Proof of Work (PoW) - a phrase that is often mentioned in the crypto investment community but very few people understand it.
In this article, I will talk about Proof of Work but in a simple style, not too much related to programming terms to make it easier for you to grasp it.
OK, got it Are you ready? Let's get started!
What is Proof of Work (PoW)?
Proof of Work (PoW), also known as proof of work, is the most common consensus mechanism in the cryptocurrency world.
This consensus mechanism was successfully applied to Bitcoin (BTC) by Satoshi Nakamoto in 2009. Since then, PoW has been one of the most popular consensus mechanisms in the cryptocurrency ecosystem.
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Proof of Work: From idea to consensus mechanism
Despite being the first adopter, however, Satoshi Nakamoto is not the father who invented the idea of PoW.
So, who created the PoW and when was the first idea of PoW born?
You refer to the important milestones in the formation of PoW:
- The most primitive idea of Proof of Work (PoW) is expressed in the essay "Pricing via Processing or Combatting Junk Mail" of scholars Cynthia Dwork and Moni Naor on the issue of denial of service denial. (DoS, DDoS), Email Spam problem.
- In 1997, Adam Back presented the anti-"Double Spending Protection" mechanism in HashCash's Whitepaper.
- In 2004, Hal Finney applied the concept of PoW to cryptocurrencies as a security solution through a mechanism called "Reusable Proof of Work".
- In 2009, Satoshi Nakamoto used Finney's idea to create a Proof of Work (PoW) consensus mechanism for Bitcoin.
- Since 2009, the Proof of Work (PoW) consensus mechanism has become a popular consensus mechanism in the cryptocurrency ecosystem.
Nature of Proof of Work (PoW)
You simply think of the nature of PoW as:
Verifying someone's proof of work is valid to the entire blockchain network through real-world resource consumption.
For example: Bitcoin's PoW mechanism:
In order for Bitcoin's blockchain to function, it is necessary to continually create a new block to store transaction information.
This is done by a component called "Miners," who will have to solve complex problems and send the right answers to the entire network as quickly as possible.
To meet that requirement, Miner needed to use devices with high computing power called "excavators".
Operating an excavator requires electrical power.
Thus, the PoW nature of Bitcoin will be as follows:
Confirm the proof of work (the correct answer of the problem) of Miners to the entire Bitcoin blockchain network through the consumption of resources in the real world (excavators, electric power and time).
The importance of PoW
The purpose of PoW from the birth of the idea to the present remains its main purpose: Network security.
PoW in blockchain will have the main effect of protecting the network from DoS attacks. Because, when attacking the network needs a lot of resources such as computing power, the time to solve the problem makes the attack extremely expensive.
Besides, PoW has little effect on Miner's ability to exploit, no matter how many coins you have in your wallet as long as you have sufficient resources (computing power) to be able to participate in the process. exploit.
If Miners do not have enough computing power, they can join a mining pool to take advantage of the computing power of the entire mining pool.
Here are the market share of Bitcoin pools in the market over the past year.
The weakness of PoW
Weak points of PoW consensus mechanism include:
- Consuming too many resources.
- 51% vulnerable to attack.
Waste of energy
This is probably the subject of controversy that never ends when one side says that using too much power to keep the network secure is wasteful.
On the other hand, making the argument that consuming resources is essential to make the network more secure.
This is an extremely important issue, with the possibility of 51% attacks that can occur for blockchains using PoW.
Why is this problem possible?
Remember, the PoW mechanism is based on computational power. So, what if an individual or organization owns more than 51% of the network's computing power?
Yes, that organization or individual will essentially gain control of the network by misleading the evidence that the network suffers from double spending, causing huge losses.
51% attack is easy on small networks, the number of miners is not much, so it is very easy to take the computing power of the network.
This will be difficult for large blockchain networks like Bitcoin because the cost to occupy huge computing power is up to 9 USD in 2017.
Below is the cost to perform a 51% attack, you can refer to:
I'm sure that after reading this, the newcomers who have just entered the cryptocurrency market have grasped the Proof of Work definition, as well as the importance and weakness of this mechanism.
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