Proof of Work (also abbreviated as PoW) is a part of the consensus mechanism by which miners expend computing resources to secure and run the blockchain and its transactions. Specifically, Proof of Work is the means by which the next block producer is selected meaning PoW is the block producer selection mechanism.

Expenditure of computing resources to provide for Proof of Work can be done thru several means, namely thru the usage of CPU power and GPU power to compute for PoW.

Proof of Work has the characteristic of it being difficult or computationally expensive to compute for but easy to check for correctness. This characteristic prevents fake proof of work from being accepted by the network.

In Bitcoin, the Proof of Work and block producer selection is done thru hashing or computing for a number that is lower than the target difficulty.

A simplified example is illustrated here:

Suppose the block difficulty is 1000, all miners work on computing for a answer that will give a number below 1000. The first miner to do so gets to assemble the next block which contains all the transactions in a given period and is awarded a reward of BTC for finding the next block.

Several detractors have criticized Proof of Work as not being environmentally friendly due to the need to expend considerable electric power in the running of mining rigs. As such research is underway to provide alternatives to Proof of Work that are more ecologically friendly  but provide the same if not better security. Some of these alternatives are Proof of Capacity and Proof of Stake.


A clarification on proof of work and consensus mechanisms

Most publications have Proof of Work as THE consensus mechanism, but we at the Crypto Research Institute think it is not the case.  Proof of Work only provides the mechanism for the selection of the right to produce and broadcast the next block to all nodes.

We quote Satoshi Nakamoto’s original Bitcoin whitepaper to show that Proof of Work is a step in the consensus mechanism but NOT the whole consensus mechanism:

“1.) New transactions are broadcast to all nodes.
2.) Each node collects new transactions into a block.
3.) Each node works on finding a difficult proof-of-work for its block.
4.) When a node finds a proof-of-work, it broadcasts the block to all nodes.
5.) Nodes accept the block only if all transactions in it are valid and not already spent.
6.) Nodes express their acceptance of the block by working on creating the next block in the
chain, using the hash of the accepted block as the previous hash.” [1]

The whole of the consensus mechanism above is called “Nakamoto Consensus” and almost every blockchain follows Nakamoto Consensus but replaces the Proof of Work part with a different type of block producer selection mechanism  such as Proof of Stake or Proof of Storage.



1.) Satoshi Nakamoto (2009) Bitcoin Whitepaper

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