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.
While this process requires large amounts of data storage space, it involves relatively little processing power, making it more energy and time efficient than many other consensus mechanisms. For example, in Proof of Work (PoW), the expected block creation time is 10 minutes; in comparison, PoC takes only four minutes.
The process of PoC involves two steps: plotting and mining.
Plotting
Plotting uses a cryptographic hashing function known as Shabal. In comparison with the hashing function on Bitcoin, which involves SHA-256, Shabal allows miners to perform the required computations in advance and store the results on local hard drives.
When a miner plots their hard drive or creates plot files, it is equivalent to producing nonces (randomly generated numbers that can only be used once). These nonces are created through repeated hashing of data, including the account ID. The more hard drive space allocated for plotting, the more nonces stored.
Mining
The second phase is the mining process, which involves deriving a scoop number. Its corresponding nonce then produces a unit of time, called a ‘deadline’, which indicates the duration of time that must elapse from the previous block before a miner can add a new one.
This process is repeated for all the nonces on the hard drive. Once all the deadlines have been produced, the shortest deadline is selected. If no other miner has added a new block within the deadline, then any miner who has completed the PoC process can add a new block.
Examples of PoC consensus algorithms include Storj (STORJ) and Chia Network (XCH).
