Proof-of-Work: The Underlying Concept

If you’ve done any reading at all on blockchain technology or cryptocurrencies, you’ve probably come across lots of technical jargon like “consensus mechanism” and “proof of work.” But precisely how do you define Proof-Of-Work (POW)? For what purpose are we proving this? What kind of work are we talking about here?

Blockchain technology may appear simple at first glance: Information is stored in “blocks,” and these “blocks” are linked using “chains.” Blocks’ security and authenticity are safeguarded by distributed ledger nodes. But how can the network tell which nodes are trustworthy and which are not?

How does blockchain technology protect itself from malicious nodes that try to alter the data in the blocks?

A byzantine fault tolerance mechanism prevents such an assault on a network. To ensure the integrity of the network, the trustworthy nodes need a consensus process, and Proof-Of-Work is one option. In this piece, we’ll examine the evolution of the Proof-Of-Work, its theoretical underpinnings, and its practical use in cryptocurrency.

A Little Walk Down Memory Lane

The concept of Proof-Of-Work predates Satoshi Nakamoto’s creation of bitcoin in 2008. As a matter of fact, it was used long ago to combat junk email and Denial-of-Service attacks (DoS attacks). Occasionally, like in the case of spam emails, the sender must perform a specific task before their message is accepted. Since a legitimate sender only needs a negligible amount of computer power to send each email, this makes it very expensive for email spammers to send hundreds of emails. Hashcash was another Proof-Of-Work technology deployed against email spam and Denial-of-Service attacks. It made its debut in 1997.

The Bitcoin

The blocks in the Bitcoin network are “mined” by crypto miners. Once a block is mined, all of the transaction data contained inside it is permanently stored. In order to “mine” a block, miners must solve cryptographic problems by determining the number of zeros that precede a given hash value (a string of letters and numbers). When a miner discovers the right hash value for a block, they will broadcast this information to other miners so that they may check it. As soon as the block has been verified, it will be linked to the prior block on the chain, and mining will begin.

These cryptographic problems require a lot of electrical energy, which miners must use in order to solve them. The successful mining of a block is evidence that miners have made an effort to solve the cryptographic puzzle. As a form of compensation for their efforts, successful miners are given Bitcoins. Mining uses a lot of energy since solving these riddles involves a lot of processing time and power. Other miners who failed to answer the riddle would have expended unnecessary resources, resulting in financial losses.

Blockchain Distortion

The immutability of a blockchain is best grasped by considering it from the point of view of an adversarial node. Assume we wish to double-spend our bitcoins (transfer the same bitcoin more than once at the same time). To do so would require altering the presently being mined block, which would be rendered invalid by other miners. One solution is to alter pre-existing blocks in the chain. If we tried to change one link in the chain, the avalanche or ripple effect would cause drastic changes to the links that followed. Consequently, other miners would become aware of such a modification and reject any effort to incorporate it into the blockchain. To modify the block and add it to the blockchain, we need to mine all the blocks that come after it before any other nodes generate a single new block. In order to make such an effort, we would need to control the vast majority of the nodes—specifically, more than two-thirds or fifty per cent of the nodes.

Forking Blockchain

A situation where two or more blocks are mined nearly simultaneously is feasible. Here, the blockchain would “fork,” or split in two. A circumstance like that would seriously impede the block’s transactions. All nodes must choose the longest chain in the fork and abandon the other chains in order to resolve the forking problem.

In some situations, the split is final. A hard fork is one in which a critical mass of nodes must agree to follow the split chain. One example, Bitcoin Cash is a hard fork (BCH).

Transaction Confirmation

A buyer commonly transfers funds from his bank account to the seller’s bank account in an online transaction. The banks keep a record of the transaction, and after they’ve validated that it’s been completed, all parties may accept that it has taken place. On the other hand, blockchain eliminates the need for a trusted third party like a bank to verify financial transactions. How then do the buyer and seller come to terms on whether or not the deal has been reached?

The Proof-Of-Work mechanism is useful in this context too. In order to complete a transaction, both parties must wait for a block to be mined. They will know their transactions have been successfully processed after the block has been mined. Another block may have been mined at the same moment but it may not have included their transaction. Waiting for more blocks to be mined and seeing which chain is the longest is one way to get around this issue. The longest chain will be mined by the node, and lesser chains will be abandoned, thus the participants in a transaction will always know whether or not it went through. Because mining the next consecutive blocks requires so much processing power, the Proof-of-Work protocol helps ensure that transactions cannot be altered in any way.

It’s Not All Milk and Honey

Proof-of-Work offers certain benefits and some limitations despite its allure. Waste and energy usage are the most significant. The energy consumption of all the nodes would be high due to their need to always be at work mining for fresh blocks. Since only one block may be accepted at a time, however, a lot of energy is being squandered.

Proof-of-Work has the additional flaw of taking too long to complete a transaction. That’s because, as previously said, transaction confirmation takes a long time. This will contribute to weaknesses in the scalability of the protocol. International financial transactions, for example, occur at a staggering rate and in enormous numbers.

Up next, we’ll take a look at Proof-of-Stake and see how it stacks up against Proof-of-Work.

Khairul Haqeem

Khairul is proficient in writing tech-related pieces for the Asia-Pacific region. Some of his most notable work is focused on emerging technologies, data storage, and cybersecurity. His prior experience includes stints as a writer for two iSaham sites: and Before beginning his writing career, he worked in the field of education. Aside from studying engineering at the International Islamic University Malaysia, he has also worked as a subtitler for Iyuno Global, serving clients like Netflix. His specialities are: • Disruptive Tech. • Data Storage. • Cybersecurity. • Decentralised Tech. • Blockchains.

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