Confusion and deception appear to be the order of business for newbies trying to understand the cryptocurrency ecosystem. Ideas on the true narrative surrounding cryptocurrency-related topics are being misconstrued for a technical course instead of finance.

With the paradigm shift towards the digital age, traditional investors who are not tech-savvy are avoiding an opt-in to crypto investment, as there are also several investors whose fear about the technology has been allayed.
Welcome to the new-age investors who are both tech-savvy and financially savvy.

However, the increasing rate of global acceptance for cryptocurrencies has become a clarion call for every crypto investor to have the requisite understanding of some underpinnings about the cryptocurrency network and its blockchains.

What Is A Consensus Mechanism?

Let us stay woke to the simple fact blockchain technology is different from other technology already in place. Often than not, centralized systems house most of the computer systems, which translates to the maintenance of the database being handled by a central authority.

But in the case of cryptocurrency, its operation is exclusively decentralized. Although record-keeping can pose some bit of difficulty, its blockchain technology profers a solution to the problem arising from decentralized record-keeping.

Instead of one bank or authority maintaining every record, every network user has their respective copy record which can be updated at any given time. The mechanism that avails every user on the blockchain network access to the same record is referred to as a consensus mechanism.

How Does Proof Of Work Affect Network Integrity?

Validation starts with individuals with computational power immediately new block of transactions is created/mined. Transaction validation is carried out by solving complex mathematical problems. The difficulty characterized by these mathematical problems is highly intentional because the network security would be vulnerable to security breaches if the sequence of mathematical problems were easy.

There tends to be a large processing time for transactions when the problems are complex. During mining, the first miner to solve the complex problems submits proof of work, which is rewarded in form of newly minted cryptocurrency. At the end of this process, there is again for consensus of the network while the network integrity is maintained.

Problems Associated With The Proof Of Work Mechanism

The proof of work mechanism is a popular concept in the crypto space. This is because the method which is peculiar to Bitcoin is being adopted by over 50% of all cryptocurrencies across the globe. Meanwhile, there are some associated problems with this mechanism.

1. There is a claim by crypto experts that the solving of complex mathematical problems to get more transactions added to a blockchain network is useless. Also, some people opine that the proof of work system is hampering the effectiveness of the computational power used today.

2. There is a huge criticism engulfing the proof of work mechanism with its consumption of large quantity of electricity. The equipment used to achieve the proof of work purpose consumes a large quantity of electricity, especially in countries like Hungary and Switzerland.

Following the discourse surrounding electricity as a finite resource, environmentalists have been vocal about its wise consumption, hence frowning against its degrading capacity to the environment.


The proof of work is complex but of necessity to the proper operation of cryptocurrencies. Another mechanism, proof of stake has recently been introduced into the crypto space but proof of work remains widely used to date.