Proof-of-work PoW explained graph

Proof of work (PoW) is a piece of information that is complex (time-consuming, expensive) to produce to satisfy particular conditions. Verification of that information however should be as easy as possible. The purpose of PoW (Proof-of-work algorithm) is to check if calculations were indeed conducted during creation of a new block of cryptocurrency.


Proof-of-work blockchain

Solving PoW represents itself as a stochastic process with low probability of success during which happens a large amount of errors. Bitcoin uses the so-called “Hashcash” function as evidence of work carried out.

One possible EZ Flash IV implication of this idea is using Hashcash as a method to prevent e-mail spam by requesting Proof-of-work content for every letter. Common e-mail users will be able to easily solve their Proof-of-work (due to the fact that this doesn’t require a lot of resources), but users who try to send out spam will face the problem of having to submit PoW for millions of their letters.

Principle of work

Proof-of-work explained

Hashcash function is used in Bitcoin to create blocks. A solved Proof-of-work attached to the block‘s content is necessary for network to accept that PoW block. Difficulty of this task is varied to control the frequency of new blocks discovery. System is programmed in such a way that 1 new block is found every 10 minutes on average.

Due to process of finding a new block being quite resource-intensive and random it’s impossible to predict with certainty which Bitcoin-worker (miner) exactly will solve the problem and find a new block. For system to accept the block as genuine its hash value has to be lower than currently set target. That way every block demonstrates that some work has been conducted to find it.

Every block contains hash of the previous block thus forming a chain. Changing a block is impossible, it’s only feasible to create a new block at the same height that will contain hash value of the previous block within itself. Execution of such a process requires doing the work of finding all the previous blocks. High difficulty of that task is what’s protecting the block chain from unsanctioned access and double-spending attacks.

The advantages of PoW

Its main advantages — protection from Ddos-attacks and the influence of low fractions of cryptocurrencies owned by the miner in extracting capacity.

Proof-of-work imposes certain restrictions on the actions of the participants, because the task requires considerable effort. Effective attack also requires a high computing capacity and a long calculation, so it is possible, but disadvantageous against the background of high costs.

No matter how much money you have in your wallet — it is important to have greater computing capabilities to solve problems and form new blocks, which means that holders of large capital can not make decisions for the entire network.


The main problems: huge costs, “useless” calculations and “attack 51%”.

For complex calculations require specialized and expensive computer hardware. Expenses grow unmanageable, and mining becomes possible only for large groups of miners. In addition, specialized computers consume a lot of energy, which increases costs. The consequence of this is a gradual increase in the centralization of the system, as it is beneficial. And this is what happens in the case of bitcoin.

Miners perform work on the creation of blocks, simultaneously consuming a huge amount of energy, the calculations that they do, are completely useless in themselves. Yes, they guarantee online safety, but their results cannot be used in business or science.

See Also on BitcoinWiki