Are you considering investing in cryptocurrencies and exploring the potential of the best proof of work coins?
Different assets within the world of cryptocurrency are often divided by consensus mechanism (the way transactions are settled). As one of the most popular mechanisms, investing in the best proof of work coins can be an excellent strategy.
This guide reviews 13 of the best proof of work coins, explaining exactly what a proof of work (PoW) coin is and evaluating their investment potential.
Let’s get to work.
Top 7 Best Proof of Work Cryptocurrency List
- Bitcoin –The Original Proof of Work Coin
- Litecoin – Forked Token for Transactions
- Zcash – Privacy-Focused Cryptocurrency
- Dogecoin – World-Famous Meme Coin
- Ethereum –Largest Smart Contract Formerly Proof of Work Blockchain
- Bitcoin Cash – Transactional Version of Bitcoin
- Nervos Network – Open-Source Layer-1 Blockchain
Best Proof of Work Coins to Invest In – Reviewed
To help investors make a better-informed decision on which proof of works cryptos are right for their portfolios, we’ve reviewed the top 7 contenders.
1. Bitcoin
Just about every crypto investor will have heard about Bitcoin (BTC), a decentralized transactional crypto commonly touted as being the best proof of work crypto on the planet. It was the project that spawned the crypto market and helped make it into the asset class we all love today.
The primary purpose of Bitcoin is to act as a borderless, decentralized currency that can be easily sent around the world without the need for third-party intermediaries. This goal was achieved by creating the blockchain, an immutable ledger that permanently records every transaction.
Being the largest and most well-known digital asset on the planet, Bitcoin is arguably the best cryptocurrency on the market. With that said, smaller cap projects like Tamadoge and Battle Infinity will typically still offer greater upside potential, so it’s advisable to create a balanced portfolio rather than investing in a singular asset.
You can check our Bitcoin price prediction for more perspective on the number one cryptocurrency.
2. Litecoin
Litecoin (LTC) is a popular altcoin and a forked version of Bitcoin. The project was created by Charlie Lee, an early crypto adopter, as a more lightweight and user-friendly variant of Bitcoin. Released in late 2011, Litecoin is almost as old as Bitcoin and has long been a favorite among crypto investors.
With Litecoin being a direct descendent of Bitcoin, it’s no surprise that the project quickly built up steam to become one of the most widely used cryptocurrencies on the market. As Litecoin benefits from greater throughput, quicker transactions, and lower fees when compared to Bitcoin, it has become fairly widely accepted among crypto-friendly merchants.
Litecoin is one of the largest cryptocurrencies on the market and perhaps the project most closely related to Bitcoin. Even today, over 10 years after its release, new Bitcoin forks are still being created, proving the need for a more transaction-friendly variant of the popular cryptocurrency.
3. Zcash
Many people believe that cryptocurrency and privacy go hand in hand. And while it’s true to a degree, most fail to realize that all the information linked to a transaction using Bitcoin or a similar crypto can be easily looked up. As not everyone wants their personal information available on the web. Zcash (ZEC) aims to change the status quo by providing crypto enthusiasts with in-built privacy tools.
To provide investors with a way to transact without privacy concerns, Zcash settles transactions on a public blockchain like a traditional crypto but hides key information like sender/receiver address and the amount of funds being transferred. However, unlike competitor Monero, Zcash also offers the ability to reveal these details to allow regularity compliance.
Like many of the best proof of work coins, Zcash is a forked version of Bitcoin with additional features. It has become quite popular as a Monero alternative and is worthy of consideration for privacy-focused investors.
4. Dogecoin
Next on our proof of work cryptocurrency list is Dogecoin (DOGE), a massively popular cryptocurrency that birthed the meme coin trend. Despite originally being created as a joke, thanks in no small part to Elon Musk, DOGE has become a transactional cryptocurrency that shouldn’t be overlooked.
As a fork of Litecoin, Dogecoin utilizes the proof of work consensus mechanism to validate transactions; however, Dogecoin’s version of the mechanism does vary in a few key ways. Firstly, As Dogecoin has just a 1 minute block time, transactions are settled much faster than other proof of work blockchains. Furthermore, as the token has an unlimited supply, it’s suited for use as a transactional token.
While Dogecoin may have been brought into the limelight thanks to Elon Musk, it’s now built up a loyal following and become one of the most popular digital assets in the world.
5. Ethereum
As the second largest cryptocurrency on the planet and arguably the best altcoin. Ethereum is among the best web3 coins and a leading platform for smart contracts, powering more smart contract agreements than any other crypto project.
The primary draw to the Ethereum network is the ability to build dApps and Web3 projects using smart contracts.
This enables projects to be created far more quickly than possible and even comes with the added bonus of heavy decentralization and security.
Ethereum previously utilized proof of work before the Merge upgrade saw it switch to proof of stake, which increased its speed and scalability and made it 99.99% more energy efficient.
With the utility offered by the Ethereum network, it’s undeniably one of the best coins on the market.
Like Bitcoin, Ethereum can be considered a blue-chip crypto and is worth considering as an addition to a balanced portfolio.
6. Bitcoin Cash
Bitcoin Cash (BCH) is a variant of Bitcoin designed specifically as a transactional currency.
It utilizes a peer-to-peer network to allow users to transfer funds between one another and aims to become the de facto currency for global transactions.
To work well as a transactional cryptocurrency, Bitcoin Cash focuses on reducing the time and cost required to send funds on the network. To achieve this, the project increased block size, allowing more transactions to be settled simultaneously.
Bitcoin Cash is one of the best proof of work coins on the market and one of the largest cryptocurrencies overall. While there are quite a few Bitcoin forks designed for everyday transactions, Bitcoin Cash is one of the most popular and could perform well if it’s picked up by more establishments.
7. Nervos Network
Last on our proof of work cryptocurrency list is the Nervos Network (CKB), an open-source proof of work blockchain and ecosystem consisting of many protocols.
Today, applications created on different networks struggle to interact with each other. However, Nervos Network aims to change this by providing developers with tools designed to facilitate the creation of universal apps. With interoperability being a large technology barrier to crypto, this could be huge for furthering the adoption of the asset class.
Overall, the Nervos Network is an interesting project and one of the best penny cryptos available. Few proof of work cryptocurrencies offer as much ingenuity as the Nervos network, so seeing how many developers adopt the Nervos tool suite will be exciting.
What is a Proof of Work Crypto?
Firstly, it’s important to understand what a consensus mechanism is. A blockchain is essentially a ledger containing information. A consensus mechanism is a fault-tolerant system that validates a transaction (information).
Proof of work is a consensus mechanism used in blockchains to validate transactions. To ensure that transactions are valid, proof-of-work cryptos allow validators to use computational resources to solve puzzles to prevent a bad actor from sending false transactions.
The process of validating transactions using computing power is typically called mining. After downloading the necessary software and a copy of the blockchain, an individual can use their computer to solve puzzles (thereby validating transactions) to receive crypto rewards.
Proof of Work vs Proof of Stake
Proof of work is a method where the blockchain requires members to confirm and verify the accuracy of new transactions added on the network. On the other hand, the Proof of Stake Consensus lets users use stake tokens on the blockchain to verify transactions.
Two of the most common types of consensus mechanisms are proof of work and proof of stake (PoS). While both achieve a similar goal (securely validating transactions), the way this goal is achieved differs a fair bit.
While proof of work coins incentivize miners to validate transactions by solving complex puzzles, proof of stake coins select a random person staking a specific amount of tokens to ensure the transaction is legitimate.
Each type of consensus mechanism has its own benefits and drawbacks. The main arguments for proof of stake over proof of work are superior throughput, lower fees, and less energy expenditure.
However, becoming a validator in a proof of stake system can take time due to a high barrier to entry. For instance, Ethereum requires validators to own a certain amount of cryptocurrency, which at today’s prices amounts to over $50,000. In contrast, proof of work only requires a decent computer.
With proof of stake coins having such a comparatively higher barrier to entry, it can result in the network being solely governed by those with large capital reserves, something that cryptocurrency was initially trying to change.
Are Proof of Work Coins a Good Investment?
As one of cryptocurrency’s main uses is as an investment vehicle, it makes sense that people would wonder whether the best proof of work coins make good investments. Below, we’ve summarized a few key points why proof of work projects can make excellent investments.
1. Decentralization
Decentralization is undeniably at the core of the crypto ethos and proof of work offers a greater level of decentralization than other consensus mechanisms. As crypto was designed to give power back to the people, it makes sense that a way of governing transactions with minimal barrier to entry would be popular.
Many crypto enthusiasts believe that proof of work blockchains are better for the average person than alternative consensus mechanisms and as buyer sentiment drives the market, proof of work coins can perform well.
2. Prestigious Roots
While cryptocurrency is a rapidly evolving industry, many of the largest and best-performing projects utilize proof of work. Bitcoin, Ethereum, and many of the top 30 digital assets utilize the consensus mechanism. As the saying goes, ‘follow the money’, if the biggest and best projects utilize proof of work, it’s likely beneficial and as such, gives an investment a greater chance of paying off.
3. Tried and Tested
PoW has stood the test of time for more than 10 years. While new mechanisms are springing up constantly and promising phenomenal throughout and minuscule fees, few will actually enjoy mainstream adoption.
New mechanisms simply haven’t been tested as much as PoW which can lead to issues surrounding security and decentralization down the line. As such, PoW projects can make better long-term investments.
Conclusion
Throughout this guide, we’ve looked at some of the best proof of work coins on the market, explained what proof of work token is, and discussed how it stacks up to competing consensus mechanisms.
It is important to consider all the factors regarding Proof of Work (POW) coins. Some of the potential negative factors of POW include high energy consumption that can result in high bills and the requirement for expensive hardware to mine effectively.