Proof of Work is the method used by BITCOIN (and FEATHERCOIN) to validate each new block and adding it to the blockchain.
I am not here to compare Proof of Work with other new methods such as Proof of Stake. I will propose my personal view as to “why proof of work is here to stay”.
Oh no man, another technical explanation. You know me now! It should not be technical!
With proof of work, every miner of the network try to solve a complex mathematical equation. Once a miner solve it, the result must be checked by the other member of the network. If a majority of the miner agree with the result, the block is added to the blockchain and the next block is being mined.
Each miner provides a certain computation power. The sum of all miners power is called the hashrate (the number of calculation performed by the entire network per second). The difficulty of the equation increase when the network hashrate increase to make sure that the time to resolve the equation remain stable (around 10 minutes for BITCOIN and 1 minute for Feathercoin).
Remember that each miner who solve a block get the coin reward (6.25 BTC per block since last halving; 40 FTC per block until next halving in July 2021).
In addition, the miner also receive the transactions fees depending on the number of transactions added to this particular block.
So when the BITCOIN price increase, more miner are interested to get the reward, therefore the overall hashrate of the network increase, the difficulty increase and the overall electricity consumption increase as well.
Many people are complaining about this huge energy cost to mine BITCOIN and also that only a few big miners are providing the 95% of the network power and therefore reduce the decentralization that BITCOIN is intended to have.
In my opinion, if we consider BITCOIN as a store of value like Gold, it is normal that the price to mine it increase overtime. During the gold rush many people where finding gold just with little tools and few energy. This gold at that time was just a few dollars compare to what it is today.
Today you need industrial equipment to find gold. You must remove a lot of mud to find a little fraction of gold.
At the end of the day, the gold miner must sell their gold to pay the bill but the miner are never influencing the gold price. Nobody take care of how much gold you have in reserve because mining and pricing are two different World.
Now, there is different methods to implement Proof of Work. While BITCOIN is using SHA-256, FEATHERCOIN is using Neoscrypt.
Industrial equipments have been developed to mined specifically BITCOIN while FEATHERCOIN can only be mined with CPU or Graphical Cards.
At the end of day, like any business, competition will stay and whatever the mining activity becomes there will be enough players to keep it running.
There will be probably changes in the rules like using another algorithm for mining or changing the transaction fee reward but the Proof of Work is here to stay.
Feedback more than welcome!
Bye for now,