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Proof Of Work

What Is Proof Of Work?

What Is Proof Of Work?

Proof Of Work, often abbreviated as PoW, is both the method for achieving consensus across the entire Bitcoin network as well as a piece of data that proves that a certain amount of energy, computation, and work has been expended.

One of the most important features of proof of work is the asymmetry between doing work and proving that work has been done. PoW problems are mathematically difficult to solve but easy to verify that they have been solved correctly.

Adding A Block

In order to add a block of transactions to the blockchain, a bitcoin miner needs to find a number called a nonce (number used once) that can only be found by systematically guessing. With each guess, miners come a little bit closer to finding the number that is needed to add a block of transactions to the blockchain and win the block reward.

Once a miner has found the winning number, they publish their result and the bitcoin nodes verify the results. It is computationally difficult for miners to find the winning number but computationally easy for the nodes to verify that the number is correct.

Here is an example of a very simple math problem that simulates PoW.

Multiply 3 prime numbers to equal 52,417.

Hint: All 3 numbers are different and each one is less than 100.

The only way to solve this equation is by trial and error. In order to find the solution, you have to systematically guess hundreds of number combinations until you find the correct answer. This requires you to do work. As soon as you have the correct answer, you can present your solution to anyone as proof that you have done the work.

The answer is 23 x 43 x 53 = 52,417.

Finding the 3 numbers requires systematically calculating dozens or even hundreds of different number combinations. Verifying that it has been solved correctly only requires a single calculation.

This asymmetry is a big part of what makes Bitcoin so secure. It takes a large amount of energy to make changes to the blockchain but a tiny amount of energy to verify that the blockchain is correct.

Consensus

Bitcoin uses proof of work to add transactions to the blockchain because it relies on cryptographic proof rather than trust in any centralized third-party to keep records of who owns bitcoin (such as a bank). In order for all of the bitcoin nodes to come to an agreement on which transactions are valid and which addresses own bitcoin, proof of work is used to achieve consensus.

Since it requires proof of work to add a block to the blockchain, the longest chain of blocks is considered the one true blockchain by all of the nodes.

When a miner finds the nonce that meets the requirements to add a block to the blockchain, they publish their proof of work and a bitcoin node verifies it. If everything is accurate, the node adds the block to the blockchain and then passes the valid block to other nodes. Once this new block has been recorded by all of the nodes, consensus has been achieved for that block and the miners begin searching for the next block.