Proof Of Work Explained

Ruma Das

A proof-of-work (PoW) system (or protocol, or function) is a consensus mechanism that was first invented by Cynthia Dwork and Moni Naor as presented in a 1993 journal article. In 1999, it was officially adopted in a paper by Markus Jakobsson and Ari Juels and they named it as “proof of work”.

It was developed as a way to prevent denial of service attacks and other service abuse (such as spam on a network). This is the most widely used consensus algorithm being used by many cryptocurrencies such as Bitcoin and Ethereum.

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How does it work?

In this method, a group of users competes against each other to find the solution to a complex mathematical puzzle. Any user who successfully finds the solution would then broadcast the block to the network for verifications. Once the users verified the solution, the block then moves to confirm the state.

The blockchain network consists of numerous sets of decentralized nodes. These nodes act as admin or miners which are responsible for adding new blocks into the blockchain. The miner instantly and randomly selects a number which is combined with the data present in the block. To find a correct solution, the miners need to select a valid random number so that the newly generated block can be added to the main chain. It pays a reward to the miner node for finding the solution.

The block then passed through a hash function to generate output which matches all input/output criteria. Once the result is found, other nodes in the network verify and validate the outcome. Every new block holds the hash of the preceding block. This forms a chain of blocks. Together, they store information within the network. Changing a block requires a new block containing the same predecessor. It is almost impossible to regenerate all successors and change their data. This protects the blockchain from tampering.

A hash function is a function that is used to map data of any length to some fixed-size values. The result or outcome of a hash function is known as hash values, hash codes, digests, or simply hashes.

Source: Wikipedia

The hash method is quite secure, any slight change in input will result in a different output, which further results in discarded by network participants. The hash function generates the same length of output data to that of input data. It is a one-way function i.e the function cannot be reversed to get the original data back. One can only perform checks to validate the output data with the original data.

Nowadays, Proof-of-Work is been used in a lot of cryptocurrencies. But it was first implemented in Bitcoin after which it becomes so popular that it was adopted by several other cryptocurrencies. Bitcoin uses the puzzle Hashcash, the complexity of a puzzle is based upon the total power of the network. On average, it took approximately 10 min to block formation. Litecoin , a Bitcoin-based cryptocurrency is having a similar system. Ethereum also implemented this same protocol.

Proof-of-work protocols can be categorized into two parts:-

This protocol creates a direct link between the requester (client) and the provider (server).

In this method, the requester needs to find the solution to a challenge that the server has given. The solution is then validated by the provider for authentication.

The provider chooses the challenge on the spot. Hence, its difficulty can be adapted to its current load. If the challenge-response protocol has a known solution or is known to exist within a bounded search space, then the work on the requester side may be bounded.

Source-Wikipedia

These protocols do not have any such prior link between the sender and the receiver. The client, self-imposed a problem and solve it. It then sends the solution to the server to check both the problem choice and the outcome. Like Hashcash these schemes are also based on unbounded probabilistic iterative procedures.

Source-Wikipedia

These two methods generally based on the following three techniques:-

This technique depends upon the speed of the processor. The higher the processor power greater will be the computation.

This technique utilizes the main memory accesses (either latency or bandwidth) in computation speed.

In this technique, the client must perform a few computations and wait to receive some tokens from remote servers.

Here is a list of known proof-of-work functions:-

o Integer square root modulo a large prime

o Weaken Fiat–Shamir signatures`2

o Ong–Schnorr–Shamir signature is broken by Pollard

o Partial hash inversion

o Hash sequences

o Puzzles

o Diffie–Hellman–based puzzle

o Moderate

o Mbound

o Hokkaido

o Cuckoo Cycle

o Merkle tree-based

o Guided tour puzzle protocol

A successful attack on a blockchain network requires a lot of computational power and a lot of time to do the calculations. Proof of Work makes hacks inefficient since the cost incurred would be greater than the potential rewards for attacking the network. Miners are also incentivized not to cheat.

It is still considered as one of the most popular methods of reaching consensus in blockchains. Though it may not be the most efficient solution due to high energy extensive usage. But this is why it guarantees the security of the network.

Due to Proof of work, it is quite impossible to alter any aspect of the blockchain, since any such changes would require re-mining all those subsequent blocks. It is also difficult for a user to take control over the network computing power since the process requires high energy thus making these hash functions expensive.

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