Once again this year, we would like to brighten up the Advent period for our readers with an Advent calendar. In a slightly different form, each door contains a “knowledge bomb”, which will be complemented with an extraordinary special prize on Christmas Day.
The term Proof-of-Work (PoW) is hidden behind the second door. To participate in the prize draw on the 24th, simply take part in the surveys and like the respective Twitter posts.
Proof of Work (PoW)
The unknown pseudonym Satoshi Nakamoto published a famous white paper in 2008 describing a digital currency (Bitcoin) based on proof-of-work protocols. The network was supposed to enable secure peer-to-peer transactions without the involvement of a central authority.
So far, digital currencies have had the so-called “double spend” problem. For an effective currency, a mechanism had to be created to prevent users from spending the same unit in multiple places before the system recorded the transaction.
Nakamoto’s consensus mechanism solved the problem by incentivizing miners. They should verify the integrity of new crypto transactions before adding them to the distributed ledger, the blockchain. This proof of work helps prevent double spending.
Proof-of-Work systems have drawn a lot of criticism in recent years, mostly related to their massive energy requirements. The European Parliament’s Economic Policy Commission (ECON) did vote against a proposed PoW ban back in June. Nevertheless, cryptocurrencies will likely be included in the EU taxonomy. The situation is similar in the United States. The necessary energy consumption of proof-of-work systems are calling climate change activists around the world.
