101 blockchains

101 Blockchain: Your Easiest Guide to Proof of Work Consensus Mechanism

Intermediate Jan 17, 2023

Proof of Work (PoW) in Blockchain, Explained

Cryptocurrencies use the Proof of Work (PoW) consensus to verify the accuracy of new transactions that blockchains record continually.

This Proof of Work consensus mechanism replaces the centralized governing of traditional systems. Instead, it relies on a distributed network of participants to validate all transactions coming into the blockchain, and at the same time, add them as new blocks on the chain or network.

More so, this type of consensus chooses which of the participants (called miners), can handle the lucrative task of verifying transactions and new data, as well as solving mathematical problems and complex equations that prevent the network from external attacks and hacks. Also, this allows miners to receive rewards in crypto—whenever they accurately perform and execute the said tasks.

Additionally, cryptocurrency widely uses the PoW mechanism. In fact, Bitcoin uses this consensus algorithm, wherein miners need to mine the new blocks and tokens to validate the transactions coming into the chain. In return, they are rewarded with bitcoin or altcoins as mentioned above.

Importance of Proof of Work

It is known that Satoshi Nakamoto introduced the very first cryptocurrency to the world around 2008. He did this by publishing the famous white paper regarding a digital currency based on the PoW protocol.

This white paper describes how a “peer-to-peer version of electronic cash” can solve the existing problems in online payments. Indeed, today we saw how cryptocurrency developed and introduced a new dawn for online payments. 

According to experts, this protocol solves the double-spend issue in a traditional payment. Moreover, it also provides a decentralized method of verifying transactions while promoting the highest level of securities. Not to mention, incentivizing the efforts that miners exert in verifying transactions and adding data on the chain.

Cryptocurrencies Using PoW

Analysts say that around 64% of the total market cap of cryptocurrencies uses the PoW mechanism. Some of the most popular ones are:

  • Bitcoin
  • Dogecoin
  • Bitcoin Cash
  • Litecoin
  • Monero

Issues with PoW Mechanism

As popular as it is, the PoW mechanism has also received criticism and backlash since its inception. One of the major reasons is its appetite for electric power.

Furthermore, PoW’s energy consumption exceeds the regular amount of electricity in a regular desktop computer—especially today, that bitcoin mining would require energy consumption that is equivalent to a standard home in nine years, just to mine one Bitcoin.

In hindsight, this intense computational energy demands in PoW make major outfits centralize mining operations. Moreover, this might result in manipulation and control of cryptocurrency operations for some.


Nonetheless, the PoW consensus algorithm has contributed so much to how we view cryptocurrencies today.

With that said, we will discuss what is Proof of Stake in the next article and differentiate it from the PoW mechanism. Stay tuned!