Proof of work | Blockchain verification, safety and mine

Crypto blockchain networks use algorithms to secure, check and auto-genrs on the blockchain. In the case of Bitcoin – The first cryptocurrency – The developers were the pioneers of a verification mechanism called proof of work.

So how does it all work? What are its advantages and risks? And if you are looking to invest in cryptocurrency using this mechanism, what could you know?

What is proof of work?

Proof of work (POW) is a decentralized system used to check the accuracy of transactions on the blockchain network.

In other words, proof of work removes the need for central authority such as a bank, a company or a government agency to monitor and manage the corresponding transactions and accounts. Instead, an algorithm checks thousands and thousands of transactions one day given to ensure that the whole history of transactions remains immaculate and unchanged.

How proof of work “works”

Cryptocurrency transactions take place on a large decentralized public book called Blockchain – a huge digital list of all transactions. Each “block” contains a limited number of cryptographic transactions. The link together creates a chain of blocks, hence the term “blockchain”.

Each computer (or “node”) participating in the blockchain network of a crypto has its own copy of this blockchain (which, once again, is a history of transactions grouped into blocks).

How does a new transaction enter a block? This is where the proof of work comes into play. Suppose you want to send to someone a certain amount of bitcoin:

• Transactions are grouped. Your transaction is grouped together with other non -verified transactions (people buying, selling or exchanging bitcoin). These transactions are waiting to be placed in a block.
• Minors compete to check the following block. Crypto minors in the world (basically, computers operating in the network) work to resolve a complex mathematical puzzle. Their objective is to spit a 64 -bit “hash” (like a signature or a password) which corresponds to Bitcoin’s “target hash”. In fact, it’s a huge assumption game. Mining computers make thousands of assumptions per second, which is why, as we will explore later, the process is ineffective and expensive energy. It takes, on average, ten minutes for minors to use a new block.
• A new block is extracted and the transactions are added to the blockchain. The first minor to reach the goal can write the next blockchain transactions page. Grouped transactions are placed in a block. This block with its solution is sent to the entire Bitcoin network so that each computer can validate it and update its copies of the big book.

Each movement in the Bitcoin network must occur in “consensus”, which means that all computers must accept the same data. This is why proof of work is called “consensual mechanism”. This is also why the Bitcoin network is called “system without confidence”. The entire system is mechanized by computer consensus rather than relying on the trust of a single entity (as opposed to a banker who could accidentally “lose” your deposit of pay or erroneous checks of your funds).

Work verification systems

The critical advantage of proof of work is that it prevents double expenses. When you give money to your grocery clerk to buy a miche bread, you cannot use the same money to buy a gallon of milk. This money is spent.

But with regard to cryptocurrencies, where no central authority monitors or manages transactions, the double expenditure has a real risk. If people could cover a crypto, then this motto would lose any value.

With proof of work, all transactions are verified and disseminated throughout the system, which makes them almost impossible to alter or change. If you send some one bit to someone, this information is sent and recorded throughout the network. You cannot start this same bitcoin again.

This is what makes bitcoin and other cryptos that use proof of work practically working on work. If a bad actor – a crook or a pirate, for example – was modifying the information in a block, this person should change the previous block, and all the computers participating in the network should accept the modifications. The time, the energy and the cost of this massive effort, assuming that it could even be done, would probably prevail over the potential profit of the falsification of blockchain. So, although falsification is not impossible, it is very unlikely.

Proof of work problems

With all its advantages, proof of work also has certain drawbacks.

It uses a lot of energy. To exploit new blocks, computers work around the clock by making billions of calculations every second to resolve the next hash puzzle. According to certain estimates, Bitcoin consumes up to 150 terawatts per year, more than sufficient to feed the whole country of Argentina (a population of 45 million inhabitants).

It’s slow. The expectation of several minutes to check a single transaction can be considered slow compared to the shipping of cash digitally in a few seconds.

It is not resistant to centralization. The interest in the creation of decentralized cryptocurrency is to ensure that no single entity is in charge of the entire system. But if a few mining pools controlled the majority of Bitcoin hash activities (which, by the way, would take massive computing power), then they would essentially control the majority of Bitcoin operations.

It is somewhat vulnerable to a 51%attack. If an entity could take more than 51% of Bitcoin’s mining capacities, it could disrupt the rules, which allows you to spend or block the confirmation of new transactions.

The bottom line

Proof of work is a unique mechanism that allows cryptocurrency networks to operate safely without the need for centralized authority. However, its energy ineffectiveness is a real drawback. And other blockchain developers create new verification systems, such as proof of participation and proof of history, aimed at improving the innovations of proof of work.

If you are looking to invest in a business or cryptocurrency to get an exhibition to a particular blockchain for its future developments, plan to learn verification technologies to help you decide which blockchain networks could get adoption in the future.

References

Cambridge Bitcoin electricity consumption index | ccaf.io