Proof-of-Work

Introduction

Proof-of-Work (PoW) is a system used to deter malicious use of a valuable resource. It was initially used to prevent email spam, by requiring the sender to generate a proof of the email’s content such that it would require significant computational resources to send mass emails. This was later adapted to require expending computational energy in order to add changes to a transaction ledger. This solved the issue of double spending which exists in most payment infrastructures.

In Bitcoin, PoW functions by requiring miners to perform a trivial, yet computationally intensive hash function (SHA-256). Once solved, the miner can broadcast the solution to the rest of the network to then receive a block reward. The solution is easily verifiable and impossible to forge since finding the solution requires energy expenditure. Transactions can only be double spent if an entity is able to perform a 51% attack whereby they control more than half of the total hash power in the network.

PoW is one mechanism to prevent double spends, others include Proof-of-Stake, Delegated Proof-of-Stake and Proof-of-Authority to name a few.

Suggested Reading

Understanding Proof-of-Work, Part 1: Demystifying Solving a Block - Julian Martinez

Proof-of-Work is not a Consensus Protocol: Understanding the Basics of Blockchain Consensus - Stefan Beyer

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