Crypto Academy Season 2, Week 13 - Homework Post for @alphafx | Proof of Capacity (PoC)

Hello Everyone,

I like to start the homework by thanking Crypto Professor @alphafx for making us understand how consensus and mining work in blockchain technology.

I like to choose the Proof of Capacity from the given consensus algorithms.

Let’s begin the homework 👇

What is Proof of Capacity?

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Proof of capacity (PoC) which also known as proof of space (PoSpace) is a consensus algorithm that miners use to take part in transaction verification. Most consensus algorithms work on high energy consumption or computational power of mining devices. This is in contrast to using computation power to mine a block, Proof of capacity consider to be an ecofriendly protocol that consumes Disk Storage, when miners have enough disk space to generate the next block in the chain, miners will compute and store the solutions to the mining problems even before the mining activity begin.

Proof of capacity emerged as the best alternate idea to solve the problem of high energy consumption in proof of work (PoW) systems and cryptocurrency hoarding in proof of stake (PoS) systems.

How Does Proof of Capacity Work?

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It is a two-step process,

1. Plotting
2. Mining

Plotting is a one time process that ensures the storage space dedicated by the miner. This process involves creating unique plot files using a very slow and hard hash known as Shabal 256. With its complexity, miners can be precomputed and stored the solution in a hard drive to mine a block.

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Once you create plot files that will initiate something called "nonce". The process will store the nonce in the hard drive repeated hashing of data. This is where the storage capacity is important, when you have more storage it will result in a higher probability where a miner has the right hash value and ultimately wins the mining reward.

During mining the created hash values are stored in pairs. Each pair of hash values is termed as Scoop. The scoop number then will be calculated by the node to figure the scoop date. The amount of time calculated called a Deadline.

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According to the block generation time of the last 24 blocks the network verifies the deadline. All of the nonces will be completed on the hard drive and then select the shortest deadline. To produce a new block a miner has to wait until the previous block has been passed according to the minimum amount of time.

When a miner able to produce a deadline shorter than those of the other miners then that particular miner has a chance to create the new block and he will be entitled to the block reward.

Proof of Capacity is used by:

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• Burst

Burstcoin has known to the world as first coin to implement the Proof of Capacity protocol. Found in 2014 this environmentally friendly coin allowed miners to use storage space for mining for the first time.

• Chia Network

Chia was founded in August of 2017 by the inventor of BitTorrent & Bram Cohen. It is based on both the Nakamoto consensus algorithm since Bitcoin and Proof of Space. Transactions were enabled on May 3, 2021

• Storj

Founded by Shawn Wilkinson in May 2014. Storj can introduce as a decentralized cloud storage network. Thousands of independent computers help to runs the network of Storj.

Benefits & Disadvantages of Proof of Capacity Mining

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Proof of Capacity consensus algorithms has a number of advantages compared to the traditional mining algorithms such as PoW and PoS.

• The main advantage is that it does not consumes high energy or compute-intensive based protocols.
• Any user with free space in the hard drive can perform mining and become a participant in the network which leads to more decentralization.
• The consumption of power is assumed 30 times less than an AISC based miner which makes the protocol energy-efficient and more sustainable for the environment.
• Mining data can be easily wiped off and reused as normal pieces of equipment to store the data.

However, this is not the perfect way for mining. Here are some disadvantage of Proof of Capacity,

• Since the plot of hashes is stored in a hard drive there can be prone to malware attacks.
• Lack of adaptation from the developers to use the technology because there are only a few project running.
• The users can invest in larger disk spaces and gain a higher capacity to produce more hash which could impact the network decentralization.
• Miner does not burn any energy or coins in order to mine the block, encouraging malicious users to generate invalid blocks.

Conclusion

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Without a doubt, Proof of Capacity has addressed the issue of high energy consumption. Such technology would be the best option for more ecologically sustainable in block chain technology. It also allows users with a small investment and technological knowledge to participate as its users. That will make a perfectly decentralized ecosystem.

However, the lack of usage of this system has been the issue for its performance. Since it is a new concept when the developers adopt this technology they will overcome the obstacles.

Thank you @alphafx for the knowledge you share with us and I have gained a lot from researching these topics.