Proof of work is a procedure widely accepted and used in cryptocurrency mining. This phenomenon allows the miners to solve some complex puzzles. These puzzles are of arbitrary nature and solving them hinders the outsiders to temper with the online transaction taking place. This phenomenon is mostly used to either verify an online transaction or to create a new coin through mining.
The proof of work mechanism enables peer-to-peer transactions for Bitcoin or any other cryptocurrency in a secured manner that does not involve any third middlemen. Proof of work is not a new concept; its first use was seen in 1993 to wipe junk emails. In 1997 it actually came to be known as proof of work until then the mechanism was not that famous. POW is the mechanism that crypto mining seeks a lot of energy consumption. Crypto coin making demands huge computing power the reason being the algorithm solving which demands high electricity consumption. For mining Bitcoin, it uses consensus between the parties to secure the blockchain working.
UNDERSTANDING IT IN DETAIL
People around the globe work through this mechanism sitting with their computers and hoping to stop the mining in order to gain the miner reward. Miners who lack advanced equipment or have better ones tend to join a larger pool to perform advanced and quicker solving of these complex algorithms by combining powerful hash generation. In pools, the rewards are evenly distributed amongst all the miners. If you want to invest in bitcoin trading, then you can visit here Bitcoin Aussie System
The first cryptocurrency Bitcoin also works through this mechanism which is based on a distributed ledger system known as BLOCKCHAIN. A blockchain is the heart and soul of a cryptocurrency and proof of work is the mechanism that runs behind it. The ledger keeps all the records relating to a transaction. Any tampering if it exists is detected through the hashes, because the previous hash is the same for every block and is mentioned in each block. If anyone is trying to hack it, the hashes of all the preceding blocks will have to change altogether. This way the tempering process is way too difficult but easy to detect.
NEED OF PROOF OF WORK IN CRYPTOCURRENCIES
- Because of its decentralized nature, it adds a cherry on the cake because cryptocurrencies are themselves immune from any outside control. That is why this mechanism is more accepted by many cryptocurrencies.
- Peer to peer network is one another need that crypto seeks. A peer-to-peer network allows consensus between the participants and makes transactions secured. Because if transaction tampering happens the consensus would be terminated because of the different hashing being changed and other things involved. Peer peer network alerts the participants as to any fraudulent practices being done.
- Blockchain technology is also one such phenomenon of forming blocks for storing multiple transactional information of the investors. These transactions are secured through the cryptographic feature and ensure the entire encryption of the data in a secured way.
- Immune from any vulnerabilities such as an online attack, fraud, etc.
If we compare this mechanism with the proof of stake mechanism, POW is more immune from POS, the reason being the inclusion and solving of those complex mathematical algorithms. As in the POS mechanism, the coins are pre-mined, which eliminates the solving of these puzzles. But due to proof of work cryptocurrencies become less vulnerable to online hacking and stuff.
The topic described above relates to the proof of work mechanisms and their need and working in cryptocurrencies. This mechanism is the most prevalent in most cryptocurrencies because of certain features that it has as compared to the other ones. I hope the article would have eliminated your doubt regarding the POW mechanism.