How it works
The system makes rewriting history costly because an attacker would need substantial computing power and energy. Bitcoin is the most prominent example.
What to check
Evaluate the distribution of mining power, issuance rules and how the network responds to changes in hash rate or incentives.
- Check mining concentration
- Understand issuance incentives
- Separate consensus security from asset price
Limits and risks
Proof of work can be robust while still facing concentration, energy-use and incentive risks. Security also depends on the value supporting honest participation.
Primary sources
Bitcoin Developer Reference↗Ethereum developer documentation↗FATF: Virtual Assets↗General information only. Investment products can lose value, and terms, fees and regulation can change.