Advertisements
Cryptocurrency,  Technology

What is Proof of Work (POW)?

If you have started in the world of cryptocurrencies you will have read this word more than once: proof of work as an algorithm used to validate the transactions of some cryptocurrencies such as Bitcoin, Ethereum or Litecoin, between others.

Later we will see other algorithms such as proof of stake, which is used by another type of cryptocurrency. But let’s focus on the proof of work algorithm.

“Several transaction validation systems exist within the blockchain with POW and POS being the best known.”

To understand the proof of work or POW you must first take into account the operation of blockchain and how the cryptocurrency mining works. Let’s give a simple example: If I want to buy a pair of sunglasses with Litecoins in an online store I will make the payment and, from that moment, my transaction is sent to many computers (miners) that are going to try to validate that transaction.

How is a transaction validated by proof of work?

Imagine that our request to buy the sunglasses is a piece of a large puzzle (block). This great puzzle is sent disassembled to a network of computers (miners). Each miner receives the same puzzle disassembled and then begins a race to see who is the first to ride it.

“Each validation of a transaction is a race to see who is the first to get it.”

The really curious thing is that there is no formula or technique to assemble it, but the only way to do it is with the test-error method and doing cryptographic tests tirelessly until it is completes. A miner finds the solution and assembles that puzzle. At that moment sends the notice to all miners, the solution is certified and that puzzle is incorporated (the so-called block) to the chain of blocks or blockchain where it will remain forever as a record of all those operations that were included in the block.

It must be pointed out that getting a Bitcoin undermined is almost impossible for an individual, since it requires a very powerful hardware infrastructure that goes far beyond a conventional computer. The difficulty of mining a block has generated businesses in which large companies have created spectacular facilities dedicated solely to mining. It is also true that it depends on which cryptocurrency requires more or less complexity and, therefore, greater or lesser reward for the winner who manages to undermine a block.

The expenditure in energy that requires the mining of a Bitcoin (there are many computers at the same time dedicated to being the first) already represents a problem for the ecosystem due to its high energy expenditure.

Differences between proof of work and proof of stake

Find below a video that explains it in a very simple way:

 

Hope this post has been interesting for you and looking forward to your comments!

Advertisements

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: