Proof-of-Capacity, the green consensus algorithm
Proof of Capacity PoC is, in general, a mechanism to ensure that a party has dedicated a particular (significant) amount of storage space towards a specific goal. Burstcoin uses PoC in the process of transaction verification for the validation and generation of blocks. Here, miners use a given amount of disk space to fill with plots. The more disk space is plotted, the higher the chances to generate (win) a block. PoC is thus in direct contrast to other consensus algorithms like Proof of Work (PoW) and Proof of Stake (PoS) where block generators need to prove the performance of some difficult computations or the ownership of a significant amount of currency, respectively.
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 the plots in order to proof the designated disk space investment is much cheaper. Additionally, users can mine using their existing hardware, instead of having to invest in special purpose hardware such as the ASICS 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 of wealth to a few selected early adopters with mechanisms such as airdrops.