Proof of Work is a protocol that existed before Bitcoin, and Nakamoto applied this technique to digital currencies and innovated the way traditional transactions are set. Proof of Work is a protocol, whose main goal is to prevent cyber-attacks. Proof of Work (PoW) validates work that has happened and proves the work is correct. Bitcoin and a multitude of Alternative coins use Proof of Work to make sure the authenticity of the blockchain is correct.
Here’s what happens with Proof of Work:
· The transactions are all bundled together into what is known as a block in the community.
· Miners need to verify whether the transactions within each block in the chain are correct and legitimate.
· In order to validate the transactions, miners need to solve mathematical problems known as PoW problems.
· Thereafter, a reward is given to the first miner who solves each block’s problem.
· Finally, the verified transactions are stored into the public blockchain.
Now, there are some downsides to Proof of Work:
· Generally, it requires a lot of electricity which increases the costs to mine.
· Requires high computing power which is expensive.
· Miners could look to mine different coins if there is a higher reward which could hurt platforms if there is no user support.
This brings us to Proof of Stake (PoS), an alternative to Proof of Work.