Proof of Capacity is one of the lesser known consensus algorithms. There is therefore a good chance that you are wondering what Proof of Capacity is . Fortunately, we have the answer for you. In this article we therefore explain what Proof of Capacity is, how it works and what the advantages and disadvantages are. Of course we also tell you which blockchains use this algorithm. This way you are completely up-to-date about this consensus algorithm!

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• What is Proof of Capacity?
• What is the benefit of Proof of Capacity?
• Does Proof of Capacity have any disadvantages?
• Who Uses Proof of Capacity?
• Proof of Capacity vs. Proof of Work
• Conclusion

What is Proof of Capacity?

Proof of Capacity (PoC) is one of the lesser known consensus algorithms. This algorithm is sometimes referred to as Proof of Space. It is a lot less known because there are not many ‘big’ crypto coins that use this consensus algorithm.

First, let’s briefly summarize what Proof of Capacity is. It is then easier to explain it in detail. With the Proof of Capacity algorithm, the participants of the network can use their available space on the hard disk. So it’s a bit like Proof of Stake; the difference, however, is that they don’t use coins but hard disk space.

That also happens with Burstcoin. This is a crypto coin that uses Proof of Capacity. It is good to take this coin as an example for this algorithm. That way we can explain it a lot easier. With Burstcoin, miners do not have to continuously use the block header and SHA256 hash to verify blocks, as with a Proof of Work blockchain.

Burstcoin therefore uses Proof of Capacity, which means that miners use a system that consists of 2 steps. These two steps are plotting and mining. Plotting consists of making a random solution, which is called the ‘plot’. You may know this term from math lessons. Here you also had to plot a graph, where you basically make a prediction based on already available data.

This is done with the Shabal cryptographic algorithm and by storing everything on the miner’s memory. Miners will then have to arrive at the desired solution through mining. The miner who finds the solution first gets to validate the next block.

The more space there is on the hard disk, the more possible solutions can be stored on the hard disk. This means that a miner also has to come up with more solutions to match the solutions that are already on the hard disk. In that case, there are also more chances for miners to win, and thus to receive a reward for the work done.

This may sound a bit tricky. We can easily substantiate it with an example. Suppose you enter a lottery. The more numbers you have on a card, the more likely you are to win the lottery. That is also the case with this algorithm. The miner who has a lot of space on his hard disk can also store more possible solutions on this. That is why there is a much greater chance that this miner has the right solution on his hard drive.

In fact, a miner is allowed to use these solutions over and over again. This increases the chance that the miner has the right solution on his hard drive. Proof of Capacity is probably a lot easier to understand now.

What is the benefit of Proof of Capacity?

The biggest advantage of Proof of Capacity is that it is very energy efficient. In fact, 30 times less energy is needed than with the Proof of Work algorithm. Anyone can be a miner, and the miners’ devices can be used for different purposes. It is therefore also very accessible for new participants.

Proof of Capacity can also use any kind of hard drive. So it doesn’t matter if the hard drive is based on Android, iOS or Linux. As a result, the support for this algorithm is very large. It is not difficult to join the Proof of Capacity network. It is also not necessary to provide hard drives with certain updates. So there are few barriers to participating in the network that uses Proof of Capacity.

Now you may be asking yourself why anyone would participate. After all, you lose a lot of space on your hard drive. Yet that is not quite the case. Another advantage is that users can easily and quickly delete the data. After this, the hard disk can be used for any other storage of data. So you don’t lose your hard drive to the blockchain network forever.

In addition, Proof of Capacity is a lot fairer than Proof of Stake. With Proof of Stake you can earn more if you can also stake more. But that says nothing about the actual contribution you make. Proof of Capacity looks at how much you contribute to mining. Can you give more space to the network? Then you will also earn more.

An extra hard drive is generally a lot cheaper than the value you would have to stake at Proof of Stake. That is why it is a lot easier to participate in a Proof of Stake blockchain.

Does Proof of Capacity have any disadvantages?

Of course there are also disadvantages to Proof of Capacity. There is not a single consensus algorithm that does not have drawbacks. The main disadvantage of Proof of Capacity is that it is less secure, requires a lot of hard disk space and is very vulnerable to certain attacks. It is possible that malware affects certain mining activities.

Who Uses Proof of Capacity?

Maybe you don’t know cryptocoins that use Proof of Capacity yet. That is not surprising, because there are a lot less than, for example, Proof of Work and Proof of Stake. However, this does not mean that this algorithm is also a lot worse.

The main blockchains using Proof of Capacity are Filecoin, BitcoinHD, Permacoin and Storj. They benefit from the advantages this algorithm has to offer.

But SpaceMint and Burst Coin also use Proof of Capacity. In addition, Burstcoin is probably the best-known crypto currency that uses the Proof of Capacity algorithm.

Proof of Capacity vs. Proof of Work

In general, an algorithm such as Proof of Work requires much more energy than Proof of Capacity. This is because every node in the Proof of Work algorithm is mining. A lot of energy is lost as a result. There may be 10,000 nodes mining for one block. Of course this takes a lot of energy, and then there is only 1 node that is ultimately the winner.

That means the other 9,999 nodes have worked for nothing. And all that energy that was used for this has in fact been lost. And the annoying thing is that the largest blockchain that uses Proof of Work is mined a lot by nodes in China. That is Blockchain. Most Bitcoin miners are in China, and here energy is mainly generated by means of coal-fired power stations. Not exactly good for the environment…

Do you want to know more about Proof of Work? In the video below from AllesOverCrypto, Matt explains what PoW is and how it works.

Conclusion

Hopefully you now know a lot more about Proof of Capacity. It is an algorithm that we do not come across very often, while it still has numerous advantages. This consensus algorithm, also called Proof of Space, is mainly based on the space that users want to free up for the network.

Participants offer part of the hard disk space. They can then save solutions on the hard drive. This process is called ‘plotting’. In fact, the miners are already preparing for the next process. After that, they actually start mining.

The miners will check whether they have the actual solution on their hard drive. Is there a match? They won that and may validate the new block. Of course they get a reward for this.

Because miners actually lend space on their hard disk for the network, this algorithm is a lot better for the environment than, for example, Proof of Work. This is because less power is needed for this algorithm. It is also a lot easier for miners to join this algorithm. All they need is a hard drive. And this one is a lot cheaper than the company they should put in with Proof of Stake, for example.

However, there are also disadvantages to Proof of Capacity. This makes it much more vulnerable to attacks.

So there is a lot to say about this algorithm. Cryptocurrencies such as Burstcoin and Permacoin use Proof of Capacity and reap the benefits. However, the question is whether Proof of Capacity is actually the best consensus algorithm.