Proof-of-Work (PoW) is a consensus mechanism for blockchains to validate transactions and add blocks to the blockchain.
In a PoW system, computers (also known as miners) compete against each other to solve a mathematical puzzle The first miner to solve a puzzle gets to create the next block and receives a reward for the work done. This process is known as mining.
The mathematical puzzle that miners must solve is difficult to solve, but easy to verify. As a result, it requires a lot of computing power to add new blocks, but is relatively easy for other computers on the network to confirm the solution.
One of the main advantages of PoW is that it is decentralized. This means no central authority is needed to validate transactions. In fact, the network works as a whole to validate transactions and add blocks to the blockchain.
PoW is used by several popular cryptocurrencies, including Bitcoin and, until September 2022, Ethereum. PoW has proven to be a secure and decentralized way to confirm transactions without the involvement of central parties. One drawback of PoW is that it is an intensive process. Solving the mathematical equations requires a lot of energy. Proof of Stake has been developed as an alternative, partly to provide an alternative to the high energy consumption of PoW.
In addition to miners, nodes also play an important role in Pow. Miners and nodes do not have the same function. Miners are computers that solve the mathematical puzzles and thus add the blocks to the blockchain through which transactions are verified. Miners thus provide the hard work.
Nodes are computers that keep a copy of the blockchain. Nodes also check the computation solved by the miner. A big difference between miners and nodes is that anyone can run a node on a PoW network. Because a node does not do heavy calculations, only one computer is needed for this. Mining requires heavier computers. Therefore, mining is often done by larger companies that purchase several heavy computers in a place where electricity is relatively cheap.
