Proof of Work (PoW) explained in mining cryptos

What is "Proof-of-Work"?
"Proof-of-Work" or PoW, is the original consensus algorithm in a Blockchain network.

In Blockchain, this algorithm is used to confirm transactions and produce new blocks for the chain. With PoW, miners compete with each other to complete transactions and be rewarded.

In a network, users transact other digital tokens among themselves. A decentralized ledger collects all the transactions in blocks. However, care must be taken to confirm the transactions and to organize the blocks.

This responsibility is produced by special computers and by people called miners. The process is called mining.

The most important principles of the work are a complicated mathematical puzzle and the possibility of quickly proving the solution.

What do you mean by a "mathematical puzzle?"
It is an issue that requires a lot of computational power to solve.

There are many of them, for example:

• Hash function, or how to find the input knowing the output.
• Whole faturization, in other words, how to present a number as a multiplication of two other numbers.
• The puzzle protocol didactic guide. If the server suspects a DoS attack, it requires a hash function calculation for some nodes (math computers) in a defined order. In this case, it is a problem of "how to find a string of hash function values".

The answer to the PoW problem or the mathematical equation is called a hash.

As the network is growing, it is facing increasing difficulties. The algorithms need more and more hash power to solve the problem. Therefore, the complexity of the task is a delicate matter.

How is it possible?
The precise work and speed of the Blockchain system depend on this.

But the problem should not be too complicated. If so, block generation takes a long time. Transactions are stuck without execution, and as a result, the workflow hangs for some time. If the problem can not be solved in a defined period, the generation of blocks will be a kind of miracle.

But if the problem is very easy it is prone to vulnerabilities, there may be DoS attacks and spam.

The solution needs to be easily verified. Otherwise, not all nodes will be able to analyze whether the calculations are correct.

So you'll have to rely on other nodes and violate one of Blockchain's most important features - transparency.

How is this algorithm implemented in Blockchain?
Miners solve the puzzle, form the new block and confirm the transactions.

How complex a puzzle will be depends on the number of users, the current power, and the network load. The hash of each block contains the hash of the previous block, which increases security and prevents any block violation.

If a miner is able to solve the puzzle, the new block is formed. Transactions are placed in this block and considered confirmed.

Where is PoW generally implemented?
Proof-of-Work is used in several crypto-coins. PoW's most famous application is Bitcoin. It was the bitcoin that laid the groundwork for this kind of consensus. The puzzle is "Hashcash". This algorithm allows to change the complexity of a puzzle based on the total power of the network. The average block formation time is 10 minutes. Bitcoin-based crypto-currencies, such as Litecoin, have a very similar system.

Another great project with PoW is the Ethereum. Given that almost three of the four projects are implemented on the Ethereum platform, it is safe to say that most Blockchain applications use the PoW consensus model.

Why use a PoW consensus algorithm in the first place?
The main benefits are the defense of anti-DoS attacks and the low impact of participation in mining possibilities.

Defense against attacks DoS PoW imposes some limits on actions on the network. They need a lot of effort to run. Efficient attack requires a lot of computational power and a lot of time to do the calculations. Therefore, the attack is possible, but it is useless because the costs are very high.

Mining Possibilities No matter how much money you have in your wallet. What matters is having great computational power to solve the puzzles and form new blocks. Thus, the holders of huge amounts of money are not responsible for making decisions across the network.

Any flaws in the PoW consensus algorithm?
The main drawbacks are huge spending, "useless" calculations and 51% attack.

Huge expenses. Mining requires highly specialized computer hardware to execute complicated algorithms. The costs are uncontrollable. Mining is becoming available only to special mining plants. These specialized machines consume large amounts of energy to carry out this cost increase. Large costs threaten to centralize the system as it benefits the government. It is quite easy to see in the case of bitcoin.

"Uselessness" of the calculations. Miners work hard to generate blocks and this consumes a lot of energy. However, your calculations are not applicable anywhere else. They ensure the security of the network, but can not be applied to business, science or any other field.

Attack 51%, what are you talking about?
A 51% attack, or majority attack, is a case when a user or group of users control most of the mining power.

Hackers are given enough power to control most events on the network.

They can monopolize the generation of new blocks and receive rewards as they are able to prevent other miners from completing blocks. They can reverse transactions.

Let's assume that Alice sent Bob a certain amount of money using Blockchain. Alice is involved in the 51% attack case, but Bob is not. This transaction is placed in the block. But hackers do not allow money to be transferred. There is a fork going on in the chain.

Mining
In addition, the miners join one of the plants. And since they have the most computing power, their chain contains more blocks.

In the network, a "branch" that lasts longer remains, a shorter one is rejected. Therefore, the transaction between Alice and Bob does not occur. Bob does not get the money. By following these steps, hackers can reverse transactions.

Tags: #cryptocurrency #pow #bitcoin #mining #blockchain

The 51% attack is not a lucrative option. It requires a tremendous amount of mining power. And, once the public display is displayed, the network is considered compromised, which leads to the exit of users. This will inevitably bring down the price of the crypto. As a consequence, the funds lose their value.