Understanding Proof-of-Work (PoW)
Cryptocurrencies operate in a decentralized manner, unlike fiat money regulated by a central authority like a bank.
Proof-of-Work (PoW) is a consensus mechanism that allows cryptocurrencies like Bitcoin and Ethereum to function without government or corporate involvement.
PoW serves the purpose of preventing double spending, ensuring that a coin or token is not used more than once in a transaction.
In the case of Bitcoin, PoW plays a vital role in adding new blocks to the blockchain and verifying transactions.
When a cryptocurrency miner successfully completes the PoW for a block, the network approves it.
Miners receive BTC as a reward for their successful PoW solutions.
For BTC, miners strive to create a hash that matches Bitcoin’s current target.
This involves generating a hash with multiple zeros at the beginning, which is a low-probability event.
The miner who accomplishes this goal first earns BTC as a reward.
The difficulty of tampering with the blockchain lies in the fact that any modification would require editing all blocks due to the nature of PoW.
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