Proof of Work

Bitcoin, which made blockchain technology popular, developed the so-called Proof of Work (PoW) algorithm. In principle, each participant on the Bitcoin network can participate in block generation. In order to confirm the transaction and enter a block into the blockchain, a miner has to provide an answer, or proof, to a specific challenge. Miners use PoW to validate transactions and mining new coins, but its main goal is to block potential cyber-attacks or suspicious activities within the network. It is essential to note that the high energy consumption of PoW blockchains is neither the result of inefficient algorithms nor of outdated hardware. Strikingly, such blockchains are “energy-intensive by design” and it is their high energy consumption that protects PoW blockchains from attacks. The second-largest blockchain Ethereum also currently runs on a PoW consensus mechanism but has plans to move to Proof of Stake in the near future.