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The cryptocurrency market continues to amuse everyone. It seems to have woken up from its slumber phase and is continuing to break important resistances to reach higher levels each day. One of the most important factors contributing to this run in the market is Bitcoin.
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The cryptocurrency market continues to amuse everyone. It seems to have woken up from its slumber phase and is continuing to break important resistances to reach higher levels each day. One of the most important factors contributing to this run in the market is Bitcoin. Bitcoin is the alpha coin of the cryptocurrency market, it has the highest market capitalisation among all cryptocurrencies and is currently priced at $42,000. However to invest in Bitcoin, one needs to understand the mechanism on which its transactions work and which is where we would be explaining the Proof of Work system. As a bonus for some new investors, we would also be helping you with questions like “How do I buy Bitcoin in Canada”.
Let’s get started by understanding the proof of work systemProof of Work System :The proof of work is a mechanism used to verify the transactions in a blockchain and is used by Bitcoin and several other cryptocurrencies. Every time a transaction is executed there is something known as a block that is created in the blockchain and this block needs to be verified to be successfully added to the blockchain. This verification process is executed by cryptocurrency miners and upon completing their job they are rewarded a certain amount of Bitcoin in exchange for their efforts.
The proof of work system works on a simple principle, one must solve a complex cryptographic algorithm and the person who does this the quickest will be rewarded Bitcoin. Back in the inception stage of cryptocurrencies, these transactions could be simply verified using a mobile phone and one could easily earn Bitcoin in exchange for their phone’s computing power. However, since the popularity of the cryptocurrency market increased, the number of transactions also increased which made these problems more complicated and to solve it quickly miners needed stronger computational power. Currently, miners require strong computational power to earn rewards from the proof of work system.
What are some of the flaws of the Proof of Work system?Currently, the proof of work system requires high computational power because of which it consumes a lot of electricity. There was a stat stating that in 2020 the cryptocurrency miners consumed an amount of electricity equivalent to the amount which was sufficient to power 5 million households in the United States of America or which was enough to power the entire population of New Zealand.The proof of work system also only lets those miners verify the transaction which has high computational power which creates a disparity within the whole miner ecosystem.
What should be done now?Now you know on what mechanism do transactions get verified on Bitcoin, Bitcoin Cash and many more such cryptocurrencies. So then why wait? Make your first transaction today. For investors wondering where to buy Bitcoin or buy Bitcoin Cash in Canada, all you need to do is visit the Netcoins website, follow the instructions there and get started with your first trade.SOURCE CREDIT: https://netcoins.tumblr.com/post/659191046774947840/what-is-a-proof-of-work-system-in
