Benefits of the PoW Algorithm
The essence of the PoW algorithm is that transaction confirmation is possible only with the consent of all participants. The algorithm constantly checks transactions between network users, thus protecting the system from various errors that can lead to the funds not being credited to the recipient's account, or not being received in full.
The implementation of Proof-of-Work allows you to authenticate each participant who works in the blockchain network. The need for the algorithm is due to numerous attacks on cryptocurrencies and personal data of users. The system needed a "filter" of false chains, which weeds out unscrupulous miners while protecting honest ones.
In technical terms, the Proof-of-Work consensus algorithm consists of a chain of computational tasks that block unconfirmed chains of unregistered participants. This mechanism provides the PoW algorithm with 5 main advantages:
Prevention of the “51% attack”, also called the “majority attack”. Its essence lies in the fact that a group of users takes control of the vast majority of computing power. This leads to network manipulation. The creation of new blocks is monopolized. The PoW algorithm requires the solution of large tasks from each participant. Let's say I'm sending funds over the blockchain to a user who is the victim of a 51% attack. The transaction is sent to the block, but the scammers do not allow the funds to be credited to the recipient's account. In this case, a fork is created within the network. Further, miners join one of the branches, if the main part of the capacities is concentrated in their hands, more blocks are formed in their chain. The blockchain recognizes a branch that has a long duration. A branch that is shorter is "discarded". So there is no operation between me and the user. It follows from this that a "51% attack" is theoretically possible, but it requires a huge investment in power. As soon as the attack occurs, the network will begin to outflow customers, and the value of the cryptocurrency will instantly fall. The costs of mining attackers simply will not pay off, which will only lead to a loss of time and money.
Prevention of theft of individual blocks. Attackers cannot steal multiple chains at the same time, since the confirmation of each transaction requires solving new mathematical problems. This is another factor that protects the network from a “51% attack”.
Reward transparency. The Proof-of-Work algorithm automatically calculates the power of each user. This data is taken into account when calculating rewards, which ensures a fair distribution of coins. The PoW algorithm does not make mistakes.
Prevention of prior evidence. For each chain of blocks, a new set of calculations is needed. The algorithm cannot be calculated prematurely, processing occurs in a certain sequence.
The real value of digital coins. The calculations that are required to generate each block require energy. The real value of the cryptocurrency is equal to the cost of electricity that was spent to mine the coins. Theoretically, this approach protects cryptocurrencies from falling to 0. The cost of mining coins cannot exceed their final price.
The algorithm copes with the security of the blockchain and the leveling of fraudulent activities.
