When Proof of Work Works

Debin Liu () and L. Jean Camp ()
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Debin Liu: School of Informatics, Indiana University
L. Jean Camp: School of Informatics, Indiana University

No 06-18, Working Papers from NET Institute

Abstract: Proof of work (POW) is a set of cryptographic mechanisms which increase the cost of initiating a connection. Currently recipients bear as much or more cost per connection as initiators. The design goal of POW is to reverse the economics of connection initiation on the Internet. In the case of spam, the first economic examination of POW argued that POW would not, in fact, work. This result was based on the difference in production cost between legitimate and criminal enterprises. We illustrate that the difference in production costs enabled by zombies does not remove the efficacy of POW when work requirements are weighted. We illustrate that POW will work with a reputation system modeled on the systems currently used by commercial anti-spam companies. We also discuss how the variation on POW changes the nature of corresponding proofs from token currency to a notational currency.

Pages: 24 pages
Date: 2006-10, Revised 2006-10
New Economics Papers: this item is included in nep-ipr and nep-pr~
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