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...

The history of the emergence of the PoW algorithm

The history of the emergence of the PoW algorithm

PoW is one of the oldest algorithms that was used in the creation of the very first Bitcoin cryptocurrency. The first description of the protocol appeared in 1993. As planned by the authors, he had to fight spam. And the algorithm performed this function. In 1997, Adam Back successfully launched the Hashcash project, which was based on the concept of PoW. Senders of letters, using the power of a PC, had to carry out billions of calculations that confirmed the truth of the subject of the letter. This solution blocked spam. From the technical side, it looks like hashing a selected range of data, for example, lines from a letter.

2 years after the launch of Hashcash, the term Proof-of-Work first appeared. During this period, the algorithm, like a mathematical captcha, solved several simple tasks that protected the system from spam and DDoS attacks. To perform operations, significant resources were not required, so the system worked smoothly.

In 2000, the developers decided to update the mechanism by introducing auxiliary functions into it. This required an increase in memory capacity and a revision of hardware requirements. The requirements of high processor speed have been replaced by large amounts of RAM. It was during this period that Bitcoin miners switched to powerful video cards.

The development of cryptocurrencies and the improvement of equipment have increased the load on the system and complicated the execution of tasks. The PoW algorithm literally began to "devour" electricity, which led to a decrease in rewards. Mining of popular cryptocurrencies became unprofitable. In 2012, the performance of the Bitcoin blockchain exceeded the energy consumption of the world's most powerful computer. After the advent of the PoS algorithm, Proof-of-Work began to fade into the background or be used in tandem. Today, the work done algorithm is used in projects that continue to issue tokens.