# What is the Proof -off algorithm (POW)?

The Proof-OF-WORK concept is an algorithm for protecting https://gagarin.news/news/what-is-the-difference-between-a-token-and-a-cryptocurrency/ distributed systems from abuse (DOS attacks, spam mailings and the like), the essence of which is reduced to two main points:

- the need to perform a certain rather complex and long -term task;
- Opportunities quickly and easy to check the result.

Pow-hazards are initially not intended for humans, their computer solution is always achievable in the final time, but requires large computing power. At the same time, checking the obtained decision requires much less resources and time.

## Who and when came up with the term Proof-OF-WORK

For the first time, the Proof-OF-Work concept was described in 1993 in the work “Pricing Via Processing, Or, Combating Junk Mail, Advances in Cryptology”. Although the term itself has not yet been used in the article, the authors proposed the following idea:

“In order to gain access to a common resource, the user must calculate some function: quite complex, but feasible; So you can protect the resource from abuse “.

In 1997, Cryptographer and future founder of Blockstream Adam Back launched the Hashcash project dedicated to protection from spam. The task was formulated as follows: “Find such a value X that the hash Sha (x) contained n older zero bits”.

The system offered a hashishment of partial inversion when sending by e -mail. To calculate the appropriate heading, about 2 52 hash compensation is required, which must be recalculated for each sending. And if for several ordinary letters they do not create additional calculations of obstacles, then the need for a permanent recalculation makes a massive newsletter to be very resource -intensive. In this case, checking the correctness of the calculated code is carried out very quickly: a single calculation of the Sha-1 with a pre-prepared mark is used.

The Proof-OF-Work term itself appeared in 1999 in the article “Proofs of Work and Bread Pudding Protocols” (authors-Marcus Jacobsson and Ari Juels) in the journal Communications and Multimedia Security.

## How Proof-OF-Work is used in cryptocurrencies

Satoshi Nakamoto used the Pow concept in the first cryptocurrency – bitcoin. He took the idea of Hashcash, adding a mechanism of changing complexity to it – a decrease or increase in n (required number of zeros), depending on the total power of the network participants. The calculated function was the SHA-256.

Blockchain is a network of distributed nodes (GCDs), each of which carries its own copy of the registry. The consensus algorithm provides the ability of each node to check that the miner (in the role of which is another node adding a new block to the blockchain) actually performed the necessary calculations.

This process includes an attempt to find a hash of the block headline (part of the blockchain, which contains a link to the previous block and the summarized transaction value in it), which will correspond to the current level of complexity in its value.

Simply put, Pow is a procedure that allows all Nodam to agree on a single version of the blockchain, as well as confirm data on new transactions in the new block. In addition, she is responsible for the issue of new coins in the blockchain. Mining – part of the Pow algorithm.

## The main achievements of the Pow algorithm

Before Bitcoin, attempts have been repeatedly accepted to create a decentralized system that would allow transfers and verify them without the need to have a central operator.

However, no project could solve the problem of double spending – the opportunity for the sender of the transfer to spend the same funds twice before the system confirms them.

This problem was solved only in Bitcoin-using the blockchain technology and the consensus algorithm Proof-off -work (Pow), which stimulates miners to verify each transaction before adding to the registry. Moreover, this economic incentive also allows the maintenance of the entire blockchain.

## What is affected by the complexity of calculating the new block

In the Bitcoin network, the complexity of calculations to add a new block is a dynamic parameter. It is installed at such a level that the speed of block generation remains at about the same level, no matter how powerful the equipment used for mining is.

At the same time, checking the results of the calculations remains simple. Nodes can always make sure that the miner has found the correct value, but since the process of finding the block is costly and random, it is impossible to predict with accuracy which miner will solve the problem and get the following block.

In order for the system to recognize the unit correct, it is necessary that the value of its hash be less compared to the current purpose. Thus, each block shows that a certain work was done to find it.

The new block contains the hash of the previous block, forming a chain. It is impossible to change the block, you can only create a block at the same height that will contain the hash of the previous block. To do this, you need to do work on finding all previous blocks. The high complexity of this process protects the blockchain from unauthorized access and double expenses.

## Proof-off -work and mining

Proof-OF -work, in fact, gave rise to the Bitcoin mining industry and became an impetus to the development of specialized equipment-ASIC, since the computing resources spent on the hash of the blocks are huge and much exceed the capacities of the largest supercomputers.

At the same time, it was not without the notorious “reverse side of the coin”: quite quickly the Pow turned into a monster devouring electricity in the race for profitability.

The power of mining equipment is constantly growing, the number of participants in this industry is increasing and increasing. As a result, the total energy consumption increases. However, the energy efficiency of miners is also increased, and the share of bitcoin in global electricity consumption and in 2022 remains low.

## The main POW criticism

According to CoinmarketCap at the end of August 2022, crypto projects with the highest market capitalization operating on the Proof-OF-WORK mechanism were: