Proof of work (PoW) is a consensus mechanism. It is a decentralized method. In this mechanism, different network participants try to solve the same mathematical puzzle to protect the system from getting hacked. It is used to verify transactions and to introduce new tokens to your system. It provides a smooth flow of transactions without any third party. Bitcoin, the most expensive cryptocurrency blockchain works on a proof of work (PoW) mechanism. Some other blockchains that work on proof of work (PoW) are Litecoin, Dogecoin, etc.
Requirement of proof of work (PoW)
Broadly proof of work (PoW) is required to keep the transaction process safe and to prevent any kind of fraud. It develops trust among users. It avoids blockchain scams. Nobody can fake transactions or mislead another party. It eliminates the requirement for third-party involvement.
Working on proof of work (PoW)
Cryptographic issues are solved by the computational network. Some people are provided with the right to add new blocks in the proof of work (PoW) blockchain. They compete to add new blocks. They are called miners and this whole work is called mining. Miners verify the transaction by adding new blocks to the blockchain. They use hashing techniques repeatedly. However, the “winner” of a hashing process collects and stores transactions from the mempool into the following block. Everyone on the network is encouraged to act honestly and record only true transactions because the “winner” is arbitrarily selected in proportion to the work completed.
Drawbacks of Proof of work (PoW)
Proof of work (PoW) is a bit of an expensive process as all the miners work on a single issue and compete. It not only increases the cost but also wastes a lot of time. The requirement for energy is also high. With all these transaction fees are also increased and make it a lot more expensive.
Conclusion
Proof of work is an efficient process but with some drawbacks. Now new alternatives to reduce these drawbacks coming up. Some blockchains are switching to other consensus mechanism like Proof of Stake.
Ruchi Arora is a writer at trickyfinance covering various topics related to finance and cryptocurrency. This includes the latest news, events, reviews and various other information. Besides writing, she has a huge interest in designing and sketching.
