What is PoW Ethereum and how does it function? Explained!
ETHPoW (1) is a separate PoW blockchain that forked off of Ethereum’s Merge (2) and went live to maintain the proof-of-work mining process for ETH miners (3). Any miner can add a block to the PoW network with the clear condition that the first valid block published is the correct block.
The network periodically discovers multiple valid blocks due to the slowness of data propagation, which results in multiple forked branches of the blockchain. Although Ethereum’s long-awaited “The Merge” upgrade lowered the requirements for mines, it did so by substituting validators who stake Ether ETH for expensive and energy-intensive equipment to secure the network, increasing the cryptocurrency’s energy efficiency.
However, before the Merge, ETHW, a hard fork of the Ethereum network that continued to use the PoW consensus process, was developed, giving ETH miners a victory. Chinese miner Chandler Guo (4) criticized PoS consensus techniques and later introduced the PoW-based Ethereum blockchain.
Although it should be seen as a win for miners over stakers, ETHW experienced accessibility problems because the chain ID that ETHPoW used, which is 10001, was already used by the Bitcoin Cash testnet (5). This caused problems for users of the MetaMask wallet because the Chain ID, which serves as an identifier, could not distinguish between two distinct blockchains.
Although pre-hard fork testing would have discovered the contradiction, the ETHW team chose to ignore it. Despite this, crypto exchanges like Binance (6) and Coinbase (7) showed their support for ETHW as Binance announced its ETHW mining pool and stated that it would be subject to the same review process as other cryptocurrencies.
The Ethereum Classic network’s original iteration, based on the PoW consensus algorithm, was hard forked to strengthen network security following the DAO hack (8). The two hard forks of the initial Ethereum blockchain that will still support active proof-of-work mining are EthereumFair and EthereumPOW.
Other censorship-resistant, trustless proof-of-work cryptocurrencies, like Bitcoin BTC (9), are marketed as being created by a single person or small group of people who solve a mathematical challenge and suggest a new block. However, when many non-colluding miners must be processing transactions, barring any small group of miners from establishing rules would make it easier to censor.
The native asset of the ETHWPoW chain, ETHW, will continue to be the reward for ETHW miners who solve arbitrary mathematical puzzles for validating transactions and additional mine tokens to prevent system abuse. A few venues where consumers or ETHW advocates can purchase proof-of-work Ethereum tokens are cryptocurrency trading platforms like Crypto.com and exchanges like Coinbase and Binance.
Although ETHW deposits are unavailable, users can sell ETHW against BUSD and USDT on Binance Convert (10). Binance has officially launched Binance Pool’s fee-free Ethereum ETHW mining services, which offer ETHW withdrawals for a limited period. To purchase ETHW on the preferred platform, you must follow a few simple steps:
- Open a profile on your preferred platform.
- Exchange identities, confirm their validity, and ensure successful identity verification.
- Once it’s finished, deposit the money.
- After that, once the account has been funded, go to the trading section and purchase ETHW.
Critics of proof-of-stake prefer proof-of-work because they have already invested in pricey mining equipment and will lose money if the network switches to proof-of-stake. Either hardware wallets or software wallets can be used to hold ETHW. However, hardware wallets provide a higher level of security because the money is kept offline, while software wallets keep control of their private keys rather than giving them to the exchange.
ETHW can be stored on mobile devices using mobile wallets, albeit the original owner may lose money if the device becomes infected with malware. As an alternative, paper wallets can be used to store private and public keys and QR codes on a piece of paper. Again, if the document holding this information is lost or gets into the hands of unauthorized people, the owner’s ETHW might not be able to be restored.
However, following the Merge, there are now two distinct versions of the Ethereum network: ETH, which employs the more recent PoS consensus process, and ETHW, which utilizes the older PoW algorithm. ETHW miners are rewarded with Ethereum tokens for resolving challenging mathematical puzzles, while validators must stake ETH to earn a living.
Miners risk going out of business without a proof-of-work consensus mechanism because new tokens will be added to the blockchain through the staking process. On a proof-of-stake blockchain, however, the execution mainnet and consensus beacon chain layers are combined rather than the original Ethereum blockchain.
The PoW consensus mechanism also adjusts the block’s difficulty upward as the network’s processing power grows, which leads to a higher network-wide hash rate. The PoW consensus mechanism’s incentive structure requires the network’s miners to perform hashes to obtain the first usable block hash, which may result in using an unsustainable amount of energy.
Since unsuccessful miners waste energy, Ethereum will switch to a proof-of-stake consensus mechanism. While ETHW attracts miners because they have already invested in hardware mining equipment, the PoS consensus method is less energy-intensive and enables networks to scale affordably.
Although the entire cryptocurrency market has experienced highs and highs ever since the Ethereum Merge, which also raised expectations for PoS potential while initially holding the same potential and use cases for PoW.
While proof-of-stake is still in its infancy, it has the potential to revolutionize blockchain security and make mining obsolete. However, it has yet to be seen in PoS consensus algorithms to result in the complete cessation of PoW mining.