Computers around the world specialized for quickly solving these complex math problems compete against each other to solve the puzzle, earning the right to verify the next block of crypto transactions. The winning miner that verifies the block and earns a reward, paid in cryptocurrency. With the need to rapidly complete computational work, crypto miners use computing equipment that is designed to quickly verify crypto transactions and maintain a record of past transactions for the blockchain network. The use of cryptographic technology allows anyone to send and receive digital assets securely. Bitcoin, the oldest and the largest cryptocurrency by market capitalization uses proof of work to verify transaction. Bitcoin’s proof-of-work system runs using open source software. Anyone with the proper hardware and computer skills can participate in proof of work cryptocurrency mining. While the proof of work method isn’t the only way to operate a cryptocurrency network, it’s currently the most widely used cryptocurrency algorithm. Step by step, here’s how the proof of work method works:
Transactions are pooled: Cryptocurrency users initiate transactions, which are pooled into a block. Miners compete: Crypto miners compete on the basis of computational power to be the first to solve a complex math problem. Showing proof of this computational work earns the miner the right to process the block of transactions. New block is processed: The winning miner processes the block of transactions, plus mints more of the cryptocurrency, and adds a new block to the cryptocurrency’s blockchain. Blockchain is updated: The new block is then distributed to all other miners, who each maintain a copy of the blockchain for the cryptocurrency network.
Pros and Cons of Proof of Work
Pros Explained
Widely used by most popular cryptocurrencies: The proof of work protocol is used by the best-known and largest digital currencies, notably bitcoin.Extremely secure: The extensive computing resources required by the proof of work protocol make a cryptocurrency network secure because manipulating a cryptocurrency’s blockchain requires control over more than half of the crypto network’s computing resources.Rewards cryptocurrency miners enabling new transactions: Miners can earn a profit from successfully validating new blocks of crypto transactions.
Cons Explained
High electricity use: Proof of work requires a large amount of electricity to support mining activities. May require expensive hardware: To succeed and earn a profit, purchasing expensive, specialized hardware may be required. Difficult for individual miners: Due to computing capacity requirements, large crypto mining companies and mining pools are more likely to succeed at crypto mining and earn mining profits than individuals working alone.
Cryptocurrencies Using Proof of Work
Here’s a list of popular cryptocurrency platforms using proof of work. This is not a complete list, as hundreds of coins use proof-of-work blockchains. Here are some of the most popular:
Bitcoin Dogecoin Litecoin Monero
Proof of Work vs. Proof of Stake
An alternative to the proof of work consensus mechanism is the proof of stake protocol,. Here’s a comparison of proof of work vs. proof of stake:
