What is Proof of Work (PoW) and how does it work?

Key takeaways

  • Proof of work (PoW) is a blockchain consensus mechanism cryptocurrency miners use to verify new tokens or entries. It involves the solving of complex mathematical puzzles by particular network members.
  • Proof of work is the primary method used by a majority of cryptocurrencies. However, it requires significant amounts of electricity, depending on the number of network participants. This makes its products the most secure, for instance, Bitcoin.
  • Proof of work allows successful peer-to-peer transaction processes in crypto as it brings truthfulness and reliability to the field.
  • Proof of work constitutes the first cryptocurrency consensus mechanism used by the likes of Bitcoin. Besides that, it has led to the invention of a newer method; the proof of stake (PoS) mechanism.

As a crypto aficionado or investor, you might wonder how your favorite cryptocurrency gets verified. Or how the heck does it pass through all the checks and balances just to make sure it’s genuine? Well, like any other legal tender, digital coins undergo a confirmatory procedure. In this case, most of them are subjected to the Proof of Work mechanism to ascertain their authenticity. The blockchain consensus method is a handy mechanism that can’t be ignored or wished away in the crypto space. Without it, crypto miners could go rogue leading to the creation of fake cryptocurrency. As a result, lead to a lack of general trust in cryptocurrencies and their downfall as a store of value. And that’s just about why we care to bring you up to speed on what a proof of work (PoW) mechanism is, its use in the crypto world, as well as its other ABCs. Hopefully, this information will give you an insight into what takes place before a digital coin hits the market so that you can trust as well as appreciate the entire mining process.

Let’s dive right in!

For starters, what is the Proof of Work mechanism?

In simple terms, a proof of work (POW) consensus mechanism is a verification method used by most cryptocurrencies in their creation process. It involves solving complex mathematical problems that require enormous amounts of computing power. This is to attract genuine and well-prepared miners with enough mining resources and motivate them to observe the laid down protocols.

As if that’s not enough to deter potential frauds from venturing into the crypto space, as they would require significant resources to beat the network. In essence, the expensive process or pre-programmed challenging mining levels help to prevent network participants from gaming the system. Doing so helps with integrity maintenance during the cryptocurrency creation process leading to the realization of authentic digital coins.

How does Proof of Work (PoW) work?

This cryptocurrency consensus mechanism allows anonymous crypto miners to compete against each other in solving complex mathematical calculations. Whoever finds the missing part of the puzzle first is pronounced a winner, followed by a validation of their entry by other network participants. Their data is then added to an existing, correct and valid blockchain. And in return, they get awarded newly minted coins.

In Bitcoin mining, a new block is added every ten minutes ― from anyone amongst the participating miners ― it’s a chances game. So you can join forces with other network participants to create a miners pool to fortify your chances of getting a piece of the action. And after that, share the rewards in the form of newly-created digital money, albeit paying some transaction fees.

What crypto experts like most about the proof-of-work method is that it puts forward a temper-proof mechanism that ensures the highest integrity possible. And that the newly minted coins are in their purest form. This makes it extremely difficult to change anything in a blockchain once a new transaction or piece of data is added.

And as said before, the mechanism’s insatiable appetite for computational power makes it expensive, which helps cut out monopoly.

Examples of cryptocurrencies that use the Proof of Work mechanism

Most existing cryptocurrencies use the Proof of work mechanism in their validation process.

Here are some of the popular ones:


It uses the Proof of work mechanism moulded from the SHA-256 hashing function to validate transactions and release its new digital coins into circulation. Here, crypto miners race against each other to find the missing hash. And once a winner is found, another problem to be solved is brought forward. This usually takes about ten minutes due to the high number of transactions amongst Bitcoin network partners.

Here you can find more info about Bitcoin.


It uses randomx, a CPU-friendly and ASIC-resistant Proof of Work algorithm developed by the Monero community members. The mechanism makes it unattainable or impossible to use particular mining hardware. The cryptocurrency initially utilized Cryptonight alongside other forms of the randomx mechanism.


This digital currency utilizes a Proof of Work mechanism similar to Bitcoin’s. For example, one that requires a crypto miner to add new blocks to an existing blockchain, though at a faster rate than Bitcoin.

Specifically, it uses Scrypt, a hashing algorithm that operates on uniquely designed mining hardware and software.

Bitcoin Cash

Like Litecoin above, Bitcoin Cash uses an improved version of the Proof of Work mechanism that is cheaper and faster than Bitcoin’s.


Similar to Bitcoin, Dogecoin miners are required to solve complex mathematical problems as required by the Proof of Work mechanism to generate new blockchain entrants. The crypto miners are then rewarded with newly minted Dogecoins for their computational work―which they can sell or stake.

What role does the Proof of Work play in the Crypto world?

Like the Proof of Stake (PoS), the Proof of Work mechanism brings to the table several helpful functionalities, as well as benefits.

Here are a few of the critical ones:

  1. Secures digital coins: one of the most fundamental issues regarding cryptocurrencies is how secure the digital currencies are. Without an adequate security mechanism, there wouldn’t be that much trust amongst users. Besides that, the digital coins would become vulnerable to cyber criminals leading to massive losses.The Proof of Work mechanism comes in handy as it overrides most security loopholes, making it extremely difficult for scammers to overtake the network. It does so by increasing the difficulty of mining levels depending on the number of miners. For example, it increases the demand levels for power and computing resources, if more people join the mining network. The same applies to preventing spam and DoS attacks on Bitcoin transactions.So at the end of the day, the Proof of Work mechanism ensures that digital coins are tightly secured, just like any other legal tender controlled by the government.
  2. Encourages decentralization in crypto mining: it’s no secret that newer cryptocurrencies are opting for decentralization to cut on the expenses that come with the Proof of Work mechanism. As a result, you can now participate in the crypto mining process without feeling a pinch.
  3. Eliminates the double spending problem: The Proof of Work mechanism integrates a verification system that prevents the sending of a digital coin to more than a single person or wallet. It adds new entrants to a distributed ledger in its work to cut out double-spending.
  4. Builds trust in cryptocurrency or digital coin users: similar to financial institutions such as banks, most cryptocurrencies use the Proof of Work mechanism to earn trust amongst their users. For instance, the process ensures that a digital coin has passed all the checks and balances before being allowed into circulation. And that no fraudulent activities can happen within a particular digital coin’s blockchain.

Pros and Cons of PoW

As everything else, the Proof of Work consensus mechanism has its own Pros and Cons.

Pros of PoW

  1. It provides the highest security possible: The Proof of Work makes it extremely difficult for fraudsters to participate in the mining process; hence it secures the network it is used in. For example, the Bitcoin blockchain is one of the most secure cryptocurrency entities thanks to the PoW mechanism.
  2. Allows a crypto miner to earn rewards: The PoW mechanism provides you with an opportunity of making newly minted digital coins as long as you become the winner in solving the given mathematical puzzle.
  3. Allows decentralized verification of transactions: Network participants can verify new entrants in standalone locations.

Cons of PoW

  1. Encourages centralization: in recent times, several small and significant organizations have come together to cut down on costs due to the expensive nature of the Proof of Work mechanism. Nonetheless, doing so can lead to a monopoly in the crypto space, which is unhealthy from a business point of view.
  2. Involves more energy use: The Proof of Work protocol purposely requires lots of energy and resources to discourage scummy individuals from participating in the crypto mining process. However, all this makes the process utterly expensive or unattainable.

Final thoughts

As of now, Proof of work is the most popular verification method behind most cryptocurrencies ― arguably with its improved version being used in most of the current and upcoming digital currencies. And it may continue to stick around for a while as it is prohibitively expensive to replace once installed.

In general, all we can do is appreciate the benefits that come along with it. For instance, its providence of unparalleled security capabilities that can help ward off potential attacks. Thereby helping keep your digital assets safe in case you’re a crypto investor.

*Nonetheless, this is not financial advice; the content is only for educational/fun purposes.

Related articles:

What is Proof of Stake and how does it work?

Proof of Work vs Proof of Stake: understanding the differences

proof of work blockchain

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