Originally dated in 1993, the Proof of Work concept was designed to prevent denial of service attacks and other abuses of services such as network spam, requiring some work for the service user, which usually means time for computer processing.
In 2009, Bitcoin presented an innovative way to use Proof of Work as a consistent algorithm used to verify transactions and transfer new blocks to the blockchain.
It then spread and became a consensus algorithm, widely used in many cryptocurrencies.
How does it work?
In short, network miners will compete with each other to solve complex computational puzzles. These puzzles are difficult to solve, but it is easy to verify the correct solution. As soon as the miner finds a solution to the puzzle, he can transfer the block to the network, where all the other miners will check the correctness of the solution.
Let’s take an example
Bitcoin is a blockchain-based system that is managed by the collective work of decentralized nodes. Some of these nodes are known as miners and are responsible for adding new blocks to the blockchain. To do this, miners must try to guess a pseudo-random number (known as a nonce).
This number, in combination with the data provided in the block and transmitted through the hash function, should produce a result corresponding to certain conditions, for example, a hash starting with four zeros. When the corresponding result is found, other nodes will check the accuracy of the result, and the miner’s node will be rewarded with a reward for the unit.
Consequently, it is impossible to add a new block to the main chain without first searching for a valid one-time number, which, in turn, generates a solution for a particular block (called a block hash). Each checked block contains a hash of a block that represents the work done by the miner, so it is called “Proof of Work”.
Proof of work helps protect the network from many different attacks. A successful attack will require a lot of computational power and a lot of time to perform calculations, and therefore it will be ineffective since the costs incurred will be greater than the potential benefits to attack the network.
One problem with Proof of Work is that mining requires expensive equipment that consumes a large amount of energy, and although sophisticated computational algorithms provide network security, these calculations cannot be used further.
Although the Proof of Work may not be the most effective solution, it still remains one of the most popular ways to achieve consensus in blockchains. There are already alternative methods and approaches that are trying to solve problems, but only time will tell which method will succeed Proof of Work.