#BTCUnbound
Bitcoin still relies on the Proof-of-Work (PoW) mechanism📈📉
It is one of the most important components of its security and technical design since its creation in 2009.
Here are the key details:
✅ What is the Proof-of-Work mechanism?
It is a method for verifying transactions and adding blocks to the blockchain. It relies on:
Solving complex mathematical puzzles using significant computational power.
The devices (miners) that solve the puzzle 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 congestion.
3. Actual mining centralization: Most of the 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%.