As the pioneering cryptocurrency, Bitcoin is generated by mining, a Proof of Work mechanism that incentivizes miners to verify transactions by solving difficult hashing problems. The downside of Bitcoin mining is that efficient mining requires specialized and expensive hardware and consumes a lot of energy. According to Digiconomist, Bitcoin energy consumption rate is close to 50 TWh/year at mid February 2018 and still increasing, while the number is close to 14 TWh/year for Ethereum. Electricity consumed by these two cryptocurrencies combined has surpassed the electricity usage of many countries.
A way to prove the work while avoiding waste of resources is highly desired. NKN proposes an alternative to the current PoW by providing a more decentralized, dynamically evolving, self-organizing and self-evolving network infrastructure and designing a whole new set of consensus mechanisms. The novel PoW does not result in a waste of resources. Instead, it is a peer-to-peer sharing mechanism at blockchain level. Participants receive rewards by contributing more network resources than they consume. NKN uses Proof of Relay mechanism to guarantee network connectivity and data transmission capacity.