Proof of Work is an essential mechanism that is used with the goal of validating transactions and securing certain blockchains, like that of Bitcoin which is the first to have implemented it. Proof of Work relies on a very simple principle: the mechanism asks a computer to solve a mathematical problem that is very difficult before being able to add a new block to the blockchain. Once the solution to this problem is found, it serves as proof that the computer has indeed provided a certain effort, called “work.”
This system aims to replace the trust that one can usually give to a central authority with a technical proof. That means that in a network of people who do not know each other and who do not necessarily trust each other, the rules can still be respected, and that in a reliable and fair way. The Proof of Work mechanism guarantees that each block that is added to the blockchain comes from real computing effort, which therefore makes it a system resistant to manipulation and abuse.
How does Proof of Work work?
Proof of Work has the mission of asking a computer to prove that it has performed a certain work, and that by solving a complex mathematical problem. This same problem is deliberately designed to be costly in time and in energy, but easy to verify when the solution is found.
When new transactions are ready to be validated, they are gathered into one same block. This block will be able to be added to the blockchain only after a computer, also called miner, has managed to solve the mathematical problem. This calculation cannot be guessed or simplified, the miner must try a very large number of combinations before being able to find the correct result. This result, which is called “hash,” must follow a predefined form, often starting with several zeros. This condition makes the task very difficult.
The miner who finds the solution to this calculation first must notify the other participants of the network. These same participants will quickly verify if the solution to the calculation is correct. If everything is good, the block can be validated and therefore added to the blockchain. The miner will obtain a reward for having provided the effort.
Why is Proof of Work important?
Proof of Work fulfills several functions that are very important in a blockchain. First, it allows to secure the transactions, which makes all cheating attempts extremely costly. Because modifying an old piece of information would require redoing all the calculations of the following blocks, which would therefore demand an enormous computing power, which is even out of reach for powerful organizations.
Secondly, Proof of Work protects the network against attacks. The more miners participate, the more the network becomes difficult to hack, because it would be necessary to control the majority of the global computing power to be able to try a fraudulent modification. Proof of Work also plays an important role in the distribution of the currency. It is thanks to this mechanism that new bitcoins can be created and put into circulation.
Finally, Proof of Work allows the network to function in a fair and organized way. Everyone can participate in mining, but only those who find the solution are rewarded. This therefore creates a form of competition that is free, and that is framed by clear and automatic rules.