How proof of work works
Proof of work is the consensus mechanism that lets a blockchain agree on its history without a central authority. Miners compete to solve a cryptographic puzzle that is hard to compute but trivial to verify; the first to solve it adds the next block and earns the reward. Because solving the puzzle costs real electricity and hardware, rewriting past blocks would mean out-spending the entire honest network, which is what makes the chain tamper-resistant.
Worked example
Bitcoin targets one block roughly every ten minutes. If more mining hardware joins, the protocol raises the puzzle difficulty to keep that pace; if hardware leaves, difficulty falls. This self-adjusting difficulty is why block times stay stable across decades of changing participation, and why an attacker would need a majority of global hash power to threaten the chain.
Proof of work versus proof of stake
Proof of work buys security with energy; proof of stake buys it with locked capital and slashing. Bitcoin remains proof of work; Ethereum moved to proof of stake in 2022. The debate is real: proof of work has the longer security track record, proof of stake uses a fraction of the energy. Both secure live networks worth hundreds of billions.
Why it matters
The consensus model shapes a coin’s issuance, energy profile, and decentralisation story, all of which feed its long-term investment case. When you take spot or CFD exposure to a proof-of-work coin on Volity, the halving schedule and miner economics are part of the fundamental backdrop. Related: the Bitcoin halving.
Read the full breakdown in our crypto trading guide.
