Level 2
Mining and Validation Explained
How transactions get verified and added to the blockchain.
8 min read
Mining and validation are the processes that verify transactions are legitimate and add them to the blockchain. Different blockchains use different methods, but the goal is the same: ensure no one can spend money they don't have.
Why This Matters
Understanding validation helps you grasp why transactions take time to confirm, why fees exist, and why some blockchains are faster or cheaper than others. It also explains the "energy consumption" debate around Bitcoin.
Simple Analogy
Imagine a room of accountants who all need to agree that a check is valid before cashing it. In Proof of Work, they compete to solve a puzzle—first one to solve it gets paid. In Proof of Stake, they take turns based on how much money they've deposited as collateral.
Proof of Work vs Proof of Stake
| Feature | Proof of Work (PoW) | Proof of Stake (PoS) |
|---|---|---|
| Used by | Bitcoin, Litecoin | Ethereum, Cardano, Solana |
| How it works | Computers compete to solve complex puzzles | Validators lock up coins as collateral |
| Who validates | Miners with powerful hardware | Validators with staked coins |
| Energy use | Very high | Much lower (~99% less) |
| Security model | Attacking requires massive computing power | Attacking requires owning huge amounts of coins |
How Proof of Work Mining Works
1
Miners collect pending transactions
Transactions waiting in the mempool are gathered to form a potential new block.
2
Miners race to solve a puzzle
They repeatedly guess numbers (nonces) trying to find one that produces a hash meeting the difficulty target.
3
First solver wins
The first miner to find a valid solution broadcasts their block to the network.
4
Other nodes verify
Other computers check that the solution is correct and transactions are valid.
5
Block is added, miner is rewarded
The block joins the chain. The winning miner receives newly created coins plus transaction fees.
📊 Validation Flow
Transaction Created → Broadcast to Network → Enters Mempool → Selected by Validator → Included in Block → Block Verified → Added to Chain → Transaction Confirmed
What This Means for You
- •Transaction speed depends on how quickly blocks are created (Bitcoin: ~10 min, Ethereum: ~12 sec)
- •Higher fees = higher priority. Validators pick transactions that pay more.
- •Confirmations matter. More blocks added after yours = more secure your transaction is.
Common Misconceptions
- •Mining doesn't "create" Bitcoin from nothing—it's the reward for securing the network
- •You cannot profitably mine Bitcoin at home anymore—it requires specialized hardware
- •Proof of Stake is not "less secure"—it's different, with its own tradeoffs
- •"Unconfirmed" transactions are not final and could theoretically be reversed
Key Takeaways
- Validation ensures only legitimate transactions get recorded
- Proof of Work (Bitcoin) uses computing power competition
- Proof of Stake (Ethereum) uses staked coins as collateral
- Validators are rewarded with new coins and transaction fees
- More confirmations = more certainty your transaction is permanent