The financial incentives (block reward + transactional fees) encourages miners to contribute honestly to the network.
Additionally, one of the security features of PoW networks like Bitcoin is that they require nodes continue to add new blocks to the longest chain; the chain with the largest amount of computation. This creates a protective layer against an actor “hijacking” the chain for an extended period of time.
How would that work?
Let’s assume a malicious actor wanted to take over a Proof of Work blockchain like the Bitcoin network. While they would indeed have the possibility to solve a single cryptographic hash puzzle and submit a new block for the nodes to approve (consensus), the malicious actor would have to continue to successfully find the correct hash number for each consecutive block before any other miner node and continue to maintain the longest chain — the largest, continuous (proof of) work.
This is, for all intents and purposes, impossible due to mathematical improbability and extremely high financial costs; it would take an immense amount of (expensive) computational power to achieve this goal, and virtually impossible to continue mining consecutive blocks successfully.
Bitcoin.org explains this as well in their FAQ section:
The Proof of Work is also designed to depend on the previous block to force a chronological order in the blockchain. This makes it exponentially difficult to reverse previous transactions because this requires the recalculation of the proofs of work of all the subsequent blocks. When two blocks are found at the same time, miners work on the first block they receive and switch to the longest chain of blocks as soon as the next block is found. This allows mining to secure and maintain a global consensus based on processing power.
Read more from their FAQs here. For more context, YouTube channel 3Blue1Brown does a good job of explaining this in the context of the Bitcoin network in their video. Watch it here.
Bonus Term: 51% Attack
A 51% attack, as the name implies, is a scenario in which 51% (more than 50%) of a blockchain’s nodes are controlled by one entity or group. If this occurs, the blockchain could be at risk of manipulation. This is because the controlling entity could use their majority to influence or corrupt the transactional data within the blocks.
Proof of Work is generally considered to be one of the more decentralized and, subsequently, secure types of consensus mechanisms as it’s the oldest and most battle tested. However, some growing barriers to entry, like high start-up costs for miners, may give rise to the argument that it pushes PoW towards some centralization because fewer organizations or individuals can afford the costs of mining equipment and computational power.
Additionally, scalability tends to be a concern for large PoW blockchains, like Bitcoin, although layer-two solutions are being conceived in various ways, by various teams, to bring increased speed and extended functionality to PoW networks like Bitcoin.
Strategic Advantages of Proof of Work
- Typically smaller blockchain size makes it easier to run a node and participate
- Typically more decentralized token ownership due to mining
- Typically less inflationary tokenomics over time
- More decentralized by design
Disadvantages of Proof of Work
- Cost prohibitive due to expensive mining hardware
- Additionally, miners have no guarantee of profitability
- Can be technically complex to set up and maintain mining tech/hardware
- Expensive to upgrade to new mining tech/hardware
- Slower network upgrades and governance over time
- Concerns over environmental impact and sustainability
- Typically slower network as mining power focuses more on solving mathematical equations vs. processing transactions, which introduces scalability concerns.
What are some well-known Proof of Work blockchains?
Bitcoin, Ethereum (pre-Merge), Litecoin, Monero, Zcash, Ravencoin, among others.