What is Proof of Work?

July 29, 2022

Welcome to Soldex academy, your number one source for Crypto and DeFi education. Imagine you’re in a puzzle competition, and you’re required to guess the combination of a lock.This is a difficult challenge, and you’d need to try out different combinations. But once you’ve produced this, it’s very easy to validate. You only need to input it and check if the lock opens.

In this article, we will explain ‘Proof of Work’ or PoW in simple terms. We’d talk about how it works and its pros and cons. Let’s get started.

A Proof of Work system is one in which miners or participants in a blockchain must complete a puzzle or computation to approve transactions and add new blocks to the blockchain. This puzzle must be difficult to solve but easy to verify. Proof of work was originally invented to prevent service abuses in a network such as spamming. However, it was later employed as a consensus algorithm by Bitcoin and many other cryptocurrencies to validate transactions and add new blocks to the blockchain. Before we go further, let’s explain briefly what a consensus algorithm is. A consensus algorithm is simply a process used to achieve agreement on a single data value among distributed systems.

How Proof of Work works

Now let’s continue with how Proof of Work works. Using the Bitcoin blockchain, we’d explain how Proof of Work works.Recall that Bitcoin is a decentralized ledger that is maintained by miners. These miners are responsible for approving transactions and adding blocks to the blockchain. A block is simply a collection of data. The data can be anything. In this case, it is a list of transactions. A block can only contain a certain amount of information, and when it gets filled, another block is added to it. A chain of blocks is then called a blockchain. Ensure to watch our blockchain video or read article to understand better how the blockchain works. Now, for miners to approve transactions in the blockchain, they must expand computational power to guess a random number. This number is called the nonce. When the nonce is passed through the bitcoin’s hash function, it must produce a number that matches some laid down conditions. After this number is produced, the other miners will verify the number’s validity. If accepted, the miner will be rewarded with an agreed-upon number of bitcoins. Basically, Proof of Work is a miner telling other miners’

“hey guys, I’ve made use of expensive computational power to find a valid nonce, and this nonce was used to generate the solution to this block. Look at the block’s hash; it is proof that I did this work. Therefore I want this block added to the blockchain, and I expect my reward of bitcoins.”

The other miners will quickly verify the block’s hash. If correct, the block will be added to the blockchain, and the miner will automatically get his reward of bitcoins. That’s how Proof of Work works.

Advantages of Proof of Work

Now let’s go over the advantages of Proof of Work.


Proof of Work has so many advantages, the first being security. Proof of Work ensures that the blockchain remains completely decentralized and secure. It’s almost impossible to carry out a fraudulent transaction on the blockchain. This is because to alter the blockchain or add fraudulent blocks to the blockchain, you’d need to control 51% of the entire network’s power. Given the price of mining equipment presently, this is equal to billions of dollars. That’s not all. You’d also need to generate lots and lots of electricity to pull this off. And if you succeed in pulling it off, you’d probably gain nothing. This is because bitcoin holders will lose their faith in the coin and be forced to sell off in a hurry. These massive selloffs will make bitcoin lose so much value that you’d have gained nothing at the end of the day.


Another advantage of Proof of Work is that it’s transparent. Miners must broadcast the details of each transaction in the network, so anyone can look it up to confirm their validity.


Proof of work solves the double-spending problem. Double-spending is an issue in digital cash systems in which the same digital token or coin can be spent more than once. For example, Sophia has 10 bitcoins in her wallet. Double spending is Sophia trying to send Alice 10 bitcoins and trying to send Mike 10 bitcoins simultaneously. Double-spending duplicates coins and makes the currency valueless and unpredictable. Ensure to watch our upcoming video on Double-spending to understand this concept better. Because miners must verify the validity of each transaction, the double-spending problem is successfully solved with Proof of Work.

Disadvantages of Proof of Work

Now let’s go over the disadvantages of Proof of Work. The main con of Proof of Work is that it requires a lot of expensive hardware that takes a lot of electricity. According to some reports, bitcoin’s Proof of Work system uses as much energy as a whole country. Also, the computer hardware required for Proof of Work is specifically designed to solve the complicated algorithm calculations of the network. They can’t be used beyond that.

In conclusion, Proof of Work is a consensus mechanism used by different cryptocurrencies to validate transactions and ensure the security and decentralization of the blockchain.

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