With the growing popularity of Bitcoin and other crypto assets, several terms related to them are often heard today.
One of them is the term Proof Of Work (POW). PoW is a system that works to deal with imminent cyber-attacks.
So, to learn more about what Proof Of Work means and its difference from Proof Of Stake (POS), see the following review.
What is Proof of Work (POW)
Proof of Work (PoW) is a consensus mechanism used in blockchain systems to verify transactions and mine new blocks.
Proof of Work is a system with the main goal of preventing cyber attacks, for example, Distributed Denial of Service (DDoS).
By sending bogus requests, the attack can exhaust computer system resources.
Therefore, Proof of Work is a system that can prevent the use of harmful computing power, for example, sending spam emails to launching a denial of service.
Proof Of Work (POW) Concept
The concept of POW is reaching a mutual agreement with “proof of work” by breaking cryptographic encryption using computational assistance systems.
Cryptography is a branch of Mathematics, while problems such as encryption and decryption generally require computer assistance to solve them.
Therefore, in practice, individuals or groups participating in a network with the POW consensus method will need hardware with computing power to solve the “mathematics” problem.
To note, this POW concept was even created before the birth of Bitcoin.
However, the inventor of Bitcoin, Satoshi Nakamoto, applied this concept to the first digital currency and then successfully revolutionized the way of traditional transactions.
Historically, the Proof Of Work idea was originally published by Cynthia Dwork and Moni Naor in 1993.
However, the term “Proof-of-Work” itself was coined by Markus Jakobsson and Ari Juels in a document published in 1999.
What is the Proof Of Work (POW) Function?
Proof of Work is a system with a very important function in the crypto world.
In this case, it is known that Bitcoin is a crypto asset supported by the blockchain network.
All Bitcoin transaction records have been arranged sequentially in a series of blocks on the blockchain.
Meanwhile, this method is implemented to prevent fraudulent use of assets by users. For example, by spending the same asset more than once.
As such, dissimilar versions will later be rejected by other users in an effort to prevent tampering with the public blockchain.
For example, user transactions will be recorded in blocks and identified as hashes.
In this case, the POW is a long string of numbers that work in the hash.
Not only used on the Bitcoin blockchain but Proof Of Work is also used on Ethereum and other blockchain networks.
Therefore, some features and utilization of Proof Of Work in crypto may vary, depending on their purpose and function.
The difference between Proof of Work (POW) and Proof of Stake (POS)
You need to know that there are many differences between Proof Of Work (POW) and Proof Of Stake.
Curious, what are the differences? Here below is the full review.
Before understanding the difference between Proof Of Stake and Proof Of Work, it is important to understand the term Proof of Stake or POS first.
Developed in 2011, Proof of Stake is a consensus algorithm.
POS itself is said to be prepared to replace the POW algorithm because it offers a more efficient concept.
For information, POS implements a new block mechanism validated according to the number of coins the user owns.
Therefore, Proof of Stake and Proof of Work are two different things.
Usually, Proof of Work is used to determine the degree to which the blockchain can reach a consensus.
Proof of Work also ensures transactions are valid and no party tries to do bad things.
It needs to be understood cryptography uses quite complicated mathematical equations so that only sophisticated computers are likely to be able to solve it.
On the other hand, there are no similarities, so when it’s done, the network will know that the transaction is genuine.
Even though this invention is quite extraordinary, PoW still has drawbacks, among others, it requires a large amount of electricity and is limited in the number of transactions that are processed simultaneously.
Well, that doesn’t exist in Proof of Stake. The first project to implement this model was peercoin. This model obtained several benefits, including an equal mining system, more measurable transactions, and less dependence on electricity.
One of the most popular crypto assets in the world, Ethereum, is also known to be switching from Proof of Work to Proof of Stake.
How Does Proof Of Work (POW) Work?
Regarding how it works, it is important to understand in advance that this Proof Of Work model is a consensus mechanism used to confirm and record crypto transactions.
Every crypto has a blockchain, a public ledger consisting of transaction blocks.
With crypto POW, each transaction block will have a certain hash.
In this case, the miner must generate a target hash that is less than or equal to the block for the block to be confirmed.
To achieve this, miners will use mining devices that quickly generate calculations.
The goal is for them to be the first miners with the target hash, as these miners are the ones who can update the blockchain as well as receive crypto asset rewards.
Proof of work on crypto works well because finding the target hash is hard, but not verifying it.
This process is quite difficult to prevent the manipulation of transaction records.
Meanwhile, at the same time, once the target hash is found, it will be easy for other miners to check it.
Example of how Proof of Work (POW) works?
To better understand how Proof Of Work (POW) works, let’s look at the following examples:
POW requires the computer to participate randomly in the hashing function until it reaches an output with a minimum number of 0.
Take, for example, the hash for block #419293, mined on October 31, 2015, is 000000000000000005ce4318659678968127fdc923g4324d7gd51b6e56dd4e9e.
Meanwhile, the block reward for the successful hash is 13.5 BTC.
The block will always contain 4,118 transactions involving more than 2,000 Bitcoins and headers from the previous block.
If someone attempts to change the transaction amount, even with 0.0001 Bitcoin, the resulting hash will be unrecognizable, and the network will reject the attempted fraud.
Conclusion
In conclusion, Proof of Work (PoW) is a consensus mechanism used in blockchain systems to verify transactions and mine new blocks.
Proof of Work is a system with the main goal of preventing cyber attacks, for example, Distributed Denial of Service (DDoS).
Usually, Proof of Work is used to determine the degree to which the blockchain can reach a consensus.
The POW function itself is to ensure that transactions can be valid and no party tries to do bad things.
