Proof-of-Work and Proof-of-Stake: what is it in simple terms?

 Proof-of-Work and Proof-of-Stake: what is it in simple terms? The key feature of this mathematical problem is asymmetry: it should be moderately difficult for the miner, but easy enough for the network as a whole. This is achieved through cryptography. Every miner in the network tries to solve the problem first; at the same time, it can actually be found only by direct enumeration, so many attempts are required for a successful solution. An example, perhaps a little fantastic, but illustrative. Imagine being handed a keyboard with several million numbered keys. You are looking for exactly the key that you need to complete the task correctly, but you do not know its number, so you sort through everything. There is a crowd around you, also looking for the right key. Suddenly you found the right key, tell everyone “guys, I found the key, its number is 22 875”. Everyone around starts checking key number 22875, and oh yes, it is. The one who finds the key first wins a prize. Each is th...

Relationship between algorithm and cryptocurrency space

 Relationship between algorithm and cryptocurrency space


In the very first virtual currency, PoW is needed to achieve consensus in the network. Since at any given time for each user there can be several versions of the blockchain at once, the algorithm determines which one is reliable. To implement his idea, Nakamoto took advantage of the developments of the Hashcash project mentioned above, slightly modifying the finished function (adding a mechanism for changing its complexity, which depends on the total computing power of all network nodes). The finished function is called SHA-256.



The PoW algorithm is necessary for checking by network nodes that the miner has performed calculations. The latter performs calculations of complex algorithms, as a result of which a new generated block (“cell”) is added to the block chain, storing a certain number of records of completed transactions. The proof-of-work mechanism attempts to find the hash of the node header, which contains a reference to the previous "cell" and the total value of all operations placed in the newly generated node. Hash exponents correspond to the set degree.