The video explains that proof of work (PoW) is a consensus mechanism used in blockchain technology to prevent fraud and double-spending of coins. Miners execute the PoW algorithm each time new blocks are added, which permanently and securely adds transaction information to the network's chain. PoW creates a reliable, safe, permanent, fair, and transparent consensus based on network participants' contributions, with healthy competition among miners to earn rewards in the form of cryptocurrency. However, PoW has several issues, including its environmental impact, inability to scale, high transaction fees, and lack of penalties for malicious attempts, which limit mass adoption. Despite these issues, many cryptocurrencies still use PoW due to its effectiveness in solving the consensus and double-spending problem.