What is Proof of Work (PoW)?According to
Mickael Mosse, PoW was the first consensus algorithm that emerged with the arrival of Bitcoin (BTC) in 2008 and presented by the unknown Satoshi Nakamoto, but in itself, this type of consensus technology had already been conceived many years in the past, such as HashCash by Adam Back.
The Proof of Work algorithm describes a system that requires an amount of effort or work, not insignificant but feasible, to deter malicious agents from taking an action, be it attacking the Bitcoin blockchain network, or performing a 51% attack.
How does the PoW algorithm work?We know that Bitcoin is a cryptocurrency backed by a distributed ledger known as a blockchain. This blockchain network contains the record of all past Bitcoin transactions organized by registered blocks one after the other so that no unsuspecting user or the malicious attacker can reverse, change or alter any of the transactions added to the blockchain.
To prevent this from happening, the blockchain is totally public and distributed, which means that anyone with internet access can observe all the historical records of BTC, and distributed because it is not stored in any central server, but in the computer of those people who believe and trust cryptocurrencies, or nodes.
This causes an altered version of the blockchain in any part of the world to be quickly discarded, as it would not be in consensus with all other versions.
Blockchain and freedom of exHashes, a large number of strings, and infinite security
The way in which the blockchain, through the Proof of Work algorithm, detects possible manipulations is through hashes, which is the same as long lines of numbers that are proof that the work was accomplished. Which job? That each transaction is unique and was correctly validated by most of the nodes of the blockchain, and therefore it is the same and will always be the same for eternity.
In the event that a transaction has been altered by one party, a completely different hash will be generated, and therefore, as transactions are recorded in subsequent blocks, on-chain, an avalanche effect will occur and a different hash will be generated in all subsequent transactions, resulting in a totally unrecognizable blockchain, and therefore not in consensus with the public and distributed version that most nodes have.
An effort not insignificant but feasibleGenerating any sequence of random numbers to validate Bitcoin transactions would be incredibly easy for any modern computer, it is here that what was mentioned at the beginning comes into play, let’s remember that “the Proof of Work algorithm describes a system that requires an amount of effort or work, not insignificant but feasible ”.
An effort or work not insignificant (difficult) but feasible are the keywords, since the Bitcoin blockchain network, for example, establishes a level of difficulty to obtain this verification number.
Specifically, in Bitcoin, the network is programmed so that on average 1 block is validated every 10 minutes. Adjusting the difficulty is accomplished by setting a “target” for the hash: the lower the target, the smaller the set of valid hashes, and the more difficult it will be to generate a valid one.
The miners come into playFinding a hash number is difficult and highly costly so the PoW algorithm requires a miner to use great computing power to encode the block data and find the solution. It is so much the necessary computing power that the electricity consumption for it is becoming one of the main costs for the miners, and a problem for the ecological and environmental organizations.
Encoding the data of each block (Hashing) means that the miner passes the data of the block over and over again through the hash function, in its attempt to generate the hash of the block.
The block hash works as a unique fingerprint, which identifies the input data and is unique for each past and future block, so the miner will have to provide random data, pass it through the Bitcoin hash function, or any other cryptocurrency, and that at the end matches the hash of the block.
If not, you will have to change your data slightly to get a different hash. Changing even one character in your data will result in a totally different result, so there is no way to predict what an output might be. As a result, if you want to create a block, you are playing guessing.
Bitcoin miningIn short, mining is the process of collecting data from the Blockchain and analyzing it until a particular hash is found. If it finds a hash that meets the conditions set by the protocol, it will transmit the data to the network and you will be paid for your work.
Mining is a competitive process, but it is more of a lottery than a race, and the more computing power you have, the more accumulated computers or the best technology the more chances you have of winning the reward.
This is why miners are grouped into pools to increase their chances of getting the magic number of the hash, which allows validating the block, including it in the chain and receiving the precious reward, which in the case of Bitcoin, is the only way that new BTC is minted.
The article was written By
Mickael Mosse — Blockchain and Cryptocurrency Advisor
