Proof of Work: What is it?

The emergence of cryptocurrencies caught the attention of the market as assets proved to be independent structures and, mainly, decentralized from traditional financial systems. And one of the mechanisms responsible for this disruption is the crypto mining process, with Proof of Work (PoW) being the most famous.

The PoW is the consensus model most used by cryptocurrencies, especially the best known: Bitcoin (BTC). Altcoins such as Litecoin (LTC), Dogecoin (DOGE), Bitcoin Cash (BCH) and Monero (XMR) also use the protocol.

But, after all, how does Proof of Work work and why does this method guarantee more security for the crypto mining process? Check out all the details below.

What is Proof of Work?

Let’s start with the theoretical part: Proof of Work is the name given to the process of approving transactions on cryptocurrency platforms. Translated into “proof of work”, it consists of a consensus validation mechanism that can be used directly by users of the blockchain network.

By using the blockchain system of a certain cryptocurrency, the PoW selects random computers of cryptocurrency users in an automated way, forming a “node” of the operation. Within these nodes, mathematical calculations are resolved and financial transactions are recorded.

That is, Proof of Work is the basis for cryptocurrency mining, a process that ensures that transactions between users are carried out safely, and also for the issuance of new coins.

New validation models

Proof of Work is undoubtedly the most used validation mechanism in blockchain networks, however, it is not the only one.

There is also Proof-of-Stake which represents a mechanism that dispenses with asset mining. In this case, transactions occur more efficiently and with less energy expenditure. For this reason, staking is considered the most sustainable mining model for cryptocurrencies.

Why was Proof of Work created?

The idea behind PoW emerged long before cryptocurrencies, more precisely in 1993, when scientists Cynthia Dwork and Moni Naor thought of a method that could create an identity to differentiate emails and spam.

The idea behind the development of this mechanism was to make computers have to prove that they spent a certain amount of time to finish the message.

In the blockchain universe, Proof of Work serves to legitimize the transaction process between users, in addition to being the basis for the creation of new digital assets . Without PoW, it would not be possible to validate, let alone record, crypto transactions, rendering these assets worthless.

How does Proof of Work work?

Now that you know what PoW is, it’s easier to understand its functionality in practice. If we compare the mechanism with a company, we can say that the consensus test works as a team effort in which each professional performs a type of work, generating an organized and effective chain of results.

In the case of Proof of Work, the “work team” is represented by the nodes we mentioned earlier, i.e. the computers connected in the blockchain network . Through these nodes, complex mathematical calculations are made that generate unique codes for each type of transaction, allowing the activity to be registered and validated.

The machines that finish the job the fastest are rewarded with new cryptocurrencies, making the mining process of many of the well-known assets on the market disputed between users. This chain is fed back, and is also the basis for the pricing of assets.

The reward is the fuel that keeps miners interested in continuing to do this work, which in turn fuels the entire creation of new cryptocurrencies.

How proof of work ensures safety

After all, how does Proof of Work guarantee greater security for crypto transactions? Calm down, let us explain. When the mechanism is triggered during transactions between users, the blockchain system recognizes a unique public key and proceeds to protect the network from further unknown entries.

In this case, the proof-of-work algorithm ensures the security of the distributed ledger and protects the network from “double spending” attacks while adding new transaction blocks to the blockchain and generating cryptocurrency rewards.

The main cryptocurrencies that use PoW

Bitcoin is the main crypto on the market to use the PoW mechanism for issuing and validating transactions. However, it is not the only one.

There are several altcoins that use the protocol to generate new mining, such as:

  • Bitcoin;
  • Dogecoin;
  • Litecoin;
  • Bitcoin Cash;
  • Monero;
  • Ethereum Classic;
  • Bitcoin SV;
  • Zcash;
  • Ravencoin;
  • Dash.


Now that you know how Proof of Work works and what its main purposes are for the crypto market, how about trading assets linked to this process?