Part 1.5: What is Proof of Work?

This article acts as a know-how prerequisite for the Mining and Miners article that follows.

Proof of Work (PoW) is a consensus mechanism in blockchain technology, characterized by its high energy consumption and carbon footprint. It involves miners competing to solve cryptographic puzzles in a Poisson process. The goal is to find the correct nonce, enabling the creation and naming of a new block for which miners receive rewards.

Typically, PoW is defined as a decentralized consensus mechanism requiring participants to perform computational work to solve an encrypted hexadecimal number, a process known as "mining." Successful miners are rewarded for their computational contributions.

However, PoW's role extends beyond this. It is a fundamental technology for establishing consensus among participants without predetermined identities or numbers. This approach differs from traditional consensus protocols (CPs), which assume a fixed number of nodes with known identities responsible for maintaining a consensus, particularly in conflict situations. These CPs often relied on leader selection for conflict resolution, a method susceptible to manipulation.

In contrast, PoW, introduced by Bitcoin, eliminates the need for predefined participants. Its design mimics the consensus process in a network without knowledge of the number of servers, their identities, or locations. Under these constraints, PoW achieves consensus by adhering to the longest chain rule.

In Bitcoin's implementation, a new block is added approximately every 10 minutes. Conflicts in transaction blocks create forks, leading to a tree-like structure of the blockchain. The longest chain within this structure is maintained, while blocks on shorter branches are discarded. This approach, known as the Nakamoto Consensus, was outlined in Satoshi Nakamoto's Bitcoin white paper and has formed the basis of blockchain technology since 2009.