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Proof of Work (PoW)

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Glossary
Mar 17, 2022
Proof of work is a system that uses computational power to secure networks, process transactions and add new blocks to a blockchain. It is the most popular consensus mechanism in crypto and is used most prominently in Bitcoin.

Miners use their computers to solve complex mathematical problems in order to validate transactions and add new blocks to the Blockchain. Proof of work (PoW) is the most common consensus algorithm used in cryptocurrencies. It has been used by Bitcoin since its inception in 2009.

What is Proof of Work (PoW)?

Proof of work is the most popular consensus mechanism in the industry to date. It helps blockchains synchronize blocks and stay secure, while determining which node in the blockchain network gets to add the next block. Proof of work requires nodes in the network to “work” — i.e., show proof of their work — by solving a complex mathematical problem. The first node to solve the problem and validate the transaction gets rewarded with cryptocurrency.

How Proof of Work (PoW) Works

As Nathaniel Popper explains in his book Ethereum plans to switch, the process of solving mathematical problems to add blocks to a network is referred to as mining for a good reason. Popper clarifies that the resources and energy required are the digital equivalents to the real-world process of mining precious metals. 

As mentioned above, nodes — or miners — in a proof-of-work network compete to solve a complex mathematical problem, with the first miner to solve the problem and validate the transaction being rewarded with cryptocurrency. Proof of work is also used to secure networks and process transactions. Bitcoin, the most popular cryptocurrency, uses PoW.

To learn in greater detail how PoW works, read on here.

What's the Difference Between Proof of Stake and Proof of Work?

Proof of stake (PoS) is an alternative to proof of work (PoW). PoS does not require miners to solve complex mathematical problems. Instead, nodes are selected to add new blocks to the blockchain based on their stake, or how much cryptocurrency they own. Proof of stake is more energy-efficient than proof of work because it doesn't require as much computational power. Ethereum plans to switch from PoW to PoS in the near future.

If you want to know more, read our detailed guide on the topic.