Proof of Work

Proof-of-Work (PoW) is the original consensus mechanism used in Bitcoin. It relies on computational puzzles that require miners to find a hash below a certain target. This puzzle is solved using cryptographic hash functions (SHA-256 in Bitcoin).

How it works:

1. A miner collects transactions into a block and creates a block header containing:
   • Previous block hash
   • Merkle Root of transactions
   • Timestamp
   • Nonce (variable number)
   • Difficulty target
2. The miner computes the SHA-256 hash of the block header.
3. If the hash meets the difficulty target (e.g., starts with a certain number of zeros), the block is valid.
4. Otherwise, the miner increments the nonce and tries again.

Example:

• Target: hash must start with 0000.
• Miner tries nonce 0 → SHA-256 hash = a5f3... not valid.
• Miner tries nonce 4721 → SHA-256 hash = 0000b3... valid → block accepted.

Role of Cryptography:

• SHA-256 ensures unpredictable and verifiable outputs.
• Hash puzzles enforce work, making it expensive to manipulate the blockchain.
• The cryptographic property of pre-image resistance prevents attackers from easily finding a valid hash without performing the required work.