Proof-of-Capacity, the green consensus algorithm
Proof of Capacity PoC is a mechanism to ensure that a party has dedicated a particular amount of storage space towards a specific goal. Burstcoin uses PoC in the process of transaction verification for the validation and generation of blocks. In this application, miners use disk space filled with plot files. The more disk space that is plotted, the higher the chances of winning the right to generate a block. PoC is in direct contrast to other consensus algorithms like Proof of Work (PoW) and Proof of Stake (PoS) where block generators prove performance of difficult computations or ownership of an amount of currency.
Advantages of POC
In contrast to PoW, PoC is considered to be more eco-friendly. While PoW requires expensive computations each time a block is generated, PoC puts most of the required computational costs up-front in the plotting process. Reading through the plot files in order to prove the investment in disk space is much cheaper. Additionally, users can mine using their existing hardware rather than investing in specialized hardware such as the ASICS which are used in Bitcoin mining.
In contrast to PoS, PoC allows a fairer distribution of coins as they are generated over time and assigned to active miners. In a PoS coin like NXT, the number of coins is fixed from the beginning and has to be distributed somehow initially. This leads to an unequal distribution to a few selected early adopters with mechanisms such as airdrops.
- Proofs of Space paper by Dziembowski, Faust, Kolmogorov, and Pietrzak
- SpaceMint paper by Sunoo Park, Kwon, Fuchsbauer, Pietrzak et al.