Proof of Work commonly abbreviated as PoW is the original blockchain consensus mechanism which secures many cryptocurrencies such as Bitcoin, Litecoin and Monero. Proof of Work works by having Miners who utilize computer hardware to compete and solve mathematically complex puzzles in a lottery. The winning Miner is chosen randomly proportional to the amount of work completed and adds the next block of verified transactions into the blockchain. The Miner is then rewarded by the network with a predetermined amount of native crypto.

PoW mining usually requires a high powered PC or ASIC along with cheap electricity and some limited technical know-how. Validating a “bad” block will result in that block being rejected and loss of time and cost of electricity used.

Why is Proof of Work needed?

PoW solves the issue of double spending in a decentralized and peer to peer environment. Since there is no centralized entity or authority, PoW ensures that the transactions occurring on the network are trustworthy.

Advantages:

• Proven, secure way of maintaining a decentralized and peer to peer blockchain
• As the network grows with more Miners and processing power it becomes impractical for any one individual or group to hijack or manipulate the blockchain

Disadvantages:

• Energy intensive
• Scaling issues
• Vulnerable to 51% attack on weaker/smaller networks
• Mining centralization, especially on networks with ASIC miners