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Proof of work (POW) -
Proof of work (PoW) describes a system that requires a not-insignificant but feasible
amount of effort in order to deter frivolous or malicious uses of computing power, such
as sending spam emails or launching denial of service attacks. The concept was
subsequently adapted to securing digital money by Hal Finney in 2004 through the
idea of "reusable proof of work" using the SHA-256 hashing algorithm.
Following its introduction in 2009, Bitcoin became the first widely adopted application
of Finney's PoW idea (Finney was also the recipient of the first bitcoin transaction).
Proof of work forms the basis of many other cryptocurrencies as well, allowing for
secure, decentralized consensus.
Proof of work (PoW) is a decentralized consensus mechanism that requires
members of a network to expend effort solving an arbitrary mathematical puzzle to
prevent anybody from gaming the system.
Proof of work is used widely in cryptocurrency mining, for validating transactions and
mining new tokens.
Due to proof of work, Bitcoin and other cryptocurrency transactions can be processed
peer-to-peer in a secure manner without the need for a trusted third party.
Proof of work at scale requires huge amounts of energy, which only increases as
more miners join the network.
Proof of Stake (POS) was one of several novel consensus mechanisms created as
an alternative to proof of work.
This explanation will focus on proof of work as it functions in the bitcoin network.
Bitcoin is a digital currency that is underpinned by a kind of distributed ledgar known as
a "blockchain." This ledger contains a record of all bitcoin transactions, arranged in
sequential "blocks," so that no user is allowed to spend any of their holdings twice. In
order to prevent tampering, the ledger is public, or "distributed"; an altered version
would quickly be rejected by other users.
The way that users detect tampering in practice is through hashes, long strings of
numbers that serve as proof of work. Put a given set of data through a hash function
(bitcoin uses SHA-256), and it will only ever generate one hash. Due to the "avalanche
effect," however, even a tiny change to any portion of the original data will result in a
totally unrecognizable hash. Whatever the size of the original data set, the hash
generated by a given function will be the same length. The hash is a one-way function:
it cannot be used to obtain the original data, only to check that the data that generated
the hash matches the original data.
Proof of work coins:
1. Bitcoin (BTC):
Bitcoin is a consensus network that enables a new payment system and completely
digital money. It is the first decentralized peer-to-peer payment network that is powered
by its users with no central authority or middlemen. From a user perspective, Bitcoin is
pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent
triple entry bookkeeping system in existence. The creator, Satoshi Nakamoto, wrote
the original white paper in November 2008 and the Bitcoin network came into
existence in January of 2009.
2. Ethereum (ETH):
Ethereum is a global, open-source platform for decentralized applications. On
Ethereum, you can write code that controls digital value, runs exactly as programmed,
and is accessible anywhere in the world. Vitalik Buterin is the creator of Ethereum.
3. Dogecoin (DOGE):
Dogecoin is an open source peer-to-peer digital currency, favored by Shiba Inus
worldwide.
4. Litecoin (LTC):
Litecoin is a peer-to-peer Internet currency that enables instant, near-zero cost
payments to anyone in the world. Charlie Lee is the creator of Litecoin.
5. Bitcoin Cash (BCH):
Bitcoin Cash (BCH) is a cryptocurrency created via a fork of the Bitcoin network. This
means that any user who held Bitcoin at the time of the fork (August 1st, 2017), now
has an equivalent amount of Bitcoin Cash on the forked Bitcoin Cash blockchain. Early
Bitcoin adopter Roger Ver is a strong advocate of Bitcoin Cash.
6. Ethereum Classic (ETC):
A continuation of the original Ethereum blockchain – the classic version preserving
untampered history prior to the July 2016 DAO hack.
7. Monero (XMR):
Monero is an open-source cryptocurrency that focuses on privacy, decentralization,
and scalability.
8. Bitcoin SV (BSV):
Bitcoin SV is a full-node implementation for Bitcoin Cash (BCH). Reflecting its mission
to fulfill the vision of Bitcoin, the project name represents the “Satoshi Vision” or SV.
Craig Wright is behind the creation of Bitcoin SV.
9. Dash:
Dash is a digital currency that enables anyone, anywhere in the world to make quick,
easy and cheap payments at any time without going through a central authority. Based
on a decentralized peer-to-peer network, and secured by strong cryptography, Dash
offers a safe and user-friendly payment method without barriers. Dash is portable,
inexpensive, divisible and fast digital cash for both the internet and everyday life.
10. Decred (DCR):
Decred is an open and progressive cryptocurrency with a system of community-based
governance integrated into its blockchain.
