The earliest blockchain protocols used proof of work (PoW) mining to secure the network and validate the transactions included in each block.
In PoW mining, network participants use either general purpose computer hardware (CPUs or more expensive, but more efficient, GPUs) or purpose-built application-specific integrated circuits (ASICs) to find the answer to a mathematical problem in order to certify the transactions included on the chain.
In exchange, those participants earn rewards in the form of crypto coins or tokens. This process is referred to as mining, and being a miner can be lucrative. At the time of writing, mining just one block on the Bitcoin blockchain can earn a miner the equivalent of approximately $250,000 USD in block rewards—not inclusive of transaction fees.
Critics argue that PoW mining tends towards centralization, a trait with potential negative implications for security and accessibility. The increasing cost of participating in PoW mining has led to the consolidation of miners into mining pools, and broad or even hobby-level participation in PoW networks is limited both by the arms race for increasingly tailored computers and the high cost of entering and operating within the market.
Miners are further consolidated within regions with cheaper electricity sources and preferable conditions for operating. Proof of stake validation was developed, in part, to lower these exclusionary barriers and to reduce the energy expenditure required by PoW mining.
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In January, 2021, we announced Bison Trails joined Coinbase to accelerate our mission to provide easy-to-use blockchain infrastructure, now as a standalone product line. The Bison Trails platform will continue to support our customers. With Coinbase’s backing, we will enhance our infrastructure platform and make it even easier to participate in decentralized networks and build applications that connect to blockchain data.