# Proof of Work

## Proof of Work – The Algorithm for Mining Cryptocurrency

The basis for mining digital currencies is an algorithm called Proof of Work (PoW). Expressively, PoW means “computational puzzle or cryptographic puzzle”. In practice, this means that if someone has solved the problem correctly, he has proven that the principle works.

The algorithm used to solve the cryptographic task offers a reward to the users who have solved it. They have successfully verified transactions and thus generated new blocks on the blockchain. The process is called mining.

Cryptocurrencies such as Bitcoin, Ethereum and Monero are based on this algorithm. The PoW is intended to protect against abuse and to prevent excessive use of the service. Processing is delayed because the user has to solve the difficult task first.

## Blockchain Security and Proof of Work

In the blockchain, PoW is intended to ensure that every user who benefits from the chain also contributes. This contribution is essentially corresponding work performance to the block calculations.

Many miners take part in solving the complicated arithmetic problem and invest a corresponding hash performance for it. For example, megahashes per second, gigahashes per second, or terrahashes per second.

These hash performances for the calculation of a block is the basic prerequisite for the work verification procedure of Bitcoin and similar digital currencies. However, the PoW has some disadvantages.

On the one hand, it takes a lot of time to calculate complicated tasks. It also requires a huge amount of energy. This makes calculation tasks incredibly costly for the individual miner.

In conclusion, it’s obvious that the PoW system is not worthwhile for the individual miner. This is largely down to the excessive electricity costs involved due to the energy-intensive nature of mining.