What is Proof of Work?

Proof of work is the most popular consensus mechanism used in cryptocurrencies. Its main purpose is to approve transactions and secure the network.   

Consensus Is Important

Consensus means that everyone is in agreement with the transactions that happened on the network. So the network should have has no fraud whatsoever to keep its integrity. As a result it gives confidence to the people that use the network. So as you can imagine consensus is really important. 

Cryptocurrencies use blockchain technology that keeps track of all the payments that happen on the network. Most blockchains are more or less decentralised which means there is no central authority to validate payments.


To clarify it is straight forward for a centralised authority to validate payments. This is because they would have an overview of the total funds everyone has and payments made on the network. They have one place or ledger where they find all the information they need to verify transactions.

On the other hand a decentralised system needs a different solution. This is because there are many different ledgers on a decentralised network. Most importantly all those ledgers need to match up and agree on all the payments made on the network.

As a result a blockchain needs to pair up with a type of consensus mechanism like proof of work.

How Proof of Work Works

Proof of work is based on mining. It is done by miners who maintain the network and keep everything working smoothly. Miners are computers and there are many of them. 

Similarly to mining for gold, cryptocurrency miners mine for cryptocurrency rewards. These rewards are mined from the blockchain itself. The difference is that they use computers and not picks and shovels.

To get the reward they have to guess the ‘password’ that will unlock it. To clarify the password is actually called a nonce and it is made up of zero’s.


Not every block needs the same amount of zeros to unlock it. In fact it takes around 10 minutes for the computers on the network to guess the nonce. When a miner guesses the nonce it notifies the other miners because they have to verify the outcome.

It is much easier to work backwards and verify the nonce than it is to guess it. As a result it takes very little time for the other miners to verify the outcome.

After that the winning miner gets the block reward. Additionally the transaction will get logged onto the blockchain. Hence this is why this consensus mechanism is called proof of work.

Advantages To Using Proof Of Work

No Double Spending

In traditional finance banks manually approve transactions that can or cannot go through. This way of working has a number of problems. Consequently one of them is the issue of double spending.

Double spending is a type of fraud. It happens when someone pays two different parties, but he does not have the funds to pay both. However the transaction goes through anyway. As a result currency is created out of thin air to pay the second party.

This is a problem happens quite often in traditional banking and it is a known problem.

On the other hand cryptocurrencies are superior to traditional banks in this respect. This is because before the transaction goes through the blockchain checks the amount in the wallet. If there are not enough funds to make the payment then it will not go through. So the network ensures there is no double spending thanks to proof of work.


Some individual or entities want to corrupt systems for their own benefit. So it is important that a blockchain is secure and able to withstand an attack. The proof of work consensus helps to keep the network secure.

The longest chain in the blockchain is the most honest chain. That is to say it has the most proof of work. So if a hacker attacks the blockchain he would need to outpace the growth of the most honest chain.

To do this the hacker would need access to 51% of all computer nodes on the network. Hence why this is called a 51% attack or a majority attack. The hacker would need to change each previous block to modify it to corrupt the network.

However there is a cost to mounting an attack. So if the network is large the potential reward is not worthwhile. For example with Bitcoin a hacker would spend around $500,000 per hour to mount an attack.

Consequently this is fairly impossible for Bitcoin’s network to get hacked at this point. On the other hand some other networks are much smaller and would cost much less to hack.

Disadvantages of Proof of Work

Proof of work is a great way to protect the network and reach consensus, but there are some drawbacks.

Energy Consumption

There is a lot of criticism lately on the amount of energy proof of work blockchains use, specifically Bitcoin. Here for example is an article from Nasdaq which states Bitcoin uses more energy than Argentina.

Bitcoin does use a lot of energy due to proof-of-work. However this is not as much as other systems.

Sourced from ARK invest

Bitcoin is money and its users want to feel secure and confident when they use the network. Hence it is a justifiable expense for security. Additionally no other consensus mechanism is as secure as proof of work.

Moreover Bitcoin is driving a green revolution which the article by Nasdaq also mentions. The Nasdaq article states that although Bitcoin consumes energy, a good portion of it is carbon neutral. This is exactly what is written in our article Bitcoin Energy Consumption which debunks some myths around the topic.


A second critique is that a proof of work network is slow and not scalable. Blockchains usually take minutes to solve blocks. For example Bitcoin takes 10 minutes to solve a block and create a new one on the blockchain.

The network is deliberately slow as otherwise no one will reach consensus. Hence the network is purposefully slow because of security. Additionally when there is high demand on the network, transaction fees can become expensive. That is to say even for small transactions.  

However blockchain developers can fix this problem by implementing a lightning network. This is a layer 2 solution that is laid upon the core blockchain layer. It is still peer-to-peer, but it also allows instant transactions that are lower cost. The issue is that it does take time to implement.

Otherwise cryptocurrencies can use a hybrid system. Where a cryptocurrency could use a proof of work blockchain and another system to make it faster. Like for example Dero uses both a proof of work blockchain and DAG network.

No Repercussions For Bad Actors

The network cannot punish miners that stage malicious attacks. To clarify proof of work does deter bad actors. However if a bad actor succeeds in staging a malicious attack they are not punished in any meaningful way.

Unfortunately most people that are on the network will lose faith in the cryptocurrency after an attack. So people will end up leaving the network and it will die a slow death.

Smaller mining pools are more susceptible to malicious attacks. This is because it is easier to gain access to 51% of the network. However with larger mining pools it is not so easily done. So this makes them more secure.

Other miners on the network can stop malicious attacks. This is good as they can keep the blockchain and its reputation intact. However since miners that stage malicious attacks are not punished it gives them incentive to do it again in future.

Proof of Work Coins

Most cryptocurrencies use proof of work. As a result there is a huge list of many thousands of cryptocurrencies that use it.

Some of the most popular cryptocurrencies that use proof of work are:

  • Bitcoin
  • Bitcoin Cash
  • Litecoin
  • Monero
  • Dogecoin
  • Dash
  • Zcash

Alternatives to Proof of Work

Most cryptocurrencies use proof of work for two main reasons. Firstly it is the oldest consensus mechanism and secondly it is the most secure.

However since proof of work uses a lot of energy some other alternatives to proof of work have emerged.

Alternatives to proof of work

  • Proof of stake – the second most popular consensus mechanism. This involves staking (locking) your crypto funds into the network. The larger the stake the more likely you are to become a validator to verify transactions on the network.
  • Proof of authority – those that validate transactions on the network need to have a longstanding good reputation.
  • Proof of weight – this consensus mechanism is customisable. So you can become a validator depending on the requirements of the network. Like for example the amount of storage capacity you provide for the network or your reputation.
  • Delegated proof of stake – You supply disk space. The more disk space you supply the more likely chance you will have to verify transactions on the network.

Proof of Work Vs Proof of Stake

 Proof of workProof of stake
Block creatorsMinersValidators
Network maintenance costCost of equipment, wifi and electricityCost of equipment, wifi, electricity and tokens
Level of DecentralisationMore decentralisedLess decentralised
SecurityMore secureLess secure

Proof of work vs proof of stake is more decentralised. This is because anyone can join the network to maintain it which makes it more democratic.

On the other hand proof of stake requires people to stake their tokens. The more tokens you stake the more likely it is that you will get picked as a validator. As a result a lot of people get priced out of the opportunity to become validators on the network. Hence proof of stake is somewhat less secure because it is less decentralised.  

Other Articles In This Section
What is Blockchain? An introduction to blockchain technology.
Proof of work. And how transactions are verified.
Proof of Stake. A more energy-efficient means of consensus?
What is Decentralised finance? An introduction and overview of DeFi.

Frequently Asked Questions

What is proof of work in blockchain?

Proof of work is a type of consensus mechanism. A consensus mechanism requires everyone on the network to agree on all the transactions made. It is used to secure a blockchain. To keep it honest and without fraud.

How does proof of work work?

This is when a miner wins a block reward and other miners have to validate the outcome. Once it’s approved the miner gets the reward and it gets logged in the blockchain.

Why is proof of work necessary?

Proof of work is one type of consensus mechanism. However there are other consensus mechanisms that cryptocurrencies could use.

What are the advantages of proof of work?

Proof of work is more secure than other consensus mechanisms. Similarly to other consensus mechanisms it does not allow double spending. Find out more in this article for proof of work.