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In 1997, Blockstream CEO Dr. Adam Back proposed Hashcash, a proof-of-work (PoW) mechanism intended to stop spam and denial-of-service (DoS) attacks. It is now used as the basis of Bitcoin's mining algorithm.

In email systems, Hashcash acts as a cost function that imposes a computational cost on the sender, thereby deterring spamming and anonymous remailers. This computational cost is akin to a "toll" that the sender must pay to ensure the email is delivered. The idea behind this is that spammers, who typically send large volumes of emails, would be discouraged from doing so as the computational cost would be prohibitively expensive.

In Bitcoin, Hashcash is used in the creation of new blocks by requiring miners to perform a certain amount of computational work before their block can be considered valid. This work involves finding a value that, when hashed with SHA-256, produces a result that meets specific criteria, such as a certain number of leading zeroes. This assures that creating new blocks requires high computing effort, helping to secure the decentralized network and playing a critical role in the security of Bitcoin's blockchain.

More information on Hashcash can be found in Dr. Back's formal paper Hashcash - A Denial of Service Counter-Measure.