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What is proof of work (PoW)?​

Proof of Work (PoW) is a consensus mechanism used in blockchain networks to validate transactions and secure the network. It is a key component of cryptocurrencies like Bitcoin, where it serves as a way to achieve consensus among distributed participants and ensure the integrity of the blockchain.
Here's how Proof of Work operates:

Mathematical Problem-Solving:
  • PoW requires participants, known as miners, to solve complex mathematical puzzles. These puzzles are cryptographic in nature and are resource-intensive, requiring significant computational power. The puzzles are designed to be difficult to solve but easy to verify once solved.

Mining Process:
  • Miners compete to solve the puzzle and find a solution, often referred to as a hash. The first miner to find a valid hash that meets the network's difficulty target can broadcast their solution to the network. This process is called "mining."

Block Creation and Validation:
  • The successful miner gets the right to add a new block of transactions to the blockchain. The block includes the miner's solution to the puzzle, a list of verified transactions, and a reference to the previous block (creating the chain). This block is then propagated to the rest of the network for verification.

Reward:
  • As an incentive, the miner who successfully mines a block is rewarded with newly created cryptocurrency (block reward) and any transaction fees included in the block. This reward system incentivizes miners to invest in the necessary hardware and electricity to participate in the network.

Security and Consensus:
  • The difficulty of the PoW puzzles and the need for a majority of computational power (also known as hash rate) to find the next block makes it extremely challenging for any single entity to dominate the network or alter the blockchain. This ensures that the network remains decentralized and secure against attacks, such as double-spending.

Proof of Work is the consensus mechanism behind many well-known cryptocurrencies, including Bitcoin and Ethereum (until Ethereum switched to Proof of Stake in 2022). However, PoW is often criticized for its high energy consumption and environmental impact due to the substantial computational resources required.
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