History of Proof-of-Work
In the early days of email technology, Proof-of-Work (PoW) was used to prevent spam emails. PoW is a system that requires sender of an email to do some work, such as solving a math problem, before the email is sent. This prevented automated programs from sending large numbers of emails, because they would have to spend time solving the PoW for each email.
What is Proof-of-Work?
In recent years, PoW has been adapted for use in cryptocurrency. This is what allows Bitcoin and other cryptocurrencies to function without the need for a central authority. In this system, miners compete to solve complex mathematical problems in order to add new blocks to the blockchain. The first miner to solve the problem gets to add the block and receive a reward in Bitcoin. This process is called mining.
Proof-of-work is an important part of cryptocurrency because it provides security and immutability. Without proof-of-work, it would be easy for someone to add fake transactions to the blockchain or double spend their coins. The fact that miners are competing against each other also means that there is no single point of failure. If one miner goes offline, there are still others working on the problem.
Proof-of-Work is one of the the two major consensus mechanisms used by most cryptocurrencies today. The other one is called Proof-of-Stake. Click here to learn more about the latter.