Proof-of-work in the overall Bitcoin system has two functions.
First, the ever changing nature of the Bitcoin Blockchain servers as a means to solidify the Bitcoin proof of work as outlined within the “Bitcoin: A Peer-to-Peer Electronic Cash System” white paper:
“Once the CPU effort has been expended to make it satisfy the proof-of-work, the block cannot be changed without redoing the work. As later blocks are chained after it, the work to change the block would include redoing all the blocks after it.” Page 3
The probability of changing a block and the subsequent blocks within the Blockchain is low. This again assumes that the system is growing at such a rate that the computational power of the honest nodes is outpacing that of the attacker nodes.
The proof-of-work also plays a role in the representation of majority decision making:
“The proof-of-work also solves the problem of determining representation in majority decision making. If the majority were based on one-IP-address-one-vote, it could be subverted by anyone able to allocate many IPs. Proof-of-work is essentially one-CPU-one-vote. The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it. If a majority of CPU power is controlled by honest nodes, the honest chain will grow the fastest and outpace any competing chains. To modify a past block, an attacker would have to redo the proof-of-work of the block and all blocks after it and then catch up with and surpass the work of the honest nodes. We will show later that the probability of a slower attacker catching up diminishes exponentially as subsequent blocks are added.” Page 3
In this context Bitcoin appears to be a self-perpetuating system whose success is highly dependent on speed. The faster the system grows, the faster and further it reinforces itself against attacks. Whereas traditional financial instruments are based on stability and lack of volatility, the ultimate success of Bitcoin appears to result from the opposite of these attributes. The faster the Bitcoin system grows, the more embedded a proof-of-work becomes in the Blockchain, and therefore the more difficult it becomes to hack.
2. J.R. Sedivy. Bitcoin: A Peer-to-Peer Electronic Cash System Abstract:
3. J.R. Sedivy. Cryptographic Proof And Honest Nodes:
4. Satoshi Nakamoto. Bitcoin: A Peer-to-Peer Electronic Cash System: