The Bitcoin network still relies on the Proof-of-Work mechanism (Proof‑of‑Work - PoW)📈📉
It is one of the most important components of its security and technical design since its inception in 2009.
Here are the basic details:
✅ What is the Proof-of-Work mechanism?
It is a method for validating transactions and adding blocks to the blockchain. It relies on:
Solving complex mathematical puzzles using significant computational power.
Miners (the ones solving the puzzles) are rewarded with a certain amount of bitcoin (currently 3.125 BTC after the last halving in April 2024).
The process requires massive electricity and specialized mining hardware (ASICs).
🔒 Why does Bitcoin still use PoW?
1. High security: It is very difficult to manipulate the chain because rewriting blocks requires enormous computing power.
2. Strong decentralization: Anyone can participate in mining (theoretically).
3. Stability and trust: Changing the mechanism requires community consensus, which is very difficult given the size of the network.
⚠️ What are the downsides?
1. High energy consumption: Mining consumes more electricity than some small countries.
2. Slowness and costs: The network processes only about 7 transactions per second, with high fees during peak times.
3. Mining centralization in practice: Most mining power has become concentrated in large companies.
🆚 Compared to Proof-of-Stake (PoS)
Ethereum transitioned from PoW to PoS in September 2022 (The Merge), reducing energy consumption by ~99%.
PoS is cheaper and faster, but it raises concerns about the concentration of power among the 'wealthy'.
📌 Will Bitcoin abandon PoW in the future?
So far, there is no consensus or serious plans to transition Bitcoin to PoS.
And most of the community considers PoW to be part of Bitcoin's philosophy regarding scarcity, censorship resistance, and political neutrality.