Proof of work

Proof of work (PoW) is a form of cryptographic proof in which one party (the prover) proves to others (the verifiers) that a certain amount of a specific computational effort has been expended.[1] Verifiers can subsequently confirm this expenditure with minimal effort on their part. The concept was first implemented in Hashcash by Moni Naor and Cynthia Dwork in 1993 as a way to deter denial-of-service attacks and other service abuses such as spam on a network by requiring some work from a service requester, usually meaning processing time by a computer. The term "proof of work" was first coined and formalized in a 1999 paper by Markus Jakobsson and Ari Juels.[2][3] The concept was adapted to digital tokens by Hal Finney in 2004 through the idea of "reusable proof of work" using the 160-bit secure hash algorithm 1 (SHA-1).[4][5]

Proof of work was later popularized by bitcoin as a foundation for consensus in a permissionless decentralized network, in which miners compete to append blocks and mine new currency, each miner experiencing a success probability proportional to the computational effort expended. PoW and PoS (proof of stake) remain the two best known Sybil deterrence mechanisms. In the context of cryptocurrencies they are the most common mechanisms.[6]

A key feature of proof-of-work schemes is their asymmetry: the work – the computation – must be moderately hard (yet feasible) on the prover or requester side but easy to check for the verifier or service provider. This idea is also known as a CPU cost function, client puzzle, computational puzzle, or CPU pricing function. Another common feature is built-in incentive-structures that reward allocating computational capacity to the network with value in the form of cryptocurrency.[7][8]

The purpose of proof-of-work algorithms is not proving that certain work was carried out or that a computational puzzle was "solved", but deterring manipulation of data by establishing large energy and hardware-control requirements to be able to do so.[7] Proof-of-work systems have been criticized by environmentalists for their energy consumption.[9]

  1. ^ Lachtar, Nada; Elkhail, Abdulrahman Abu; Bacha, Anys; Malik, Hafiz (2020-07-01). "A Cross-Stack Approach Towards Defending Against Cryptojacking". IEEE Computer Architecture Letters. 19 (2): 126–129. doi:10.1109/LCA.2020.3017457. ISSN 1556-6056. S2CID 222070383.
  2. ^ Cite error: The named reference JaJue1999 was invoked but never defined (see the help page).
  3. ^ Cite error: The named reference DwoNao1992 was invoked but never defined (see the help page).
  4. ^ "RPOW - Reusable Proofs of Work". nakamotoinstitute.org. Archived from the original on 2023-06-19. Retrieved 2024-01-17.
  5. ^ "What Is Proof of Work (PoW) in Blockchain?". Investopedia. Archived from the original on 2024-01-17. Retrieved 2024-01-17.
  6. ^ "Cryptocurrencies and blockchain" (PDF). European Parliament. July 2018. Archived (PDF) from the original on 27 June 2023. Retrieved 29 October 2020. the two best-known – and in the context of cryptocurrencies also most commonly used
  7. ^ a b "Proof of Work Explained in Simple Terms - The Chain Bulletin". chainbulletin.com. Archived from the original on 2023-04-01. Retrieved 2023-04-01.
  8. ^ "The Only Crypto Story You Need, by Matt Levine". Bloomberg.com. Archived from the original on 2023-04-07. Retrieved 2023-04-01.
  9. ^ Kharif, Olga (November 30, 2021). "Analysis | Bye-Bye, Miners! How Ethereum's Big Change Will Work". The Washington Post. Bloomberg News. Archived from the original on 2 December 2021. Retrieved 13 January 2022.