Proof of Work (PoW)
Proof of Work (PoW) is a consensus algorithm used in blockchain networks to validate transactions and create new blocks. As the name suggests, it requires participants (miners) to perform a certain amount of computational work.
In PoW, miners use computational power to solve complex cryptographic puzzles. The first miner to solve this problem, and verify the solution, gets to add a new block of transactions to the blockchain. These puzzles are deliberately designed to require significant resources but the solution, once found, is easy for others in the network to verify.
The PoW mechanism is used to prevent any malicious attempts to disrupt the network, as it would require an enormous amount of computational resources to do so. To overwrite or manipulate information on the blockchain, a malicious party would need to control more than 50% of the network's total computational power aka hashrate. If the party manages to do this, they could launch a
'51% attack.' However, in large networks like
Bitcoin, a 51% attack is very difficult and expensive to achieve.
Bitcoin creator
Satoshi Nakamoto created the PoW mechanism and introduced a means by which miners can be rewarded for their work with transaction fees and newly minted Bitcoin, fueling a competitive
mining landscape.
While PoW provides impressive security benefits, it has been criticized for its high energy consumption, leading to the development of alternative consensus mechanisms, such as
Proof of Stake (PoS), aimed at delivering the same level of security with less environmental impact.