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Basic Concept of Proof of Work Before going into the details of the operation of the Proof of Work (PoW) algorithm in the blockchain, we first need to clarify the concept of Proof of Work. The proof-of-work algorithm is used as a mechanism to enable computers and blockchain systems to verify the value of a piece of data. Also, this algorithm verifies the status value of a network among the multi-agent processes of the systems; The function that proof of work performs for cryptocurrencies. One of the applications of the proof-of-work algorithm is in maintaining reports related to cryptocurrencies.
If the concept is still not clear to you, we can explain it with an example. For example, in the blockchain associated with Bitcoin, proof-of-work is implemented through a series of complex computer processes to solve mathematical puzzles called PoW. These complex computer calculations consume a lot of electrical energy to ensure that all the nodes used in the network are kept healthy.
Bitcoin, the world’s first cryptocurrency, was created by a person or group named Satoshi Nakamoto. Although there are many doubts about the originality of the name, since the beginning of the emergence of Bitcoin as a cryptocurrency, there were many challenges that had to be solved. One of the biggest challenges was how to make sure that no one misuses the cryptocurrency. To solve this problem, Nakamoto published a famous white paper in which a special protocol was used to carry out cryptocurrency exchanges without the need for a central authority, and also to maintain the security of these exchanges at the same time.
It was a matter of spending twice. Cryptocurrency is just information data and the challenge here was how we could design this data in such a way that it cannot be copied or used. Nakamoto solved this challenge with a proof-of-work algorithm that involved solving complex mathematical computation problems. Now you can’t reuse paper money, but anyone who has worked with a computer can imagine how it would be possible to copy the file and have two samples. Therefore, the proof-of-work algorithm was proposed as an optimal consensus method to solve the problems that cryptocurrencies were facing.
In blockchain and cryptocurrencies, the proof-of-work consensus algorithm has been highly regarded. This algorithm is based on solving complex mathematical problems using the computing power of computers. To better understand, you can think of it as a computational competition where the person who finds the first correct answer wins the right to add a new block to the blockchain and is known as a “miner”. This competition is known as “mining”.
Security: Due to the computational complexity, it is very difficult to change a blockchain block and requires recalculation to verify each block.
Trust: The proof-of-work system is highly reliable; Because changing a block requires changing the history of the entire blockchain.
Energy consumption: One of the main criticisms of the proof-of-work algorithm is the excessive energy consumption by the mining process, which can lead to environmental challenges.
Concentration of power: Mining is usually limited to countries or companies with access to cheaper energy sources, which can lead to an unwanted concentration of too much power in one spot.
Bitcoin uses this algorithm for consensus in its network. Miners try to solve complex mathematical puzzles, and the first person to solve the puzzle wins the right to add a new block to the blockchain and receive a reward of Bitcoin as an incentive. This process is effective in terms of security and allows the blockchain to continue working in a correct and secure state.
The proof-of-work algorithm in blockchain, especially in cryptocurrencies, plays a key role in the security and trust of the network. However, there are also challenges of energy consumption and power concentration. This algorithm is mainly improved to solve these challenges or they resort to other algorithms such as proof of stake.
