Crypto currency

The Importance of Proof of Work for Bitcoin

Bitcoin is powered by blockchain technology. The technology was created to provide a robust and safe decentralized database where the BTC transactions will be processed and recorded without the control of other parties. Today Bitcoin is considered a safe alternative to traditional currencies, and it is also known for its incredible money-making potential.

That being said, the main reason why Bitcoin has achieved its position as the largest cryptocurrency in the crypto market is the development of blockchain technology. One component of blockchain technology that is particularly important for its successes the proof of work consensus mechanism.

Bitcoin Mining

Proof of work is tied to Bitcoin mining, which is an essential process in the blockchain network. The mining process is facilitated by the miners on the network, which work on computer systems that are well-equipped to process BTC transactions. The main result of the mining process are new Bitcoin tokens that enter the crypto market along with validated BTC transactions.

One of the crucial aspects of the mining process which solves the double-spending problem and also the centralization of financial institutions is the fact that in order for the mining process to work and for the BTC transactions to be verified on the network, the miners need to solve a computational puzzle. Each computational puzzle is associated with a different solution, and the first miner who solves the puzzle successfully earns a block reward.

This leads us to proof work. This system was created in order to identify malicious uses of computing power. One example where it’s used is in the detection of spam emails. In Bitcoin mining, proof of work is a consensus mechanism that simultaneously motivates the miners to work on the network (they get transaction fees and block rewards in exchange for their input), and it prevents anybody from tampering with the system.

When it comes to the block reward of the miners, there is a blockchain protocol that cuts in half the worth of the book reward after 210,000 blocks are included in the network. To this date, there were three halvings, and as a result, the block reward is 6.25 BTC in 2021.

BTC Investments

So, with that being said the Bitcoin mining is a time-consuming process that also requires effort from individual miners that want to gain the block reward. As a response, there are a lot of online trading sites where obtaining BTC is a simple process that doesn’t take a lot of time.

Moreover, you can find great automated trading sites, which further makes it easier for any crypto newbie to make an investment in BTC. For example, this trading site https://bitcoin-profit.org/ is based on AI technology, and you can earn up to $800 on a daily basis.

The system, more specifically, uses Natural Language Processing and Deep Learning in order to adapt to changing data and yield great results for the users. An initial deposit of $250 is required for new users.

Why Proof of Work is Important

The proof of work as a consensus mechanism requires computing power and substantial effort from the miners of the network to solve the ‘hash’ puzzle. Actually, the difficulty of the mining process increases when the total traffic (computing power) increases in the network. Because Bitcoin is a popular currency, the computing power is on the rise in the network. This also increases the transaction fees in the network, which further motivates the miners to work in the network.

Otherwise, each block of the transaction includes 2,012 BTC transactions along with the header of the previous block. If someone tries to alter the data of the block, the hash would be unrecognizable to the system, and instantly the error would be detected. This is why the blockchain network is considered tamper-proof, and it is impossible for any entity to take control of it.

Back to top button