Proof of Work System in BlockChain | Technology Help Station

Simplifying Proof of Work systems in Blockchain

Have you ever wondered why blockchain technologies are creating such a buzz nowadays?

Until recently, we have always entrusted central authorities such as banks, governments, and private corporations with maintaining and managing our transactions. However, with the inception of newer technologies, we are compelled to ask ourselves whether this centralized approach of managing information can be replaced with something more fast, secure, and accessible.

As the name suggests, blockchain technologies use a sequence, or chain, of blocks to update transactions in a distributed and decentralized manner.

The sequence of the chain

The first block of the chain is called the genesis block. Each block contains information about transactions, and as more transactions occur, subsequent blocks are added to the chain to form an open ledger. Instead of a central authority, a large number of smaller entities, called miners, collectively update and manage the open ledger.

Each block also contains a hash value of the previous block of information. The hash value is like a fingerprint of the previous block, and it safeguards the sequence of the chain. Moreover, the hash value is also used to authenticate the information in the previous block.

Addition of blocks to the chain

A Proof-of-Work (PoW) system is used to select which miner adds the next block to the chain, and ensures that the selection of miners that update the chain is random and unbiased.

Miners compete with each other to solve a complex and computation-intensive mathematical problem, as follows:

Step 1: Generating the proof of work	The system provides a computation-intensive problem to the community of miners. Miners compete with each other to solve the mathematical problem by testing randomly generated solutions.
Step 2: Communicating the solution and transaction information with other miners	The first miner to arrive at the solution shares the solution with other miners, along with information about newly occurred transactions.
Step 3: Validation and verification by majority of miners	The solution is verified by more than half of the total number of miners. The transaction information is validated by more than half of the total number of miners.
Step 4: Updating the blockchain	The winning miner adds the new block containing the occurred transaction information to the existing chain of blocks. The winning miner receives a monetary incentive.