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Blockchain101: Proof-of-Work (PoW)

Blockchain101: Proof-of-Work (PoW)

Here is a dedicated article about the "Proof-Of-Work" (PoW) protocol. We will see in this article how the security mechanism of the blockchain - "Proof-of-Work" works.

Proof-of-Work (PoW) Introduction

The "Proof-of-Work" is the mechanism that allows to secure the blockchain, to trace and to have a proof that simply all the transactions made on the blockchain are valid.

Let's say Alice wants to send Bitcoin to her friend named Bob. As a reminder, when there is a transfer of Bitcoins, for this transfer to take place, several conditions are required. First of all, it is necessary to verify that Alice is solvent and therefore that she has the quantity of bitcoins she wants to send. Then, the transaction must be registered in a register and recorded in what is commonly called the "blockchain". It is then necessary to register Alice's sending of Bitcoins to Bob in the blockchain, which is a digital ledger to which all participants in the Bitcoin network have access. When Alice sends to Bob for example 1 BTC, there are then people with more or less powerful computing machines, which are called "miners", and which are located a little bit everywhere in the world, which when the transaction is going to be initiated are going to fight to solve a complex mathematical problem and the first one who succeeds in solving this complex mathematical problem will have the right to add the transaction that Alice carried out towards Bob in the blockchain. And in fact, when a miner adds a transaction to the blockchain, he is rewarded by the blockchain via an algorithm and receives BTC in exchange for his efforts.

How Proof-of-Work (PoW) Works

This is simply the process of "Proof-of-Work". It is a process that, when there is a transaction that wishes to be carried out on a network operating via the "Proof-Of-Work", which is the case of the Bitcoin network, the first person who manages to solve a complex mathematical problem by soliciting computing resources, then this person will receive cryptocurrency as a reward.

"Proof-Of-Work", as the name suggests, the more you work and spend in computer resources and electricity to find a solution to a problem the more I am rewarded.

Alice sends money to Bob and there is a transaction of say 1 BTC between the two parties. What will happen is that there are people all over the world who will fight to verify that Alice has the BTC on her wallet and then fight to find the so-called "nonce". This "nonce" is a number that must be found somewhat arbitrarily and to find this number there, it is quite simple as it is advisable to take computing machines, large computers and the fastest computer to find this "nonce", then it is him who will have the right to add the transaction on the blockchain and will receive a reward.

We hope you follow us well. So Alice wants to send 1 BTC to Bob. This transaction is offered to miners who are struggling to find a nonce.

Actually, when we say that their computers are running to find the "nonce" we mean that they are running a program to find the solution. What is happening is that nowadays they are not even fighting with normal computers but fight within so-called "farms" or "pools" that gather several hundreds or thousands of computers in cooperatives to be active at the same time and spend all their electrical and computer energy to find a "nonce". The first one who finds it, let's imagine that it is a French mining farm. Wouhou! But what's exactly going on? Well, the fact that Alice wants to send 1 BTC to Julien means that the French cooperative will have the right to register this transaction in the blockchain within a block. So in our example, to register a transaction from Alice to Bob for an amount of 1 BTC within a block of the Bitcoin blockchain.

​​Top Projects Using the Proof-of-Work (PoW) Protocol

Bitcoin (BTC): Bitcoin is a consensus network that enables a new payment system and completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence. The creator, Satoshi Nakamoto, wrote the original white paper in November 2008 and the Bitcoin network came into existence in January of 2009. Buy BTC on Bitget!

Ethereum (ETH): Ethereum is a global, open-source platform for decentralized applications. On Ethereum, you can write code that controls digital value, runs exactly as programmed, and is accessible anywhere in the world. Vitalik Buterin is the creator of Ethereum. Buy ETH on Bitget!

Dogecoin (DOGE): Dogecoin is an open source peer-to-peer digital currency, favored by Shiba Inus worldwide. Buy DOGE on Bitget!

Writer’s notes: ​​

We wrote this article in June 2022, Ethereum was still a PoW blockchain back then. But after ‘The Merge’ in September 2022, Ethereum has moved from a Proof-of-Work (PoW) protocol to a Proof-of-Stake (PoS) protocol.

Read more on this topic:

What is the Proof-Of-Stake (PoS)? How is it different from Proof-of-Work (PoW)?

A wrap-up of Ethereum’s PoW-to-PoS shift


Finally you realize that what miners do when they use a "Proof-of-Work" protocol is that they work via a system that rewards participants who spend energy and therefore make efforts by investing in equipment and all this with the aim of finding the nonce and this nonce is what makes the blockchain secure. This nonce connects all the blocks to each other. Why is this? We're not going to go into detail and stay on the surface in this article but basically every block within a blockchain contains information, mainly transactions that have been made by people. Each block also contains information that links them together which we call a "block hash". A block hash is a sort of unique identifier for each block. These hash blocks are obtained thanks to nonces. That's why we call it a blockchain. The nonce allows to find the block hash and the block hash is found in the blocks allowing to link each block between them. As a result, trying to modify a block will modify the block hashes and the participants will know that there has been an attempt to fake it.

This is the proof of work: it is spending money, energy and soliciting material to find a "nonce", a random number, which makes it possible to generate a block hash which itself must be registered in the initial block and carried over to the following block in the header of the latter and this is what links each block with the others.

So finally, proof of work can simply be summarized as a mechanism to spend energy to secure the blockchain. This might sound technical and unaffordable but we tried to make it not so and to make it less complicated.

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