While trying to learn more about how Bitcoin, Ethereum, or other cryptocurrencies work, you must have come across these two difficult terms — Proof of work (POW) and Proof of stake (POS). Both terms are quite difficult to understand without the technological knowledge.

In reality, both terms are not that hard to get. Proof of work and proof of stake are two kinds of computer algorithms that are responsible for today’s success of digital currencies like Bitcoin and Ethereum. First of all, let’s start with basic definitions of POW and POS.

What is the Proof of Work?

Proof of work is a protocol that has the main goal of deterring cyber-attacks such as a distributed denial-of-service attack (DDoS) which has the purpose of exhausting the resources of a computer system by sending multiple fake requests. The Proof of work concept existed way before Bitcoin was presented to the public, but the creators of Bitcoin applied this technique to the first digital currency revolutionizing the way traditional transactions are set.

In fact, PoW idea was originally published by Cynthia Dwork and Moni Naor back in 1993, but the term “proof of work” was coined by Markus Jakobsson and Ari Juels in a document published in 1999. Either way, Proof of work is maybe the biggest idea behind Bitcoin white paper, because it allows trustless and distributed consensus.

Proof of work is a requirement to define an expensive computer calculation, also called mining, that needs to be performed in order to create a new group of trustless transactions (called block) on a distributed ledger called blockchain (Learn more about mining).