Different *“blockchain”*-based (which we will see what in the next section shortly) implementations might enforce the usage of this *“proof of work”* in different ways. Some systems might perform *“a proof of work per every ledger transaction”*, some may perform *“a proof of work per a batch of transactions”* etc. For the simplicity of explanation, I’ll be referring to the scenario of *“one proof of work per every single ledger transaction,”* which is the most inefficient.

Also as we discussed in the previous section, solving a *“proof of work”*-based problem*genuinely requires a “significant effort” and this effort needs to be rewarded. This “rewarding upon obtaining a valid nonce for a given proof of work” too is done in different ways in different blockchain implementations. Some systems will reward the problem solver a percentage commission, out of the total amount in the transaction.*

*For instance going back to our latest ledger solution in Figure 5, since all transactions are “broadcast”ed anyone can do the “proof of work” for anyone else’s transaction and upon providing a “valid nonce” can get a reward for doing it.*

*Proof of Work: Rewarding — A Working Example*

Imagine that Alice has *“broadcasted”* (as in Figure 5) a new transaction;

*{ “06”**“Alice pays Bob $10” “AliceDS_06” }*

and that Casey is willing to find a *“valid nonce”* by doing the *“proof of work”* for Alice’s transaction (*“AliceDS_06”* is the digital transaction annexed by Alice for her transaction contents).

Let’s assume that our hypothetical distributed ledger system has a mutual agreement among all of its users to pay 1% of commission out of the actual transaction amount for the person doing *“proof of work.”*

First Casey will verify Alice’s transaction by using Alice’s *“digital signature.”*

Once verified, since Casey needs to collect her reward upon successful completion of *“proof of work;”*

- she will split the original transaction from Alice into 2 split-transactions
- append the split-transactions with the original transaction content
- digitally sign this total transaction content from 2

*{*

*{ “06”**“Alice pays Bob $10” “AliceDS_06” },*

*{ “Alice pays Bob $9.90”, “Alice pays Casey $0.10” }*

*} “CaseyDS_06”*

Then Casey will find a *“valid nonce”* by doing *“proof of work.”* Casey will use the *“total contents of the original and resulting split transactions” *signed with Casey’s digital signature, for her *“proof of work”* and will end up with a *“valid nonce”* (such as *“345abc12tuv3”*) upon successful completion.

Since the split transaction content has 2 unique *“digital signatures”* from Alice (which is *“AliceDS_06”*) and Casey (which is *“CaseyDS_06”*), it proves that;

- Casey has used the original transaction
*“broadcasted”*by Alice - The
*“valid nonce”*(i.e*“345abc12tuv3”*) being discovered upon successful completion of*“proof of work”*, belongs to Casey

So ultimately,

- Bob will receive only $9.90 out of $10.
- Alice and Bob will witness $0.10 cents as a
*“charge made by the system”*for the transaction. - Whereas for Casey $0.10 cents is her reward for appreciating the
*“significant effort”*she made to find a*“valid nonce”*.

Once again please note that the above is only a high-level example to understand the concepts in general, whereas the actual implementations of *“blockchain-based distributed ledger”* systems would vary from one to another.

*Bitcoin Mining*

In terms of *“Bitcoin”* (or *“Cryptocurrency”* in general, which is only a single practical application of *“Blockchain”*); one’s earnings made by supplying *“nonce”*s after solving *“proof of work”*s for transactions done by somebody else is called *“Bitcoin Mining.”*