Short for Proof of Work. First popularised by Bitcoin, PoW is a decentralised consensus mechanism that requires blockchain miners to solve complex mathematical puzzles with computers to verify transactions and mint blocks. This proves a certain amount of work was done and proves that one person solved the problem, preventing fraud and preserving integrity of the network. The miners are then rewarded for their efforts with tokens and thus a Bitcoin is born and a new block is added to the blockchain. A frequent criticism of PoW is the power that is needed to generate the blocks and keep the network running. However, Bitcoin secures a trillion dollars of value (at the time of writing) and arguably uses less power than the banking system.
“@HalFinney theorized the PoW and Bitcoin going to $10m. I believe in both!”« Dictionary Menu