It is one of the most popular consensus protocols for cryptocurrency mining and further work with them. Further review will allow you to familiarize yourself with the basic properties of this algorithm, its distinctive features and conduct a comparative analysis with its main competitor – the Proof Of Stake.

How is Proof-of-Work algorithm works?

This specific term was first mentioned in an article by Cynthia Dwork and Moni Naor entitled “Pricing via Processing, Or, Combatting Junk Mail, Advances in Cryptology.” The authors made the assumption that in order to increase the protection level of a specific network, it is necessary to do laborious and complex calculations to increase the input threshold. Four years later, the Haskash project appeared, fully dedicated to the anti-spam system. During authentication, the platform performed hashing of the inversion part by means of email resources. To send a specific header, 252 calculations were required. If you used this algorithm to send regular emails, this was done relatively quickly and without problems, but in the case of mass mailing of spam messages, the number of necessary capacities increased dramatically. Proof of the code correctness does not take much time, since a special method for calculating the ShA-1 with a pre-marks is used.

Two years later, the term Proof of Work was already officially used. He was devoted to the article by Jacobson and Zhevels, where the topic of algorithms and security protocols was discussed in detail. After some time, Proof of Work was used by Satoshi Nakamoto when developing the Bitcoin network. For more efficient and stable operation, he modified the original algorithm of the protocol, adding to it a mechanism of varying complexity. Depending on the number of active network users, the number of zeros in the transaction proof calculations has changed. Algorithm SHA-256 provided full-featured, efficient and stable operation of the system.

In other words, the protocol provides guarantees for testing the node when you are mining the cryptocurrency. At the same time, the miner is part of the chain for the formation of new blocks. In turn, a block hash is searched for, including the previous block of information and the sum of the operations performed, which determines the degree of computational complexity when the algorithm works.

The key features of the Proof-of-Work algorithm

POS is an effective protocol for protecting user data and maintaining the stability of computing systems. Also, it provides protection from hacker attacks, fraudulent actions, and unauthorized access to user data. The main characteristics of the protocol are:

  1. Automatic processing of labor-intensive computing processes.
  2. Accelerated process of verification of results and evidence of transactions in the network.

Initially, the protocol algorithm was designed to work in large computer networks, and not for use by users. It involves the use of a large number of computing capacities, but it ensures that the tasks are performed at the highest level, with a simplified process of verifying the correctness of the code in the shortest possible time.

Advantages and disadvantages of the Proof of Work algorithm

The main disadvantage of the algorithm is the increased power consumption during operation. Very often, energy costs exceed the industrial capacities level. In turn, carrying out labor-intensive calculations guarantees the stability of the network and the highest level of protection of confidential information of users. Today, it is the level of protection that determines the user’s involvement in the operation of a particular cryptocurrencу network.

Proof-of-Work vs. Proof-of-Stake

Proof-of-Work (PoW) algorithm contributes to double cryptocurrency mining expenditure. In this case, Proof-of-Work (PoW) reduces this indicator with the increasing number of confirmed transactions within the network, which indicates the dependence on the number of computing capacities that the hacker has at his disposal. To reduce the risks of double spending, users expect a specific number of transaction confirmations and also use risk reduction protection systems for fast payments.

It should be noted that these algorithms can be subject to similar attacks, but the result is different. The main danger for them is represented in the face of DoS, or Denial of Service, and Sybill attack. The first attack is aimed at interrupting the normal operation of the system, which is achieved due to the overflow of network nodes. For example, a hacker can flood a network with low-cost operations in colossal amounts – remember the flood-attack of the Bitcoin network 2 years ago. When using Sybil attack, the network is undermined by creating a huge number of incorrectly functioning nodes.

The level of vulnerability of the Proof-of-Work algorithm and its competitor to these attacks is dependent not only on the type of agreement that is applied within the network, but also on the detail of the network protocol. At the same time, today there are no internal characteristics that could make a particular protocol less susceptible to attacks.

The next attack, which can cause users to worry about their cryptocurrency assets, is Selfish mining. With Proof-of-Work mining under this attack, selective block publishing occurs, which forces users to waste their computing capacities. The developers of Proof-of-Work (PoW) are worried, because unlike its rival PoS, which is not burdened with expensive resources, here the situation is different. However, none of the developers have yet confirmed the effectiveness of this type of attack, and some believe that the assumption is made with serious errors.

The definition of Proof-of-Work (PoW) relative to the resistance to attacks is based on the total processing power of the network. But for Proof-of-Stake, there is no equivalent to “health state”, because with an precise distribution of currency within the network, the attack is based on its branching, and if there is a significant share of users there is a risk of censorship to transactions.


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