Proof of Work (PoW)
A consensus mechanism in which computers (miners) compete to solve cryptographic puzzles in order to validate a new block of transactions.
Proof of Work (PoW) is a consensus mechanism in which network participants (miners) compete computationally for the right to add the next block of transactions by solving an energy-intensive cryptographic puzzle. The winner receives a reward in the form of newly issued coins and transaction fees — this is the mechanism that secures the Bitcoin network.
The advantage of PoW is a high level of security resulting from the cost of an attack (see: 51% attack), while the drawback is very high electricity consumption, which is the main argument of critics of this approach and the reason some newer blockchains have chosen the alternative Proof of Stake mechanism.
Related terms
Proof of Stake (PoS)
A consensus mechanism in which the right to validate transactions depends on the amount of coins locked (staked), not computing power.
51% attack
A situation in which a single entity controls more than half of a network's computing power (or staked funds) and can manipulate transactions.
Bitcoin
The first and still most recognizable cryptocurrency, launched in 2009 by the pseudonymous Satoshi Nakamoto.