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As far as I can tell, PoW allows multiple parties who don't trust each other to agree on an order of transactions. The fact that every transaction has a hash of the previous block means that you can always verify that the ledger hasn't been tampered with.

My question is twofold:

1) If there is a 51% attack, and a party forks the blockchain after 6 blocks after a merchant confirmed his money, then there will automatically be realised by the nodes, since suddenly they will have to replace 6 blocks in their chain.

2) Given this, why not just have one miner who publishes blocks, then every node can detect whether this miner has forked the blockchain (since the database is untamperable, he/she has to remove the top blocks on the chain). The miner would never lie since if she did, it would be detected and everyone would lose trust in the network.

Presumably, I misunderstood something quite fundamental.

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You have the right idea when you wrote:

allows multiple parties who don't trust each other

Then you proposed:

just have one miner who publishes...

That would mean that everyone has to trust and rely on that one miner to publish accurately and correctly.

But the whole point of the system is to not trust anyone.

Proof of Work (POW) is the mechanism that creates a trustless system without any central node.


P.S. There are potentially lots of ways to tamper with a block chain other than forking. There are double-spends, re-writing old transactions, forging new transactions, and denial of service attacks. So far, the POW scheme seems to be an effective defense against all of these attacks.

  • My question is whether all of these could be detected by the nodes. Forking would be seen, since suddenly the blocks the nodes have would change at the top. Double-spends would be seen (that's just forking no?), forging new transaction requires the private key I think, and DDoS could be solved by distributing the miner – Nick Jan 20 '18 at 8:33
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There are three ways, this question can be understood:

1. Does POW serve any purpose?

Yes, it does, as described in the principles of POW cryptocurencies. It allows for one verified item to exist in a decentralized network. It offers protection from various attacks and is proven to work. Many proponents of POW systems will claim, that it is the only system proven to be reliable even in the world where you cannot trust anyone.

2. Is POW the only option to make a cryptocurrency work?

No, there are other principles - POS, distributed consensus (where there is some other mechanism for the participants to agree on a correct version of the blockchain) and maybe others.

3. Does POW have any downsides?

Yes, it does. The biggest one is the most obvious one - there is a lot of busy work done that doesn't actually help anyone with anything, it is just to prove that it has been done. Many people may see that as a waste. And the proponents of alternative mechanisms will tell you, that those alternatives are inherently cheaper to run.

Another problem is the probabilistic nature of mining. (You cannot actually predict, when a new block will be mined, which can complicate situations for some businesses.)

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