What Is Proof of Capacity (PoC) for Cryptocurrencies?
Proof of capacity (PoC) is a consensus mechanism algorithm used in blockchains that allows for mining devices in the network to use their available hard drive space to decide mining rights and validate transactions. This is in contrast to using the mining device’s computational power (as in theproof of work algorithm) or the miner’s stake in the cryptocurrencies (as in theproof of stake algorithm).
Key Takeaways
- Proof of capacity (PoC) authentication systems employ spare space on a device's hard drive to store solutions to a cryptocurrency hashing problem.
- The main benefit of a PoC system is its efficiency compared to proof-of-work (PoW) and proof-of-stake (PoS) systems.
- Blockchains that run on proof of capacity include Signum, Chia, and SpaceMint.
Understanding Proof of Capacity
Proof of capacity emerged as one of the many alternative solutions to the problem of high energy consumption in proof of work (PoW) systems and cryptocurrency hoarding in proof of stake (PoS) systems.
Proof of capacity allows the mining devices, also known as nodes, on the blockchain network to use empty space on their hard drive to mine the available cryptocurrencies.
Instead of repeatedly altering the numbers in the block header and repeated hashing for the solution value as in a PoW system, PoC works by storing a list of possible solutions on the mining device’s hard drive even before the mining activity commences.
The larger the hard drive, the more possible solution values one can store on the hard drive, the more chances a miner hasto match the required hash value from his list, resulting in more chances to win the mining reward.
To draw an analogy, if lotteryrewards are based on matching the most numbers on the winning ticket, then a player with a longer list of possible solutions will have better chances of winning. Additionally, the player is allowed to keep using the lottery ticket block numbers again and again repeatedly.
Signumis acryptocurrency that uses a proof of capacity system. Other coins that use it are Chia, and SpaceMint.
How PoC Works: Plotting and Mining
The proof-of-capacity protocol involves a two-step process that involves plotting and mining.
First, the hard drive is plotted: the list of all possible nonce values are created through repeated hashing of data, including a miner’s account. Each such nonce contains 8192 hashes, which are numbered from 0 to 8191. All the hashes are paired into "scoops," which means adjacent hashes are combined to form a pair of two. For instance, hash 0 and 1 constitute scoop 0, hash 2 and 3 constitute hash 1, and so on.
The second step involves the actual mining exercise, during which a miner calculates a scoop number. For instance, if a miner begins the mining activity and generates a scoop number 38, the miner would then go to scoop number 38 of nonce 1 and use that scoop’s data to calculate a deadline value.
The process is repeated for calculating the deadline for each nonce held upon on the miner’s hard drive. Following the calculation of all the deadlines, the one with the minimum deadline is selected by the miner.
A deadline represents the duration of time in seconds that must elapse since the last block was forged before a miner is allowed to forge a new block. If no one else has forged a block within this time, the miner can forge a block and claim the block reward.
For instance, if miner X comes up with a minimum deadline of 36 seconds and no other miners can forge the block within the next 36 seconds, X will secure the chance to forge the next block and get rewarded.
Pros and Cons of Proof of Capacity
PoC has several advantages over PoW and PoS systems, as well as some important disadvantages that include:
Pros
PoC can use any regular hard drives including those with Android-based systems.
It is reportedly up to 30-times more energy efficient than the ASIC-based mining of the bitcoin cryptocurrency.
There is no need for dedicated hardware or constant upgrading of hard drives.
Mining data can be easily wiped-off and the drive can be reused for any other data storage purpose.
Cons
Not many developers have adopted the system.
It is possible for malware to affect mining activities.
Widespread adoption of PoC could start an "arms race" to produce higher capacity hard drives.
FAQs
What Is Proof of Capacity (PoC)? In Proof of Capacity (PoC), occasionally referred to as Proof of Space (PoSpace), network participants temporarily provide storage space on their hard drives in a bid to verify transactions and mine new blocks.
What are the disadvantages of proof of capacity? ›
The following are the disadvantages of the Proof of Capacity consensus algorithm: PoC is still not under mass usage, like proof of work. The drives used for storing data of hashes have a lot of free space. Which makes it hard to detect any malicious computation storage by network intruders.
What is proof of capacity plotting? ›
The proof-of-capacity protocol involves a two-step process that involves plotting and mining. First, the hard drive is plotted: the list of all possible nonce values are created through repeated hashing of data, including a miner's account. Each such nonce contains 8192 hashes, which are numbered from 0 to 8191.
What is proof of storage in cryptocurrency? ›
The first proof-of-storage coin was Signum (formerly known as burstcoin) in 2014, with Filecoin released that same year. Chia was created in 2021 by the author of the BitTorrent protocol. Many of the proof-of-storage coins are used to store actual data for others. These function like a distributed file storage service.
What does proof of capacity means? ›
Proof-of-Capacity is a consensus algorithm where miners will "plot" their hard drives in order to take part in transaction verification. In other words, the miners will compute and store the solutions to the mining problems before the mining has even begun.
What is conditional proof of capacity? ›
Conditional Proof of Capacity (CPOC) is an improved version of PoC. It has a work, stake, and capacity system that works like the PoW, PoS, and PoC algorithms. By pledging their digital assets, users receive a higher income as a reward. Additionally, CPOC has designed a new reward measure for top users.
What are the pros and cons of proof of concept? ›
Pros and Cons of proof of concept
| Pros | Cons |
|---|
| Brings useful user insights such as the market demand or target audience and their pain points. | Proof of concept sometimes appears as a barrier. Therefore, It can limit your creativity as it imposes some guidelines to be followed. |
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Pros and cons of proof of stake in crypto
| Pros | Cons |
|---|
| Energy-efficient. | Not as proven in terms of security as proof of work. |
| Provides fast and inexpensive transaction processing. | Validators with large holdings can have excessive influence on transaction verification. |
1 more rowMajor limitations of the PoW are weak consistency, low transaction throughput, and high energy consumption [96–98]. Few works considered the PoS consensus mechanism. PoS is also a probabilistic consensus mechanism, therefore, does not guarantee final consensus.
What is the formula for capacity planning? ›
Capacity is calculated as (number of machines or workers) × (number of shifts) × (utilization) × (efficiency).
Capacity planning is the process of determining the potential needs of your project. The goal of capacity planning is to have the right resources available when you'll need them. Resources could mean individuals with the right skills, time available to add another project, or the necessary budget.
What is the safest storage for crypto? ›
The answer to the question “what is the safest way to store crypto” is a self-custody cold storage wallet. As covered earlier, options include hardware wallets and paper wallets. But that's not to say that holding 100% of funds in cold storage is right for everyone.
What are the 2 types of crypto storage? ›
There are two subcategories of wallets, hot and cold. A hot wallet has a connection to the internet or to a device that has a connection, and a cold wallet has no connection. Lastly, there are three subcategories of wallets—software, hardware, and paper. Each of these types is considered either a hot or cold wallet.
How do you show Proof of cryptocurrency? ›
Generating a statement from your cryptocurrency account, exchange or wallet, ideally showing your name, the amount of your holdings, the valuation of your crypto assets in USD, the date(s) of purchase and other information, could also be used to prove your ownership of crypto assets.
What is a disadvantage of proof-of-work? ›
Problems with proof-of-work
Unfortunately, that methodical pacing results in a waste of resources and a very high level of energy consumption. Because proof-of-work mining requires so much computing power, it tends to consolidate miners down to the few people who can afford the equipment.
What is a disadvantage of the proof-of-work PoW consensus algorithm? ›
The following are the disadvantages of the Proof-of-Work (PoW) mechanism: A lot of energy gets wasted as only one miner can eventually add its block. It requires heavy computation power hence massive resource and energy consumption. A 51% attack risk on the network.
What are the pros and cons of proof-of-work vs proof of stake? ›
This provides more security to the process since there is no incentive to cheat or steal coins. The main upside of Proof-of-Work is that it is trusted and has a long track record while the main upside of Proof-of-Stake is that it requires less energy, is more secure, and is scalable.
