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PoW / Proof of Work explained

What is Proof of Work?

Proof of work is a technique used by cryptocurrencies to verify the accuracy of new transactions that are added to a blockchain. The decentralized networks used by cryptocurrencies and other applications lack any central governing authority, so they employ proof of work to ensure the integrity of new data.

What is Proof-of-Work?

Cryptocurrencies do not have centralized gatekeepers to verify the accuracy of new transactions and data that are added to the blockchain. Instead, they rely on a distributed network of participants to validate incoming transactions and add them as new blocks on the chain….


Proof of work is a consensus mechanism to choose which of these network participants—called miners—are allowed to handle the lucrative task of verifying new data. It’s lucrative because the miners are rewarded with new crypto when they accurately validate the new data and don’t cheat the system.


Proof of work is a software algorithm used by blockchains to ensure blocks are only regarded as valid if they require a certain amount of computational power to produce, it’s a consensus mechanism that allows anonymous entities in decentralized networks to trust one another.

Why is Proof-of-Work Important?

One of the issues that had prevented the development of an effective digital currency in the past was called the double-spend problem. Cryptocurrency is just data, so there needs to be a mechanism to prevent users from spending the same units in different places before the system can record the transactions.

While you’d have a hard time spending the same dollar bill on two separate purchases, anyone who’s duplicated a computer file by copying and pasting can probably imagine how you could spend digital money twice—even ten times or more.

The consensus mechanism solved the double-spend problem. By incentivizing miners to verify the integrity of new crypto transactions before adding them to the distributed ledger that is blockchain, proof of work helps prevent double spending.

Proof-of-Work and Mining

Consider a conventional bank account. If you deposit a check in your savings account, how do you know that you’ll be credited for the accurate amount? How does the writer of the check trust that they’ll only be debited for the amount they wrote on the check? The value of a bank is that all the parties to a transaction trust the bank to accurately move money around.

With cryptocurrencies, there are no bankers or financial institutions to ensure trust. Instead, miners and proof of work guarantee transparent, accurate transactions. For blockchains that use proof of work, miners are the guardians and facilitators that make the system run smoothly and accurately.

A proof of work mechanism requires miners to use computing resources for the privilege. Here’s how it works:

New transactions are grouped together. Users buy and sell cryptocurrency, and the data from these transactions are pooled into a block.
Miners compete to process the new block. Crypto miners compete to be the first to solve a complex math problem. By showing proof that they’ve undertaken the computational work—referred to as a hash—earns the miner the right to process the block of transactions.
One miner is chosen to add the new block. There is a degree of randomness in deciding which miner wins the right to process the block. The winner is awarded new cryptocurrency coins, and adds a new block to the blockchain.


Proof-of-Work is the most popular of the two main consensus mechanisms for validating transactions on blockchains. While it’s not without limitation, miners using proof of work help ensure that only legitimate transactions are recorded on the blockchain.

By doing so, miners also help protect the security of the blockchain from potential attacks that could cause those transacting blockchain-based businesses to suffer losses.


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