What Is Proof of Work (PoW)? How Does PoW Work? (2022)

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In the crypto world today,  there are two main consensus algorithms: Proof of Work and Proof of Stake. It is important to understand the key differences between each algorithm before investing in any cryptocurrency.

Therefore, in this article, let’s talk about the basic principles of Proof of Work, as well as its pros and cons.

What is Proof of Work (PoW)?

Proof of Work (abbreviated as PoW) is the first consensus algorithm in a blockchain network, and it was initially employed by Bitcoin. This mechanism is used to validate and track the creation of new cryptocurrencies and blockchain transactions. The work is solving extremely difficult mathematical problems, whereas the proof is the problem’s solution.

What is Proof of Work

Virtual miners compete to be the first to solve a complex math puzzle, which secures and verifies PoW blockchains. Mining is a term used to describe the act of competing against one another. The winner receives a reward in cryptocurrency exchange for updating the blockchain with the most recent verified transactions.

How does Proof of Work work?

A blockchain is a public record that is dedicated to each cryptocurrency in the crypto network. It is made up of blocks of transactions which are validated via Proof of Work.

The process of confirming the transactions in the block to be added, placing these transactions in chronological order, and notifying the whole network about the newly mined block consumes extremely little energy and time. The hard mathematical problem to link the new block to the last valid block in the blockchain network takes the most energy.

A hash is assigned to each crypto transaction. In order for the transaction to be legitimate, the crypto miner must create a target hash that is less than or equal to the sample block hash.

Miners utilize mining machines that generate calculations fast to create this type of target hash. When a miner ultimately finds the correct solution and creates the target hash first, the node broadcasts it to the whole network at the same time, getting the PoW protocol’s reward.

As a result, generating the desired hash is a challenging task. However, validating is simple, which may be why Proof of Work is popular in Bitcoin. However, the method is robust enough to prevent transaction records from being manipulated. Also, validation becomes easy by applying this process. 

With more miners, the time it takes to mine the next block will inevitably be shortened. This implies that new blocks are discovered more quickly. To consistently find 1 block every 10 minutes, the Bitcoin network changes the difficulty level of mining a new block on a regular basis.

Note: 10 minutes is the amount of time that Bitcoin developers think is required for a steady and diminishing flow of new coins until the maximum number of 21 million is reached (expected some time in around 2,140 with the current rate).

The Proof of Work mechanism

The importance of Block n being connected to Block n-1 via its hash number is that this “hash number” ties a new block to the previous legitimate block on the network. If, on the other hand, the Block n Hash number on Block n-1 differs from the Block n, this number would not match, and Block n-1 would not be verified. 

Note: The first block in the blockchain is called the Genesis Block and has no Prev Block Hash value.

Features of the Proof of Work system:

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The following are the primary factors that have led to the widespread success of this consensus protocol:

  • The mathematical problem is difficult to solve.
  • The solution’s accuracy is simple to verify.

Blockchains use Proof of Work consensus

Bitcoin is still the most popular coin that employs PoW consensus. However, this technique is used by a slew of other currencies.

Among the most popular cryptocurrencies are:

  • Litecoin: Litecoin, similar to Bitcoin, has SegWit which allows the block size limit to be increased by removing the data from the network. Litecoin distinguishes itself from Bitcoin by offering lightning-fast transaction speeds at a substantially cheaper cost.
  • DASH: It claims of speedier and more private crypto transactions. The rapid transactions encourage miners to invest their efforts in DASH.
  • Monero: Another prominent altcoin that employs PoW consensus. Monero, an open-source cryptocurrency, emphasizes fungibility, privacy, transparency, and decentralization via a public ledger.
  • Bitcoin Cash: an altcoin that arose from the Bitcoin network’s hard fork. Despite the fact that it employs PoW, which appears to be a solid consensus, Bitcoin cash is one of the badly harmed victims of the 51% attacks.
  • ZCash: Unlike other cryptocurrencies, ZCash strives to give privacy through anonymity. The Zcash network employs the same SHA-256 Proof of Work hash algorithm.
  • Classic Ethereum: Despite the fact that Ethereum 2.0 is moving away from PoS. To safeguard its network, Ethereum Classic continues to use the PoW consensus. However, because it is only a minor chain, Ethereum Classic is more vulnerable to 51% attacks and currency double-spend.

Pros and cons of Proof of Work


There are numerous important advantages to employing PoW over other forms of blockchain technologies. These include:

  • Extensively used by most prominent cryptocurrencies: The most well-known and biggest digital currencies, notably Bitcoin and Ethereum, employ the Proof of Work mechanism.
  • Extremely secure: Because altering a cryptocurrency’s blockchain demands control over more than half of the crypto network’s computer resources, the substantial computing resources required by the Proof of Work protocol make a cryptocurrency network secure.
  • Rewards miners enabling new transactions: Miners that successfully validate fresh blocks of Bitcoin transactions might earn a profit.


The Proof of Work mechanism has the following issues:

  • The 51% attack risk: If a controlling entity possesses 51% or more of the network’s nodes, the entity can damage the blockchain by obtaining control of the majority of the network.


  • Time consuming: Miners must examine several nonce values to discover the correct answer to the puzzle that must be completed in order to mine the block. Transaction confirmation takes between 10 and 60 minutes. As a result, it is a time-consuming operation.
  • Resource consuming: Miners require a significant amount of computational power in order to solve the difficult mathematical puzzle. It results in the squandering of valuable resources (money, energy, space, hardware). 
  • Expensive hardware may be required: Purchasing expensive, specialized hardware may be essential to succeed and generate a profit.
  • Individual miners have difficulties: Due to computational capacity requirements, huge crypto mining organizations and mining pools are more likely to succeed at crypto mining and make mining income than people working alone.
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Comparing Proof of Stake and Proof of Work

Compare Proof of Stake with Proof of Work

Proof of Work and Proof of Stake are the two methods that can be used to secure a blockchain. They differ in several important ways, including the costs involved and the level of control they confer on those who validate transactions.

Let’s take a closer look at each one to better understand how they work and the advantages and disadvantages of each approach.

Cost structure

The first major difference between Proof of Work and Proof of Stake is their cost structure.

In a Proof of Work system, miners need to expend significant resources-both, financial and computational, in order to participate in the verification process for new transactions. This makes it expensive for an individual or organization to attempt a 51% attack since such an effort would require them to build and operate a data center full of specialized hardware for several years.

In contrast, a Proof of Stake system can be expensive only for those who wish to participate as validators. This means that anyone with enough cryptocurrency to stake could potentially try to gain control of the network by staking a large portion of the currency and voting against any other proposals. However, this is unlikely because it would require them to put their entire investment at risk in order to do so.

Validation mechanism 

In addition, Proof of Work gives almost complete control over which transactions are included in new blocks to those who contribute the most hashing power or computational capability.

Conversely, Proof of Stake lets participants validate blocks by locking up some amount of cryptocurrency as collateral. Validators thus have an incentive to act in the best interests of everyone using the network, since their “investment” is at risk if they don’t.

Waste of energy from mining hardware

Finally, Proof of Work systems generally rely on a competitive marketplace for the generation and continuous improvement of new mining hardware. This can lead to wasteful spending on redundant or overly specialized equipment since miners are forced to spend money constantly just to stay in business.

This kind of arms race is not found within Proof of Stake networks, which means that validators will not waste as much energy or other resources securing transactions.

Overall, these differences mean that each system has its own advantages and disadvantages when compared to the other. Many people believe that Proof of Stake will eventually replace Proof of Work as the primary means of securing a blockchain, as it is more efficient and provides greater decentralization.

However, both systems have their own strengths and weaknesses, and it remains uncertain which one will ultimately come out on top.

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FAQs about Proof of Work

How secure is Proof of Work?

The Proof of Work method is extremely safe because it can survive the Byzantine Fault Tolerance (BFT) – a system that can tolerate failures caused by the Byzantine Generals’ Problem. The way it works makes it much more secure.

Furthermore, the hash of each block contains the hash of the preceding one, increasing security and preventing any block violation on a Proof of Work blockchain.

Miners must generate a new block with the same antecedent to alter a block. In such cases, it is necessary to regenerate all successors and redo the work they hold. As a result, the blockchain can avoid security manipulation.

Why do cryptocurrencies need Proof of Work?

Because blockchains are decentralized and peer-to-peer by nature, they require some mechanism of obtaining both consensus and security. One such measure is Proof of Work, which makes attempting to overrun the network extremely resource-intensive.

Other verification processes, such as Proof of Stake (PoS) and Proof of Burn (PoB), need fewer resources but have drawbacks or flaws. If there was no proof mechanism in place, the network and the data stored on it would be vulnerable to attacks or theft.

Furthermore, the Proof of Work mechanism prevents users from minting coins they did not earn or from spending twice. If users could use their coins more than once, the assets would essentially lose their value.

Who invented Proof of Work?

To get Bitcoin off the ground, Satoshi Nakamoto invented Proof of Work. Nobody knows who Nakamoto is or whether his name is an alias.

Why does more mining power mean more security?

The more processing power invested in Bitcoin security, the more resources a potential attacker must gather in order to successfully assault Bitcoin.

How does Proof of Work validate a transaction?

The work itself is arbitrary. For Bitcoin, it involves iterations of SHA-256 hashing algorithms. The winner of a round of hashing, on the other hand, combines and records transactions from the mempool into the next block. Because the winner is picked at random proportional to the effort put in, it incentivizes everyone on the network to act honestly and record only real transactions.


This article has provided a comprehensive overview of what Proof of Work is, as well as some great information for this topic! If you find it useful, please share it with your friends! 

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