Proof of Work

Proof of Work is a consensus mechanism in which participants, called miners, compete to solve a computationally difficult puzzle. The first to find a valid solution earns the right to add the next block of transactions to the blockchain and collects the associated block reward.

How it works

Miners repeatedly hash a block’s data together with a changing value called a nonce until the result falls below a network target. Finding that solution requires enormous numbers of guesses and therefore real electricity and hardware, but verifying a winning solution is instant for everyone else. The network automatically adjusts the difficulty so that blocks arrive at a roughly steady pace regardless of how much mining power is online.

Why it matters

The cost of mining is what secures the chain: to rewrite history an attacker would need to out-compute the honest majority, which is prohibitively expensive on a large network. The same energy cost is also Proof of Work’s main criticism, and it is the reason some networks favour proof of stake instead.

Example

Bitcoin is the best-known Proof of Work network. Litecoin and Bitcoin Cash also use it, each with their own hashing details.