Bitcoin’s Proof of Work (PoW) explained in under 2 minutes

Bitcoin’s Proof of Work(PoW) — Simply explained for non-technicals

When we speak of miners and the overpriced machines they use to mine Bitcoin, all we are talking about is machines that are solving proof of work (PoW)calculations, in order to submit and validate new blocks of transactions to Bitcoin network. A mouthful I know, but conceptually it’s quite simple.

Proof of Work (PoW) is just a complex type of maths calculation that mining machines need to solve in order to get paid, via the block reward. These, however, are no ordinary calculation, they are so complex they can only be done by these special machines. These machines run millions of numbers per second. The reason we need machines to solve these calculations before we allow them to submit new transactions on the network, is that it proves they’ve done some amount of work to solve the maths problem. This proves they’ve spent a lot of money on electricity to do that work and get the right answer. Now, we can trust them, as nobody would spend money just to have their transactions rejected by the network, that would be a waste of money.

To fortify the concept of PoW, I want you to think about a beautiful gold ring. Why do we place so much value in this ring, apart from the scarcity of gold?

Because we know there is only one way to create that gold ring. You have to first go deep into the ground and dig up some gold ore, melt it, purify it and create a beautiful ring from it. This all takes a lot of time and resources, which you cannot fake(there is no magic gold machine last time I checked). As such, we have a subconscious or unspoken Proof of Work for that gold ring, and therefore value it more.