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Relationship between algorithm and cryptocurrency space
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Relationship between algorithm and cryptocurrency space
In the very first virtual currency, PoW is needed to achieve consensus in the network. Since at any given time for each user there can be several versions of the blockchain at once, the algorithm determines which one is reliable. To implement his idea, Nakamoto took advantage of the developments of the Hashcash project mentioned above, slightly modifying the finished function (adding a mechanism for changing its complexity, which depends on the total computing power of all network nodes). The finished function is called SHA-256.
The PoW algorithm is necessary for checking by network nodes that the miner has performed calculations. The latter performs calculations of complex algorithms, as a result of which a new generated block (“cell”) is added to the block chain, storing a certain number of records of completed transactions. The proof-of-work mechanism attempts to find the hash of the node header, which contains a reference to the previous "cell" and the total value of all operations placed in the newly generated node. Hash exponents correspond to the set degree.