
Proof of Work (PoW) is a prevailing today algorithm of reaching consensus that is applied in the blockchain functioning of such cryptocurrencies like Bitcoin, Litecoin, Ethereum, Monero. Its primary task is to check the transactions within a network and prevent maleficent intervention into its structure.
Proof-of-Work is an algorithm functioning to make the decentralized network protected from that or another abuse. A reliable and uninterrupted work of the algorithm is implemented based on:
PoW is an algorithm that is effectively executed only with the help of the most powerful up-to-date computer facilities. And its tasks always have specific and predictable implementation time-frames.
Many will find this paradoxical opening surprising, but the basis for the PoW algorithm had been laid long before it was established and applied in blockchain in the 21st century:
Legendary Satoshi Nakamoto was the first one to launch and put into practice the PoW mechanism within the blockchain. Proof of Work has become the tool that allows reaching consensus – the common opinion of all system members about what version of the blockchain to consider the right one.
During its development, the anonymous Bitcoin creator used the groundwork of the old project Hashcash but improved it using a mechanism of changing difficulty. In the Bitcoin ecosystem, the complexity depends on the indicator of the total capacity of all blockchain network participants.
In simple words, Proof of Work creates a mechanism, which makes it possible for some nodes of the network to check the nodes that add new blocks into blockchain during mining. The goal of this action is to find out whether the actual calculation was fulfilled or there is space for machination. The process requires verification of the hash of the block title.
When working with PoW, one should necessarily know and understand the following:
In each found block, there will always be a hash of its predecessor. That describes exactly how the chain is formed, which gave the name to the blockchain technology afterward. The high difficulty of the process of building an integral chain protects the whole system from unauthorized editing or such negative consequences as ‘double-spending’.
Thanks to this algorithm, the whole industry for cryptocurrency mining has emerged. The node remuneration scheme implemented in blockchain led to the development of specialized equipment that is several times more powerful than the capabilities of an average PC.
In 2012, the total power of all devices within the Bitcoin network outperformed the most powerful supercomputer on the planet. That was precisely the moment when the Proof of Stake algorithm, a competitor and alternative that new and new altcoins tend to, appeared.
The creation of an alternative mechanism of reaching consensus was logical literally from the appearance of PoW itself. Considering the key parameters of the initial model of blockchain protection, it is no wonder that the PoS algorithm turned out to be virtually its complete opposite:
Disputes about what algorithm is the future – among the most favorite topics for blockchain enthusiasts. Considering the difficulty, slowness, and power consumption of PoW, the PoS algorithm is perceived as an obvious path of evolution due to these factors particularly:
At the same time, Proof-of-Work creates way less motivation for accumulating tokens in the hands of a single person or a group of individuals.
Proof of Work (PoW) is a prevailing today algorithm of reaching consensus that is applied in the blockchain functioning of such cryptocurrencies like Bitcoin, Litecoin, Ethereum, Monero. Its primary task is to check the transactions within a network and prevent maleficent intervention into its structure.