What is Proof of Work (PoW)?

The original consensus mechanism is Proof of Work (PoW), powering some of (the) most popular blockchains, such as Bitcoin. Its main objective is maintaining network security and decentralization so participants, referred to as miners, must solve complex cryptographic puzzles to verify transactions and make new blocks to the blockchain’s ledger. While labour intensive, this facilitates the prevention of malicious attacks and secure integrity of decentralized systems. In the following I’m going to explain how PoW works, what are its benefits and what are the difficulties that PoW faces in an ever changing world of blockchain technology.

Proof of Work (PoW): The Backbone of Blockchain Security

Proof of Work (PoW) is one of the earliest consensus mechanisms in blockchain technology and has been around longer than any other high profile consensus algorithm, being used to establish transaction validity and secure decentralized networks. PoW was first used by Bitcoin and it is used to guarantee that all network participants (called miners) are competing to solve some complex cryptographic puzzles. Whomever — first — solves the puzzle, gets the right to write the next block on the blockchain—and is rewarded with some cryptocurrency. This is an important process, because if this was missing then malicious actors could modify the transaction history.

How Proof of Work (PoW) Works

A PoW is a system in which miners include computational power to solve cryptographic puzzles that should take significant effort but are easily verifiable by other network participants. The difficulty of each puzzle is adjusted by the network so that on average, one per block is solved in 10 minutes. As soon as a miner solves the puzzle, they announce the solution to the network (and other participants quickly confirm it is correct). Upon proven, the certified block is thrown in with the blockchain and the miner get compensation for exactly what was their issue — recently developed crypto and exchange expenses. Making this process ensures that in order to rewrite any previous block, you will need to redo the work for that block and all others following it, and this is practically impossible without controlling the majority of the network’s computational power.

Proof of Work: Benefits and Challenges

Proof of Work gives you a very high security level due to the fact that mining an attack on the network is too difficult and too expensive. This decentralized nature leads to trustless and transparent, because no entity can control that network. These are good reasons why PoW is the gold standard for, and forms the basis of, the most secure blockchain networks, like Bitcoin.

But PoW itself has major challenges. The energy consumption is one of its main setbacks. The energy intensive nature associated with PoW has caused its supporters to worry about the environmental impact of PoW based systems. This increases operational costs as the energy required also increases, causing limit in scalability. Moreover, tasks can be completed only after the slower Proof of Work (PoW) compared to the faster Proof of Stake (PoS) consensus mechanisms, and obviously wasting more energy.

Conclusion

Proof of Work is one of the fundamental consensus mechanisms which has defined blockchain technology. What has driven it to be a cornerstone of major networks like Bitcoin, is its security and decentralization. However, the energy consumption and scalability associated with the model have caused the blockchain community to start considering alternative consensus models. Although PoW remains the definitive means for ensuring security for some blockchains, better solutions for securing decentralized networks still remain to be innovated.

Proof of Work (PoW)

Proof of Work (PoW): The Backbone of Blockchain Security

How Proof of Work (PoW) Works

Proof of Work: Benefits and Challenges

Conclusion

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