Advantages of POW (Proof of Work) include: One of the technologies that gave birth to the Crypto market in general and Bitcoin in particular, but not everyone understands all its concepts. In this article, let’s join Weakhand to learn about the Proof of Work consensus mechanism? Why is it so successful?
To better understand Proof of Work, people can refer to some of the articles below:
- What is Bitcoin? All About Bitcoin
- What is Aleo? Overview of Aleo Cryptocurrency
What Is Proof Of Work?
Proof of Work (proof of work, often abbreviated as PoW) is a consensus and transaction validation mechanism in blockchain networks, requiring nodes to solve a complex computational problem to create a block. new in blockchain and at the same time check the validity of transactions.
Once a new block is created, it is inserted into the blockchain chain and synchronized with other network nodes to perform transactions. This helps secure the system and prevent attacks from bad actors.
Proof of Work is the first blockchain consensus algorithm and is still widely used to this day. PoW was first officially introduced by Satoshi Nakamoto in the Bitcoin whitepaper in 2008.
PoW Working Mechanism
Imagine blockchain as a book and each block will be a page, everyone and every transaction that takes place will be recorded in that book to demonstrate the transparency of the system. However, the question is if only one or a few parties authenticate the transactions recorded in that book, will it ensure transparency or not?
PoW was born to solve the transparency of the above ledger by allowing anyone who just owns a computer to participate as a node and verify the accuracy of transactions recorded in the ledger.
Nodes will participate in solving a difficult problem created in each block thanks to their hardware power. When a block is solved, it is added immediately after the previous block and the reward generated from the block is given to the fastest solver.
Transactions that are considered valid by all or most nodes are added to blocks so everyone can read them in the correct order and are almost impossible to change.
History of Formation and Development of Proof Of Work
Development history of PoW
- PoW was first introduced in 1993 by Cynthia Dwork and Moni Naor to solve the problem of “spam” via email.
- Later, this technology was used in the anti-DDoS attack system of websites.
- In 2009, PoW was used as the main mechanism to validate transactions on the Bitcoin network.
- The development of PoW is relentless and has become an important part of most different cryptocurrencies.
Background of PoW in Blockchain
Proof of Work was created to solve the problem of “double-spending” in the cryptocurrency system, especially Bitcoin. With a distributed cryptocurrency system, validating transactions accurately and efficiently is crucial.
In fact, without any authentication mechanism, one person could use the same coin to make two different transactions, leading to fraudulent spending and destroying user trust.
PoW has been used to solve this problem by requiring miners to perform complex mathematical calculations to validate transactions and create new blocks on the blockchain.
Before the advent of Bitcoin, popular forms of online payment such as PayPal, Visa, Mastercard often had to rely on an intermediary to authenticate and transfer money, which could cause security issues and increase transaction costs.
Advantages Of Proof Of Work
Advantages of PoW include:
- Safe: PoW is one of the safest transaction authentication algorithms today. Because changing a block requires a lot of computing power and high cost.
- Difficult to be attacked: Because it takes a lot of energy to execute, an attacker who wants to attack a PoW network must spend a lot of money to rent or buy equipment and invest in computing.
- Cannot be changed: Once a block is confirmed, it cannot be changed. This ensures the integrity of the data on the blockchain.
- Extraordinary nature: PoW also helps create cryptocurrencies with real value by requiring miners to forgo the costs of creating new blocks.
- Decentralization: Because everyone in the world, no matter where they come from, can participate in PoW networks, no individual or organization can control PoW networks.
- Transparency: As mentioned above, blockchain in general or blockchain using the PoW mechanism in particular are very transparent as everyone can see all transactions that have occurred in the past.
Disadvantages of Proof Of Work
Disadvantages of PoW include:
- Takes a lot of energy: to mine a block in the PoW network, miners must consume a huge amount of energy. This is wasteful for the world and has a negative impact on the environment.
- Expensive in cost and time: The more difficult mining becomes, the more costs and time people involved in the mining process have to spend to calculate the authentic values of a block.
- Centralized power factor: Miners with better hardware will have more opportunities to mine and reap rewards, leading to the concentration of power and potential network security risks.
- 51% attack threat: If one miner takes up 51% of the computing power of the entire POW network, the security of the network will be threatened and dangerous attacks can be carried out.
- Not environmentally friendly: Unsustainable energy use for cryptocurrency mining increases emissions and greenhouse gas emissions, demonstrating the potential for environmental harm on an international level.
- Difficult to reach new people: When a network has more people participating in mining, the difficulty of mining in general will increase. A new person who wants to participate in mining will also encounter many difficulties when encountering problems with the required hardware. set.
Compare PoW and PoS
Here are some comparison points between PoW and PoS:
- Energy consumption: PoW consumes a lot of energy to complete calculations, while PoS does not require such a large amount of computing power.
- Concentration: PoW tends to centralize power due to the huge hardware disparity between miners, while PoS helps minimize that centralization because new coins are only issued to those who own a fixed amount of coins. instead of miners with more powerful hardware.
- Safety level: PoW is considered a more secure authentication method because to attack a network using PoW, the attacker must have up to 51% control of that network. However, PoS uses staking props instead of hardware, so there is no risk of being attacked by someone using the computing power of more powerful hardware.
- Possibility: PoW requires miners to use expensive storage mechanisms and large blockchains, while PoS does not require expensive costs and does not require storing a large blockchain, which increases the availability of the system system.
Because it was born late, PoS will have many advantages compared to PoW. However, up to now, PoW has been gradually improved and is still the consensus mechanism of the largest blockchain – Bitcoin.
Is PoW Hacked?
Although it possesses a very good security mechanism, PoW also has some disadvantages and is vulnerable to attacks as follows:
- 51% Attack: If a miner takes up 51% of the PoW network’s computing power, the network’s security will be threatened and dangerous attacks such as double-spending will be performed.
- Attack clones: Forge the creation of a new block using the hash of the previous block.
These attacks can harm the integrity and security of the network, but they are difficult to execute and require large amounts of resources and computing power to execute.
Prominent Projects Using PoW
Bitcoin
We will not be able to ignore Bitcoin, which is the first and most popular blockchain project to use PoW. The Bitcoin system uses the SHA-256 algorithm to validate transactions in the network.
Bitcoin is still the largest, most decentralized, and most secure Proof of Work system in the Crypto market as the mining difficulty continues to increase year by year.
Dogecoin
Dogecoin was created by a team of programmers named Billy Markus and Jackson Palmer as a decentralized digital currency that was not a serious competitor to Bitcoin or other cryptocoins, but marked a significant milestone. pay attention in developing different types of memecoins.
Dogecoin uses a Proof of Work-based algorithm to verify transactions on its blockchain and is mined by users through the act of “mining”.
The highlight of Dogecoin is the excitement and massive support from the user community and it has been used to raise funds for charitable causes and sponsor various sports stadiums.
Aleo Network
Aleo is a private blockchain platform developed on the MimbleWimble protocol platform, allowing transactions to hide the identities of transaction participants on the network.
Aleo’s processing speed is faster than other PoW blockchain technologies and is scalable to meet the needs of application services.
The platform uses the Rust programming language and advanced technologies to ensure system security and reliability.
PoW Coin Storage Wallet
Currently it is difficult to find a wallet that supports storing many coins using the Proof of Work mechanism, however we can also use OKX Wallet to store a variety of Crypto types such as BTC, LTC, BCH, BSV,..
To download OKX Wallet, people can follow these steps:
- Access and download OKX Wallet here depending on the device you are using.
- Proceed to create a wallet and store the 12-digit passphase.
- Withdraw coins from centralized exchanges.
- Experience storing PoW coins.
Summary
Although PoW has become a reliable method of solving the consensus problem, it also consumes a lot of energy and causes waste of resources.
Above is an article about what Proof of Work is from Weakhand, hopefully everyone will better understand the consensus mechanism that gave birth to this Crypto market.
