Cryptocurrency technology has advanced considerably in the past years. Marketplaces accept various coins, and blockchains further the innovation of these cryptocurrencies, with developers contributing to improvements. The first consensus mechanism used in crypto was proof of work and is still a prominent technology. However, in time, it became obsolete for some projects as it led to mining problems. And since cryptocurrencies rely on mining to be secured, their productivity can affect value. For example, Dogecoin mining uses proof of work that makes the process a bit slow, which can affect the Dogecoin price. This is one of the reasons why Ethereum changed its consensus and switched to proof of stake: PoW led to network congestion and massive gas fees. Despite the technical requirements and challenges, proof of work remains the main consensus that pushed for cryptocurrency adoption. So, let’s see what tokens continue using it.
Bitcoin
Bitcoin’s proof of work consensus offered the knowledge for the creation of further cryptocurrencies. The system is based on miners who create blocks that must solve complex mathematical problems. The first one that does within the competition is the block stored on the blockchain, which includes information like the timestamp and transaction counter. While proof of work has helped Bitcoin tremendously over the years, as it reached significant safety and users trusted it, it also brought several problems. Bitcoin is increasingly consuming energy for mining due to the high computational power necessary to mine the cryptocurrency. At the same time, miners get competitive over who mines the first one, meaning they increase their throughput.
That’s why some solutions propose Bitcoin-leveraged renewable energy solutions. Several Bitcoin miners have started using hydropower to run their rigs, while wind energy and solar energy are also increasing. Offsetting Bitcoin’s energy consumption would make it a more sustainable solution as well as handle competitiveness.
Dogecoin
Dogecoin uses the same consensus mechanism as Bitcoin, but the process differs slightly from Bitcoin’s. While Bitcoin uses the SHA-256 hashing algorithm, Doge leverages the Scrypt algorithm. In other words, miners receive pending transactions and assess them into blocks that
must match the network’s difficulty target.
This technology strains computer memory, contributing to energy consumption, so Doge mining has a similar issue to Bitcoin. Mining difficulty is automatically adjusted every 240 blocks, and miners receive the same rewards for mining 10,000 DOGE. In addition, Doge pool mining brings more benefits than Bitcoin since a pool manager distribution system contributes to a cooperative approach. Therefore, miners receive a steady income. However, due to the algorithm difference, Doge miners need specific ASICs, which require a particular market. Moreover, Dogecoin’s difficulty is calculated at about every four hours, meaning miners adapt faster to hash rate changes.
Litecoin
Litecoin was initially a Bitcoin alternative. Although it uses the same consensus mechanism, it’s cheaper and faster than Bitcoin. The peer-to-peer currency is less competitive in mining, which is why miners and investors also turn to Litecoin. Miners who generate about the network target receive rewards, so there isn’t a specific one. Miners can join pools with minimal equipment that includes one ASIC and a computer or a laptop, but they receive few rewards. However, the investment is considerably less expensive than what mining Bitcoin requires. The rewards also depend on the level of contribution to the network. The current reward for mining Litecoin is 6.25 new litecoins per block, but this will change during the following halving, which will happen somewhere in 2027. The total litecoins on the blockchain stop at 84 million litecoins, much more than Bitcoin.
Ethereum Classic
Ethereum Classic is a different network from the original blockchain. It combines the technology of ETH and the concept of BTC. The open-source computing platform still uses proof of work, even though the main blockchain switched to proof of stake. The system allows developers to use Ethereum Classic and its smart contracts to build decentralized applications and decentralized organizations. However, people can also mine on the blockchain without much hassle by joining pools or individually mining. Indeed, you need an ASIC mining machine, but using a GPU system can also work well, especially for a beginner.
The network has a fixed monetary policy and will continue using proof of work. In addition, miners are free to use smart contracts and automate repetitive tasks. Users who previously mined Ethereum can make the switch to Ethereum Classic effortlessly, but you only need to look for other mining pools that support ETC. At the same time, mining ETC leverages the ETCHash, which is a smaller version of the DAG system.
Monero
Monero is yet another cryptocurrency whose creation addressed Bitcoin’s problems. Miners are responsible for the security of transactions based on the unique algorithm RandomX. In addition, the consensus mechanism supports ASIC technology, so there’s no need to build specific mining hardware rigs like in the case of other cryptocurrencies. Monero miners must compete fairly, so there isn’t much competition on the market. Solo mining is possible and great for securing the network, and users can leverage their Monero wallets for it. However, mining in pools offers frequent payouts as the network rewards miners with XMR based on their participation. Miners can use CPUs and GPUs, even if the latter is much more efficient than the former. GPU options require dedicated software, while CPUs for solo mining are easier to find and use. Monero is based on dynamic scalability, in which there is no maximum block size, and new blocks are created every two minutes.
What do you think about these PoW cryptocurrencies?
All cryptocurrencies use different consensus mechanisms to make them more valuable among the competition. While it all started with PoW, projects now leverage proof of stake or proof of history for fast transactions and efficient ecosystems. However, some cryptocurrencies are still using proof of work, including Bitcoin, the most popular token on the market. At the same time, coins like Doge and Litecoin follow the consensus as they help secure the network but have different approaches to mining.
