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So, what's Proof of Work?

Updated: Aug 15, 2021

Proof of Work (PoW) is of the consensus mechanisms we named in an earliest post.

PoW is the underlying algorithm that sets the level of difficulty and rules for the work of the miners. Mining is the “work” itself: adding valid blocks to the chain. In other words, PoW are the rules that miners need to follow to generate coins.

There are different implementations of PoW, depending on the blockchain we’re looking at. These implementations have subtle differences. For the purpose of this post, we focus on the Ethereum blockchain. You can check its documentation here.

As we have said, PoW are a series of rules. For example, in order to maintain the Ethereum blockchain validity, all the miners (nodes) must agree on the state of all the information recorded on the blockchain. Therefore, every time a new coin gets generated, each block needs to be validated by at least half of the existing miners. Another example of these rules is that PoW prevent users from “double spending”, by avoiding duplication of coins.

Now let's go to the details: How PoW works inside Ethereum Blockchain?

The Ethereum PoW protocol is called Etash. Following PoW, miners invest a vast majority of their resources into find the Nonce -the unique ID- for a new block, through trial and error. Only blocks with a valid Nonce can be added to the blockchain.

The trial and error consists in download the full Ethereum blockchain, and put all of it through a mathematical function. This process is repeated many times and generates the 3 elements of the block: a Hash that is a product of the unique Nonce, both related by the block Difficulty.

The problem

The Difficulty to mine new coins is proportional to the number of miners and blocks generated. Therefore, is becoming increasingly difficult to mine new coins. Because of the above, mining is requiring more and more energy consumptions, which is bad for the environment.

Possible solution?

Proof of Stake. This mechanism (which we’ll touch on an upcoming post) solves many of the problematics related to PoW but adds another: the need of a substantial amount of ETH to participate.

Don’t miss out the next post with some questions answered about PoW, also, the good/bad/ugly about this consensus mechanism.

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