In the world of decentralized networks, there’s no one single authority who is in control of the network. But fundamentally, every network needs controllers to take charge of the operations on the chain, and/or to validate the transactions. To solve this issue, the concept of a consensus mechanism was developed.
Technically, the consensus mechanism is the way by which the nodes - the computers on the blockchain validate the transactions happening on the chain. There are different types of consensus mechanisms available to be implemented on various such as Proof of Work, Proof of stake, etc. Here, we will be learning all about Proof of Work.
If you haven’t already, read our article about What are some popular consensus mechanisms?
The history of proof of work dates back to the time when the concept of blockchain was proposed. It’s a bitcoin-native concept to validate a transaction on the chain. By validate, it means to verify a transaction in the chain. Under this mechanism, every miner on the chain would first need to compete with other miners to solve a mathematical puzzle. The miner who does it the fastest wins the transaction and hence further gets the chance to validate it and submit the block. The miner is also rewarded a pre-set amount of crypto as decided by the network.
The concept was subsequently adapted to securing digital money by Hal Finney in 2004 through the idea of "reusable proof of work" using the SHA-256 hashing algorithm
With proof-of-work cryptocurrencies, each block of transactions has a specific hash. For the block to be confirmed, a crypto miner must generate a target hash that's less than or equal to that of the block.
To accomplish this, miners use mining devices that quickly generate computations. The aim is to be the first miner with the target hash because that miner is the one who can update the blockchain and receive crypto rewards.
List of Networks using Proof of Work:
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