What Is Proof Of Work In Blockchain?
In Proof of Work mechanism, the data on the blockchain can be edited, maintained, added or deleted by a distributed ledger which is self-governing, thanks to decentralisation.
Proof of Work (PoW) Explained
PoW works with the help of validators on the blockchain. In proof of work mechanism, an anonymous person can join the network with any computer and become a validator.
Here, if a transaction is happening on the blockchain then everyone knows that it has happened and until and unless the work is proved, the transaction isn’t deemed complete. In short proof of work requires validators to submit a proof of work.
On the Bitcoin network, one block can contain up to 100 transactions and miners execute proof of work to mine a new block.
On average a new block is added to the Bitcoin blockchain every 10 minutes and whenever a new block is added, the hash function syncs all the nodes to the same blockchain copy.
In simple words, the proof of work mechanism can be considered as a race that has been set up among many people. Whoever wins the race also ends up winning the reward, except here the race is between computers, the better the computing power the more are the chances of a person winning the blockchain reward.
Here, as a reward, the person gets awarded 6.5 Bitcoins for each block solved.
Furthermore, proof of work also saves the blockchain from double spending, which is when a transaction is entered twice resulting in the value of tokens getting reduced which becomes a major threat to the blockchain.
Since proof of work employs people validating transactions, a question can arise:
What if a transaction is wrongly validated on purpose?
Well, the beauty of proof of work consensus mechanism is that it works on a majority, so to wrongly validate a transaction the person will require 51% of the total votes or the computational power on the blockchain. While it may sound less but in practicality, 51% of the votes would require the person to hold billions of validating computers which logically is impossible.
Furthermore, while solving a block, the password/solution to the block can only be guessed and whoever does that the fastest wins. This entire process merely takes seconds thereby leaving the intruder with very less time to make a false call. Hence, due to processes like these, pow mechanism is fair and happens transparently in real time while being efficient.
Disadvantages of Proof Of Work
In reality, as good as proof of work might sound, it brings with it certain disadvantages:
- Inability to scale, and
- High energy consumption.
Moreover, during peak times, the transaction fees can go extremely through the roof with no penalties being imposed on people who commit fraud.
Hence to tackle these issues the Proof of Stake mechanism was created.