In: Operations Management
The cryptocurrency ‘bitcoin’ uses a blockchain that utilises the ‘proof of work’ concept. Explain this concept – your explanation should focus on:
• what ‘the work’ is
• why is it needed
• the operational implication in terms of processing time, and
• the distributed nature of the blockchain processing.
Bitcoin is a type of cryptocurrency. The term ‘Balances of Bitcoin’ tokens are kept using the public and private "keys," and which are long strings of the numbers and letters that linked through the mathematical encryption model or algorithm that was used to create them. The Bitcoin blockchain uses an algorithm or process called Proof-of-Work. The Proof of work describes as a system that requires a not-insignificant role, but a feasible amount of effort in order to deter frivolously or track the malicious uses of computing power, such as the sending spam emails, spam contents, or launching denial of any service attacks.
The work is the original consensus of the algorithm in a Blockchain network. In the Blockchain, this direct algorithm is used to confirm the transactions and produce some new blocks to the chain. With the Proof-of-work, the miners usually compete against each other in the system to complete transactions on the network and get them rewarded. This is needed or necessary because the Proof of Work (PoW) is necessary for the security, which prevents any kind of fraud, which enables trust. This security model ensures that the independent data processors (miners) can't lie about a certain transaction. The PoW is used to securely sequence the Bitcoin's transaction history or while increasing the difficulty of altering any form of data over time.
In the bitcoin aspect, the operational implication in terms of processing time means the effect of an accident or any disaster on a firm's operations which (while not quantifiable in the financial terms) may be among the most severe in determining the firm's continuity and survival. While the processing time includes the time it has to takes to encode the option or to compare the encoded representation with the specific target, and to finalize or decide whether to terminate the specific search or continue to examine more of the options.
In the blockchain processing, or originally called blockchain, is a widely growing list of records, called blocks that are linked to using as cryptography. The distributed ledgers like the blockchain are exceedingly helpful for financial transactions because of the fact that they cut down on the operational inefficiencies (which ultimately saves more on money). They also provide greater security due to their algorithm or decentralized nature, as well as the fact that the ledgers are immutable in nature. Also, it is oftentimes public, into digital ledger consisting of the records called blocks that can be used to record transactions across many of the computers so that any involved block or blocks cannot be altered retroactively, or without the alteration of all the subsequent blocks.