Proof of work (PoW): how miners secure the network

Proof of work (PoW) is a mechanism for agreeing on the state of a network without a central administrator. Participants called miners compete to solve a computational puzzle, and the winner adds the next block and receives a reward. The cost of energy and hardware makes rewriting history very expensive, which protects the network from fraud.

The advantages of PoW are a simple security model and a long track record. The drawbacks are high energy use, rising hardware costs and a tendency for mining to concentrate in large entities. A 51% attack, meaning taking over a majority of the computing power, is theoretically possible and can be realistic for small networks. Bitcoin uses PoW, but it is not the only way to secure a network.