What is Proof of Work (PoW) and How Does It Work?
One of the most curious and researched terms in the crypto world, especially Bitcoin, is the term Proof of Work (PoW). Have you ever wondered what is Proof of Work or PoW for short? If you have satisfied your curiosity about what it is, have you ever thought about the logic of PoW?
With this content, we will try to explain to you what Proof of Work is and with what logic it works.
What is Proof of Work (PoW)?
Proof of Work (PoW) is a protocol that prevents attacks that may prevent the functioning of a system and creates blocks in the crypto world.
The Turkish equivalent of the term, which has the abbreviation PoW and stands for Proof of Work. As the name suggests, PoW is a proof-and-study protocol.
Although the term Proof of Work has entered our lives with Bitcoin and other cryptocurrencies, it is actually a protocol based on the past. Proof of Work, which first appeared in articles handled in 1993 by computer experts Cynthia Dwork and Moni Naor, was formalized in 1999 by researchers named Markus Jakobsson and Ari Juels.
When Proof of Work (PoW) first emerged, it was widely used to prevent and prevent attacks known as DDoS (Distrubuted Denial of Service) attacks from infecting computers and spamming. The main purpose of these attacks was to send the same transaction many times, exceeding the capacity of the server or computer, to provide a crash process, and the PoW protocol also prevented this process.
After 1999, computer scientist Hal Finney created the RPoW (Reusable Proofs of Work) system, a reusable proof-of-work system that can be used as electronic money. This system, which includes the idea of a token that can be used as a currency with double-spend protection calculation, was never used or adopted as a payment system until 2009.
In October 2008, we came across Proof of Work in a completely different way by the person or team of Satoshi Nakatomo, the founder of Bitcoin. Because the technical article titled Bitcoin: Peer-to-Peer Electronic Cash System published for Bitcoin included the idea of using the Proof of Work (PoW) protocol in a secure payment system and cryptocurrencies.
Although it took the RPoW logic of Hal Finney as the idea, Proof of Work for Bitcoin was built on providing the prevention of double spending with a decentralized P2P protocol instead of the double spending control calculation system in the system owned by Hal Finney.
With What Logic Does Proof of Work Work?
Along with Bitcoin, many cryptocurrencies have blockchains called blockchains formed by decentralized nodes called Nodes. The main purpose of blockchains protected by networks is to ensure continuity and sustainability.
Cryptocurrency miners, on the other hand, are operators working on adding new blocks to the blockchain in the network at this point. They do the block addition process by solving some complex code systems, and this solution process needs very powerful processors.
The first miner to decode the code system and verify the block transactions publishes this block to the network and is entitled to receive the reward and fees for the transactions in the block in return. All transactions performed on the network are recorded in this block, and any user can download a copy of this blockchain and verify all blocks.
In the PoW protocol, which has the Consensus algorithm, there are two types of work called Challenge-Response and Solution-Verification.
In the Proof of Work protocol, attacks on the Bitcoin network must capture at least 51% of the system in order to be successful. Capturing this rate is almost impossible due to the size of the Bitcoin network and the computational power that requires high-capacity processing.
Proof of Work, the protocol that underpins the decentralized payment system, is a foundation and a start, thanks to the difficulty of computation and because attacks require at least 51% success to be successful. However, there are of course also disadvantages.
For example, computational power difficulty and the 51% rule are seen by some experts as dangers of monopolization. Because Proof of Work in Bitcoin or other networks is provided with more votes by the people with the highest proof or proof power, at this point, the principle of decentralization creates question marks due to the risk that the strong can gain authority.
Although the attack success rate of 51% seems close to impossible due to the power it requires, the mining pool managed by Bitmain in 2017 reached a success rate of 45%.
The most important disadvantage, which has been very popular lately, is that the systems in the PoW protocol require very high processing power, resulting in very serious energy consumption. PoW is heavily criticized for these reasons, both in terms of cost and energy resource use.
Frequently Asked Questions About Proof of Work (PoW)
Why is Proof of Work Necessary?
Proof of Work is especially important in terms of payment records and preventing double spending. Because, thanks to Proof of Work, if a person tries to use the same money and amount in two or more transactions, this is prevented by the Proof of Work protocol and it is deemed invalid after a transaction.
What is Double Spend and How Does Proof of Work Prevent It?
Being able to spend the same money or asset twice means double spending. This means a serious problem especially in financial payment systems. Proof of Work prevents this with its calculations and blockchain records.
What is the First Money Earned with Proof of Work?
The first money making process with Proof of Work (PoW), which was formalized and brought to the literature in 1999, the currency called Shell Money after a while, is the first currency earned and was earned in the Solomon Islands.
What is the Difference Between Proof of Work (PoW) and Proof of Stake (PoS)?
Although there are many protocols such as Proof of Work protocol, Proof of Stake or PoS with its abbreviation is the most used protocol after Proof of Work. To summarize the difference between them, while there is mining and an algorithm solving race in the Proof of Work system, there is no mining in Proof of Stake and instead there are validators.
For more detailed information, you can read our content: What is Proof of Stake (PoS) and How Does It Work?