Today, cryptocurrencies have become an integral financial instrument. Many countries use crypto-coins and blockchain to improve the financing system and other areas of life. One of the popular terms that often appears in conversations about cryptocurrency is Proof of Work or PoW.
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In this article we will talk about what Proof of Work (PoW) is, what principles of technology work, and what mechanism underlies the PoW algorithm.
Proof of Work (PoW) – what is it?
In the cryptocurrency sphere, successful computing operations of mining equipment are considered proof of the work done.
That is, Proof of Work (PoW) is an algorithm that checks the work performed by miners (checking and entering transactions into a block), and then "controls" the reward for the one who first found the required hash-metric (hash of the previous block + sum block transaction hashes + random number).
By the way, the algorithm of the Proof of Work is used by all cryptocurrencies that can be mine. The first PoW crypto-coin in the world – Bitcoin. Although the principle of "proof of work" began to be used long before that. It was developed at the end of the last century (1993) to effectively protect servers from hacker attacks and spam.
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Proof of Work consensus algorithm: sequence
- Cryptocurrency transactions made over a certain period are grouped into a blockchain.
- To check transactions and form a block, miners need to perform a series of mathematical calculations (Hashcash) —find a hash (Proof of Work Problem).
- The first who found the desired number forms a block in the chain.
- The Proof of Work algorithm sends a reward, which is then also considered one of the transactions and will be included in the next block.
- The next block of the chain is formed only if the Proof of Work is executed, that is, new miner calculations.
Editor: Alyona Nabok