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Blockchain – Proof of Work (PoW)

Proof of Work consensus is the mechanism of choice for the majority of cryptocurrencies currently in circulation. The algorithm is used to verify the transaction and create a new block in the blockchain. The idea for Proof of Work(PoW) was first published in 1993 by Cynthia Dwork and Moni Naor and was later applied by Satoshi Nakamoto in the Bitcoin paper in 2008. The term “proof of work” was first used by Markus Jakobsson and Ari Juels in a publication in 1999.

Cryptocurrencies like Litecoin, and Bitcoin are currently using PoW.  Ethereum was using PoW mechanism, but now shifted to Proof of Stake(PoS).

Principle: A solution that is difficult to find but is easy to verify.

Purpose of PoW

The purpose of a consensus mechanism is to bring all the nodes in agreement, that is, trust one another, in an environment where the nodes don’t trust each other. 

Features of PoW

There are mainly two features that have contributed to the wide popularity of this consensus protocol and they are:

How Does PoW Work? 

The PoW consensus algorithm involves verifying a transaction through the mining process. This section focuses on discussing the mining process and resource consumption during the mining process. 


The Proof of Work consensus algorithm involves solving a computationally challenging puzzle in order to create new blocks in the Bitcoin blockchain. The process is known as ‘mining’, and the nodes in the network that engages in mining are known as ‘miners’. 

Energy and Time consumption in Mining: 

The process of verifying the transactions in the block to be added, organizing these transactions in chronological order in the block, and announcing the newly mined block to the entire network does not take much energy and time. 

Mining reward:

Bitcoin’s PoW System

Bitcoin uses the Hashcash Proof of Work system as the mining basis. The ‘hard mathematical problem’ can be written in an abstract way like below :

Given data A, find a number x such as that the hash of x appended to A results is a number less than B.

A target hash is a number that the header of a hashed block must be equal to or less than for a new block, along with the reward, to be awarded to a miner. 

The lower a target is, the more difficult it is to generate a block.

Note: The target hash adjusts once every 2016 block or approximately once every 2 weeks. All the miners immediately stop working on the said block and start mining the next block. 

Common cryptographic protocols used in PoW: The most widely used proof-of-work consensus is based on SHA-256 and was introduced as a part of Bitcoin. Others include Scrypt, SHA-3, scrypt-jane, scrypt-n, etc. 

Challenges With PoW

The Proof-of-Work consensus mechanism has some issues which are as follows:

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