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What is Proof-of-Work?

What is proof-of-work

Proof-of-Work (PoW) is the underlying consensus system in which cryptocurrency is acquired through “work”.

This “work” comes in the form of mining via cryptography, or complex code computed on the blockchain via automated algorithms in order to form a consensus that any activity on-chain is valid. 

Through this consensus system’s work, which requires mass amounts of energy, the network is kept safe.

What’s the tech behind PoW?

  • The technology behind Proof of Work’s (PoW) consensus system uses a competitive validation method in order to confirm transactions, add new blocks to the chain, and to keep the blockchain network secure. 
  • This competitive validation method makes blockchain network members do intense amounts of cryptography with large amounts of computational power. 
  • So what’s being “competitively validated?” Miners have to verify the validity of blockchain transactions through a process known as “cryptography”.

How does cryptography work?

  • The blockchain contains a ledger or record of transactions called “blocks,” which cannot be edited or rearranged. 
  • The process of mining, through cryptography, adds blocks to the blockchain. 
  • These blocks are a living record of what has happened on each network, adding transparency to the transactional activities to deter malpractice and illicit use while on the blockchain.

How does Bitcoin mining work?

In its most famous incarnation, PoW is a method of validating and mining new coins on blockchain networks like Bitcoin.

  • Blockchain transaction data are recorded in hashes, strings of alphanumeric characters that contain transactional history of the chain. 
  • In addition, the blockchain is append-only: meaning that users are not able to delete or edit recorded hashes on the blockchain.
  • In order to generate, secure, and validate a new set of coins, users are to compete and solve for the target hash, or the most recent block that is to be recorded on the chain. 
  • In solving for the target hash, miners use mass amounts of real computational power via cryptography, competing with each other in order to find the target hash.
  • Once a valid solution has been found for the target hash, it gets added as a “block” to the blockchain.
  • In solving for the solution, miners compete for newly-created Bitcoins for their contribution to the network. 
  • Winners are randomly selected from a pool of those who have correctly solved for the target hash.
  • Often, people gather together to create mining groups where they can increase the chances of getting these rewards, as there is more manpower and computational power to reap rewards. In this case, rewards are usually split between individuals in the group. 


As PoW requires a ton of computational resources and luck, blockchain networks such as Bitcoin are awarded high security in return. 

PoW is considered to be the most secure consensus mechanism out there, making it the driving force behind Bitcoin’s track record of zero network hacks since its beginnings in 2009.

PoW, however, is not the only decentralised consensus mechanism out there. 

Proof-of-Stake (PoS) is an alternative to PoW that many blockchain enthusiasts use, particularly for building smart contracts on the Ethereum blockchain. 

PoS is considered a “clean energy” alternative to PoW since it does not require as much energy to use. While PoS is less resource-intensive and is an accessible starting point to cryptocurrency for more people, it is more susceptible to network hacks. 

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