It means proof of work, it is used to solve the blocks that are generated on the blockchain.
It is part of several Systems of the various cryptocurrencies that we know today, and is the first to have been introduced with Bitcoin.
The features of this system are that:
- No one has control over the information
- The network continues to function and move forward
- Everyone can participate
- It is Decentralized
- It has a high operating cost
How the POW consent system works
This system, precisely from the word itself TEST OF WORK, is decided by the amount of work to solve a block.
That is, for example, the block of the Bitcoin network is solved by those who have more computing power used at that time.
Obviously more power means more electricity consumption, in fact solving a Bitcoin block consumes almost as much as a small nation at current levels.
With this system the blocks where the production of new crypts is decided and the transactions occurred at that time are validated.
This task awaits MINERS who are companies, communities or individuals, who, with special computers, solve these complex mathematical calculations.
Looking at this graph we can see how the computing power on bitcoins has increased enormously.
In recent years it has been necessary to resort to miningpools where the individual calculation powers of each are added to form a large micturition plant so as to have more probability
The algorithms of the POW consent system
In addition to the true and proper system, there are the individual algorithms for each cryptocurrency that has the POW as a consent system.
In other words, these cryptocurrencies use these algorithms to solve the mathematical calculations proposed by the block.
- SHA256 that of Bitcoin
- Ethash that of Ethereum
- Cryptonight that of Monero
Each of these algorithms has characteristics such as that of Monero is resistant to Asics, or the resolution of the block is calculated differently, etc.
Problems related to the POW consensus system
Unfortunately there are also problems related to this system, due to the increase in the network.
This means that if you have these increases, there is also the growth of the miners who, driven by requests for block validation, increase.
More miners leads to more difficulties on the network, it is more difficult leads to more energy required to solve the blockade.
In addition to this there is the fact that only one block at a time is solved by a single miningpool and all the others who participated remain empty-handed.
This leads to a waste of time and electricity costs.
This is why the system has been improved with the next generation of cripovalutes.
In this graph we can see how the difficulty has increased.
Another problem is that of double spending, that is, of spending the same cryptocurrency twice.
This is facilitated by the Fork that happen on the crypto like that of Bitcoin Cash, as they create two similar chains from the mother and you have the possibility of undermining with little computing power.
To accomplish this situation you must have 51% of the network power on that crypt.
This leads to the famous 51% attack, which if implemented has the possibility of double-spending.
Obviously on Bitcoin the thing is impossible because it would take a lot of power that the game will not be worth candle.
This makes Bitcoin more secure than Bitcoin Cash because being a fork makes this situation easier.
There may also be other factors when double-spending occurs, that is to say the centralization of mining power in the hands of a few that are unlikely on bitcoin.
This system is the pioneer of cryptocurrencies, but it has also become a problem related to consumption, which would make these crypts unusable.
In fact, for example, Bitcoin is trying to create validation nodes without doing Mining using wallets as nodes.
But this takes time to develop and a lot is being done to improve this situation.