Proof of Work (PoW)

Proof of work is a consensus mechanism used in blockchainThe blockchain is a digital ledger that records transactions in a secure and decentralized manner. Think of it like a shared spreadsheet that is constantly... More networks that allows miners to compete to validate transactions and earn rewards by solving complex mathematical puzzles. This mechanism is currently used in EthereumEthereum is a type of cryptocurrency that is similar to Bitcoin, but with some important differences. One of the key differences is that Ethereum is... More, but it requires a significant amount of computing power and energy consumption. As a result, Ethereum is planning to transition to a proof of stake mechanism, which will use validators who hold a certain amount of cryptocurrencyCryptocurrency is a digital or virtual currency that uses cryptography for security and operates independently of a central bank. Cryptocurrencies use decentralized technology called blockchain... More as collateralCollateral is an asset that a trader pledges to a lender to secure a loan or margin trading position. In the context of crypto trading,... More instead of miners to secure the network. This is expected to reduce energy consumption and increase transaction speeds, making the network more efficient and environmentally friendly.