What Is Proof of Work?

Last updated on 12/04/2018

Proof of work (PoW) is the consensus algorithm used in the Bitcoin network, as well as many other blockchain networks.

In essence, it is the system that provides double-spend protection for the Bitcoin network, making it energy- and time-prohibitive for anyone to manipulate transactions that have been recorded on the Bitcoin blockchain.

How Does Proof of Work Function in Bitcoin?

The Bitcoin network relies on a process called mining to ensure the prevention of conflicting transactions in which the same bitcoin is spent twice, and to release new bitcoins into the ecosystem. The mining process is complicated, but it can be thought of as one in which miners “guess” what the next block in the blockchain will look like via a mathematical process.

If they guess correctly, their block is accepted by the network. Each of these “guesses” requires some computational work — a bit of computing, or hash, power — to make. In order to get the right guess first and receive a bitcoin reward, miners can spend a lot of computing energy.

Miners are completing a PoW for each block in the blockchain. If any individual actors wanted to alter the data in the blockchain, they would have to regenerate every single block on the chain, even those that precede the block they wish to change, and redo all of the work that they contain. This is nearly impossible, as it would require an incredible amount of energy that gets greater every moment Bitcoin exists.

Importantly, though the PoW system is expensive for miners, it makes verifying transactions easy for the system.

Who Invented Proof of Work?

The concept of PoW as a prohibitive that keeps double spending out of economic systems is nothing new. The concept as it applies to computer-based systems was first introduced by Cynthia Dwork and Moni Naor in a 1993 research paper titled “Pricing via Processing or Combatting Junk Mail,” which outlined their concept for a “user to compute a moderately hard, but not intractable, function in order to gain access to the resource, thus preventing frivolous use” of junk emails.

The term “proof of work” was introduced in a 1999 research paper from Markus Jakobsson and Ari Juels, who outlined a concept where “a prover demonstrates to a verifier that she has performed a certain amount of computational work in a specific interval of time.”

The Bitcoin network uses a form of the outdated Hashcash PoW system, which was first proposed in 1997 by the British cryptographer Adam Back.