PoW: What are Proof of Work algorithms?

PoW: What are Proof of Work algorithms?

Proof of Work is a kind of algorithm which forces distant network participants, possibly unknown to each other, to prove they have spent a certain amount of time performing a computation.

This type of algorithm is usually employed to forcefully delay processes, ensuring no one can abuse the timing of a system. The idea was originally developed to increase the cost of sending email spam, by requiring each message to include a special header showing that it had cost a certain amount to be sent.

The idea eventually found its way to the world of cryptocurrencies via the work of Satoshi Nakamoto and the original Bitcoin Core developers Hal Finney and team. It is considered one of the major breakthroughs, if not the most important one, introduced by Bitcoin. Previous attempts at creating a trusted distributed ledger had failed to find a solution to the problem of unknown and untrusted parties agreeing on a ledger consensus.

In cryptocurrencies, Proof of Work (or PoW for short) ensures that everyone is contributing a certain amount of mining power to the network. As the name implies, the algorithm forces all participants to show that they have made a certain amount of attempts to solve the current block.

While Bitcoin mining is essentially a lottery and anyone could theoretically find a block by mere chance, Proof of Work ensures that the average case requires a certain amount of work to be performed.

PoW is considered to be wasteful due to the immense amounts of energy required to find the solution to a single Bitcoin block. This is due to the self adjusting nature of Bitcoin, where “network difficulty” rises with the amount of people who are attempting to mine a block at any given time.

Through PoW, Bitcoin is able to self adjust and thus maintaining an average 10 minute period between blocks.

The same principles were copied, with slight variations, from Bitcoin by most PoW-based cryptocurrencies including Litecoin, Monero, Aeon, Dogecoin and many others.

See Also: Proof of Stake

Image Credit: Rebcenter-Moscow

 - On August 21, 2017