Proof of Work (PoW) is the first blockchain consensus mechanism ever used.
PoW produces blocks to validate user transactions. These blocks are linked together in a chain as each succeeding block secures the previous one.
This mechanism makes use of miners, the validators of the network.
These miners compete against each other to confirm the transactions. Whoever completes the transaction blocks first gets rewarded with cryptocurrencies (called block rewards).
Through this method, the blockchain remains secure and tamper-free.
How it Works
The miners use their mining equipment to consume electricity in order to solve a mathematical puzzle at a specified timeframe. For Bitcoin, the given timeframe is ten minutes, therefore, it takes this amount of time to validate each batch of user transactions. Other PoW coins have different block timeframes, i.e. Litecoin has a three minute block time.
The difficulty of the puzzle adjusts depending on the number of users, the current power, and the number of transactions.
Once the puzzle for a particular block has been solved, the new block is chosen and added to the blockchain, and becomes immutable. Each block contains user transactions at each particular time frame, therefore, these transactions become confirmed once they’ve been successfully added to a block.
The further back your transaction was confirmed, the more secure it becomes. For instance, if your Bitcoin transaction was confirmed ten hours ago, that means about 60 blocks have been added to the chain. Therefore, your transaction will have been encrypted 60 times, making it 60 times harder to reverse or tamper with.
PoW blockchains are resistant to cyber attacks since influencing the network requires raw computing power greater than half the network itself (51%). This scale of computing power is incredibly too costly to amass and even then, such an undertaking is still unlikely to fully hijack the network anyway, making the notion pointless to begin with.
Another advantage for PoW is that it’s not influenced by those with big money in their wallets, unlike the traditional finance and banking systems we have today. PoW inspires a decentralized form of governance where independent miners are in charge of making decisions for the entire network.
- Bitcoin Cash
- Bitcoin SV
- Ethereum Classic
Proof of Work has had a ten-year test through the Bitcoin network, which has survived several attacks and sabotage attempts both internally and externally, yet has stood firm as the number one cryptocurrency in terms of market capitalization. That says a lot about the security and resilience of a PoW consensus mechanism.
This article is published on BitPinas: What is Proof of Work? | PoW Guide