Proof of Work (PoW)
How does it work
Proof of Work (PoW) is a consensus mechanism used in many blockchain networks, including Dogecoin. It's a process by which transactions are verified and added to the blockchain, and it involves miners competing to solve complex mathematical puzzles.
Here's how it works:
Transaction Verification:
Transactions are broadcasted to the network. Each transaction contains details like sender, receiver, and amount.
Creating a Block:
Transactions are grouped together into a block. Miners compete to be the first to create a valid block.
Nonce and Hashing:
Miners try to find a specific number called a "nonce" that, when combined with the block's data, produces a hash that meets certain criteria. The hash must start with a certain number of leading zeros.
Brute Force Approach:
Miners employ a brute-force approach, trying out different nonce values until they find one that produces a valid hash. This process is computationally intensive and requires a significant amount of computational power.
Difficulty Adjustment:
The network's difficulty level is adjusted periodically to ensure that blocks are added roughly every 10 minutes. If miners collectively solve blocks too quickly, the difficulty increases, and if they solve them too slowly, the difficulty decreases.
Consensus Achievement:
The first miner to find a valid nonce and create a valid block broadcasts it to the network.
Verification by Nodes:
Other nodes on the network receive the new block. They verify that the nonce is valid and that the block's transactions are legitimate.
Block Reward and Transaction Fees:
The successful miner is rewarded with a set amount of cryptocurrency (block reward), which incentivizes miners to participate. They may also collect transaction fees from the transactions included in the block.
Longest Chain Rule:
The new block is added to the existing blockchain, becoming the latest block. This chain extension is accepted as the legitimate chain, as per the "longest chain rule."
Sources:
Bitcoin Whitepaper by Satoshi Nakamoto - The original document that introduced the concept of Proof of Work in the context of Bitcoin, the first cryptocurrency: Bitcoin Whitepaper https://bitcoin.org/bitcoin.pdf
"Mastering Bitcoin: Unlocking Digital Cryptocurrencies" by Andreas M. Antonopoulos - A comprehensive book on Bitcoin and blockchain technology, which includes a detailed explanation of Proof of Work.
"Blockchain Basics: A Non-Technical Introduction in 25 Steps" by Daniel Drescher - This book provides an accessible introduction to blockchain technology and includes a section on consensus mechanisms like Proof of Work.