How does the cost of proof-of-work incentivize nodes to build on the valid chain-tip?
Tuesday, January 10, 2023
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Question: How does the cost of proof-of-work incentivize nodes to build on the valid chain-tip?
The cost of proof-of-work incentivizes nodes to build on the valid chain-tip by providing an economic reward for mining and extending the blockchain. The cost of mining is essentially a cost-benefit analysis — the higher the cost of mining, the higher the reward for successfully mining and extending the chain-tip. The higher the reward, the more incentivized the miners are to expend their resources to mine and thus build on the valid chain-tip. This incentive structure ensures that the cost of mining remains competitive, and that miners have incentives to continue mining and extend the valid chain-tip.
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