In the previous part, we dive into the core process of Proof of Work (PoW) consensus mechanism. In this post, we continue with the rest of the process and discuss its advantages and disadvantages.

Let’s begin.

As we know from the previous part, the probability for hash function creating many consecutive 0's in the beginning is very low. So the miners have to try so many times the get the match with the target value. Right? So you may have the question why we have to find the match or why the level of difficulty to find the match increases?

To answer this question, let’s answer another question first. So what if the level of difficulty does not increase? What happens then? Then the relationship between hashing power and block rewards is a linear relationship. It means that the more hashing power, the more block rewards. It leads to the increasing participation of miners in the network and the increasing in hashing power, which will result in increasing in corresponding block rewards.

When we have so much easy-to-get coins circulating in the network, this will destroy the value of that coin. It will be inflated. Wait, oops, this sounds familiar. There is something which is also easy to print, and get inflated every day.

Therefore, the increasing level of difficulty of mathematical puzzle is an important tool to control the inflation.

Because of complexity of solving mathematical puzzle, the possibility of two miners or more miners complete the block validation at the same time is rare. However, even if they do, which blocks will be chosen to be part of a blockchain? For example, miners created three block 10A, 10B, 10C at the same time. How does the Proof of Work mechanism decide?

The decision of choosing which blocks depends on the rule of "the longest chain rule". The problem will be solved when the next block 11th added to the block. If this 11th block will add to block 10A, then rule "longest chain" applies. The chain with block 10A and 11 will be longer than with block 10B or 10C. Therefore, it will be chosen forward.

The mining process can be carried out by individual (individual miner) or by group (mining group).

If one person want to participate mining, he/she can register her/himself as as miner and follow the same process of validating the transactions and mining the block.

On the other hand, miming pool is a group of miners. They combines the computational power to increase the chance of solving the mathematical puzzle and, therefore, compete effectively than individual miner. If the pool wins the rewards, then it will distributed based on the mining power of each miner contributing to the pool. This will increase the chance of wining rewards of small miners.

Because of the process of solving the hash function, Proof of Work is considered as the high secure and reliable consensus mechanism. However, because of the increasing level of difficulty overtime, it requires also the increasing computational power which leads to high cost for mining and less electric efficiency. Furthermore, the speed to verify transaction will be low which are not suitable for the blockchain that needs to broadcast many transactions per second. The high reliability and security of PoW consensus mechanism is perfect for blockchain which are designed for store-value coin such as Bitcoin.

Next week, we will continue with another consensus mechanism. It is known as a technique can improve the disadvantages of PoW like slow speed and less electric efficiency.

Happy weekend and see you next week for more interesting topics! And as always, thank you for interest into math, technology and science.

Charlotte.