Proof-of-Work (PoW)

A blockchain consensus mechanism involving solving of computationally intensive puzzles to validate transactions and create new blocks. *see Proof-of-Stake (PoS).

What Is Proof-of-Work (PoW)?

In contrast to fiat money which is typically regulated by a central authority such as a bank, cryptocurrencies are decentralized. PoW paves the way for many cryptocurrencies including Bitcoin and Ethereum to work without the involvement of a government or company.

This consensus mechanism is crucial to avoiding double spending — ensuring that a coin or token isn’t used more than once to facilitate a transaction.

It is the key process behind adding new blocks to Bitcoin’s blockchain and verifying transactions.  

The network approves a block each time a cryptocurrency miner successfully completes PoW behind the block.

Miners are rewarded with BTC if they successfully solve the PoW. In the case of BTC, cryptocurrency miners are tasked with the objective of creating a hash matching Bitcoin’s current target.

This consists of a hash which is frontloaded with multiple zeros. The probability of achieving a hash that has several zeros at the front is rather low.

The person who achieves the goal first earns BTC.

The reason why PoW makes it so difficult to tamper with any part of the blockchain has to do with the fact that any alteration would require all blocks to be edited.