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20.7.2020 damian

Proof-of-Work (PoW) and its role in the cryptocurrency world

In the world of cryptocurrencies, PoW stands for Proof-of-Work. It is a method used to demonstrate the value within the Bitcoin network (as well as in other networks). Transactions are verified through this proof, which essentially creates a competition between individual miners. These miners use GPU, CPU, or ASIC devices to "mine" a specific coin, performing heavy work in the process. As a reward for their efforts, they receive coins of the respective cryptocurrency.

Cryptocurrencies using PoW

Cryptocurrencies such as Bitcoin, Litecoin, and Ethereum utilize Proof-of-Work. However, some cryptocurrencies are transitioning to Proof-of-Stake (PoS), which they believe offers a better future. Ethereum is one of those making this transition. With PoW, it is crucial to be cautious with smaller cryptocurrency projects that may be susceptible to a so-called 51% attack. If someone acquires more than 50% of the mining "pie," they can confirm fraudulent transactions. This issue affected Ethereum Classic, for example. Some cryptocurrencies have measures in place to prevent this from happening.

The main disadvantage of PoW

The primary drawback of Proof-of-Work is its energy consumption, which is frequently criticized in relation to Bitcoin. In this regard, the PoS consensus performs significantly better.

The future of PoW and PoS

As more cryptocurrencies shift towards Proof-of-Stake, it remains to be seen how Proof-of-Work will evolve in the future. The energy consumption issue may prompt further innovations and improvements within the PoW model or lead to wider adoption of alternative consensus mechanisms, such as PoS.


Proof-of-Work plays a crucial role in the world of cryptocurrencies, ensuring the verification of transactions and maintaining network security. However, its energy consumption presents a significant drawback, leading some cryptocurrencies to adopt alternative consensus mechanisms like Proof-of-Stake. As the cryptocurrency landscape continues to evolve, it will be interesting to see how PoW adapts and whether it remains a dominant force in the industry.

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