Is Proof of Work Still Working?

Every blockchain relies on a consensus mechanism which defines the rules of the blockchain. These rules state how transactions are processed and validated on the blockchain as well as how the peers on the blockchain network interact with each other. The most popular consensus mechanisms used in blockchains are Proof of Work, Proof of Stake, and Delegated Proof of Stake. Each one of these consensus mechanisms sets different transaction processing and peer interaction rules for the blockchains that implement them. In this article, we will take a look at some of the pros and cons of the first consensus mechanism used in a blockchain: Proof of Work.

What is Proof of Work

As mentioned, Proof of Work is the first consensus mechanism used in blockchain technology when Bitcoin made its debut in 2009. It is a complex computational puzzle that all peers on the network compete in to see who can create the next block of transactions first. Once created, this block is appended to the blockchain and the race to solve the puzzle restarts.

There is a difficulty metric that is included in this blockchain computational puzzle. The reason for this is to ensure that the average block formation time does not fluctuate due to varying computing power in the network. For example, if more computers join the network and take part in solving the consensus puzzle then the increased computing power will result in the puzzle being solved quicker. So, to maintain Bitcoin’s average block formation time of 10 minutes the difficulty is increased according to the amount of computing power that has entered the market. Likewise, if computers leave the network then the difficulty is decreased to make it easier to form the next block.

The Proof of Work consensus model is the pioneer of blockchain consensus models and paved the way forward for the next iterations of protocols that built on the pros and addressed the cons of Proof of Work. Let’s take a look at the pros and cons of Proof of Work.

Cons of Proof of Work

Slow transaction speeds

Transaction speeds on Proof of Work blockchains are slow due to the fact that every peer in the network needs to participate in the processing and validation of each transaction. This is because once a block is formed by a peer, the peer then needs to broadcast their proposed block to every other peer. If all of the peers agree that a proposed block is the correct block, then the block is appended to the blockchain. This, combined with the restricted transaction block size of blockchains, results in lowered Proof of Work blockchain throughputs and lower transaction speeds.

Computationally expensive

The complexity and difficulty of solving the blockchain puzzle requires a lot of computational power. Peers on some Proof of Work blockchains, like Bitcoin, can no longer participate in the transaction process and earn rewards with just their laptop. To earn on these blockchains peers need to join mining pools which take all of the computing power from all of the members in the mining pool and pool their computing power together.

Increases in transaction processing difficulty also impacts the computational power needed to process transactions and form blocks on a Proof of Work blockchain.

High energy consumption

The amount of computing power needed to process transactions on a Proof of Work blockchain puts stress on the global energy supply. The current demand for energy that major Proof of Work blockchains have is leaving the global energy supply strained. Due to this, Proof of Work blockchains also can’t scale without significantly harming the environment because of the increased energy demand that comes with the scaling.

Risk of centralization

Although a Proof of Work blockchain aims to be decentralized, if someone were to own 51% of the computers on the network they would theoretically be able to control the network. For major Proof of Work blockchains like Bitcoin it would be financially infeasible to purchase the number of computers needed to own 51% of the network’s computing power since the cost would be larger than the financial reward that comes from gaining control of the network. However the decentralization of smaller Proof of Work blockchains is at risk since fewer computers would be needed to gain control.

Pros of Proof of Work

Pioneering consensus protocol

Proof of Work is the pioneer in blockchain consensus protocols and proved that a truly decentralized network, without the need for an intermediary to process transactions between peers, is possible. This paved the way forward for future iterations of blockchain consensus protocols that used Proof of Work as a blueprint.

Difficult to hack

Proof of Work blockchains are very secure and difficult to hack. As mentioned, the only threat that exists with Proof of Work blockchains is someone coming to own 51% of the network’s computing power and therefore gaining control of the network. However, if the network is large enough then it is not only financially infeasible for someone to gain control of the network but also extremely difficult, if not impossible, for someone to hack the network. This is due to the fact that there is no central point in the network for a hacker to attack. Each peer on the network keeps a copy of the blockchain and ensures that every other peer does not act maliciously in an attempt to manipulate the network. This guarantees the safety of data stored on a Proof of Work blockchain.

To Recap

Every blockchain relies on its consensus protocol to stipulate the rules for transaction processing and peer interaction in the network. The first consensus protocol to be implemented in a blockchain is the Proof of Work consensus protocol. Like all pioneering technology, Proof of Work has limitations and disadvantages that need to be addressed. For this reason Proof of Work is now used as a blueprint for all of the new consensus protocols making their way to the blockchain market as they build off of the advantages of Proof of Work and address its limitations.

CORE combines the advantages that are native to each consensus protocol and has created a first-of-its-kind Proof of Stake-based artificial intelligence consensus protocol. This allows CORE to achieve higher network efficiencies and throughputs while also reducing the environmental impact of blockchains. CORE’s hybrid consensus protocol also enhances user privacy and data security by implementing transaction mixers and sophisticated encryption.

Website: https://www.coremultichain.com/

Contact Details:

LBK Blockchain Co. Limited

LBank Exchange

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