Proof of Capacity

The process involves two distinct phases. First, plotting pre-computes and stores potential solutions, known as plots, on a hard drive. Second, mining involves rapidly reading these stored plots to find a valid hash that meets the network's difficulty target. This separates the computationally intensive work (plotting) from the fast, low-energy verification (mining).

PoC is designed for significantly lower energy consumption compared to Proof of Work (PoW). Once plots are generated, the mining process requires minimal electricity, as it involves reading data from storage rather than performing continuous, competitive computations. This makes it one of the most energy-efficient consensus mechanisms.

Mining relies on readily available and reusable hard disk drives (HDDs) or solid-state drives (SSDs), lowering the barrier to entry compared to specialized ASIC hardware. Key metrics are storage capacity and read speed. This promotes a more decentralized and accessible mining landscape, as storage hardware is common and has secondary uses.

Security is derived from the cost and commitment of storage space. A 51% attack would require an adversary to acquire a majority of the network's total allocated storage, which is a significant capital expenditure. The mechanism is resistant to ASIC centralization but must guard against plotting optimization and storage-based attacks like the Nothing-at-Stake problem variant.

PoC introduces unique trade-offs:

• Initial Setup Time: Plotting can take days and wears out SSDs.
• Storage Waste: Plots are single-use for a specific blockchain, potentially leading to electronic waste.
• Centralization Risks: Large-scale miners can still create economies of scale in storage farming.
• Less Battle-Tested: It is a newer mechanism with a smaller security footprint than PoW or PoS.

The foundational process for all PoC protocols. It involves pre-computing and storing large datasets of cryptographic hashes (plots) on a hard drive.

• Time-intensive: Plotting can take hours or days.
• One-time cost: Plots are reusable for farming.
• Competitive edge: More plotted space increases the probability of winning the right to create a new block.

The ongoing process of validating new blocks. When a new block is needed, the network broadcasts a challenge. Farmers scan their plots for the closest deadline (the hash closest to the challenge). The farmer with the best proof wins the right to forge the block and receives the block reward.

PoC is designed to address major criticisms of Bitcoin's consensus model.

• Energy Efficiency: Uses idle storage space, consuming significantly less power than ASIC mining rigs.
• Decentralization: Leverates ubiquitous hard drives, lowering entry barriers.
• Reusability: Storage hardware can be repurposed, reducing electronic waste.

Unlike Proof of Stake, where validators have financial stake at risk, PoC miners risk only their allocated storage space, which has residual value. This can reduce the economic disincentive for malicious behavior like double-signing or mining on multiple chains. The primary cost is the opportunity cost of not mining on the canonical chain.

PoC favors miners with access to cheap, high-volume storage hardware. This can lead to centralization around entities with economies of scale, such as data centers, creating a single point of failure and increasing vulnerability to 51% attacks. The barrier is capital for storage arrays, not ongoing energy costs.

A malicious actor can perform a replotting attack by generating new plot files optimized to include specific solutions for upcoming blocks, potentially allowing them to dominate block production for a short period. This requires significant computational burst power during the plotting phase, which is distinct from the ongoing mining process.

Creating multiple identities (Sybils) is cheap in PoC, as it only requires generating additional plot files on the same hardware. Robust sybil resistance must be built into the protocol's consensus rules, often through mechanisms that make it computationally impractical to generate a dominating number of valid plots quickly.

Because historical plot files can be stored indefinitely, an attacker could theoretically amass a large volume of old plots to rewrite history from a point far in the past—a long-range attack. Defenses include checkpointing (hard-coding recent block hashes) and requiring valid plots to be generated with recent blockchain data.

PoC replaces energy-intensive hashing with storage-intensive plotting. Its security derives from the cost of storage hardware and the time to plot, rather than ongoing electricity expenditure. This makes it less vulnerable to energy market fluctuations but potentially more vulnerable to advances in storage density and plotting ASICs.

The initial, computationally intensive process in Proof of Capacity where a miner generates and stores potential solutions to the mining puzzle on their hard drive. These stored data sets are called plots. Plotting can take hours or days but is a one-time setup; once complete, the mining process itself is very low-energy, involving only rapid lookups of these pre-computed plots.

A cryptographic hash function specifically chosen for the Chia Network, the most prominent PoC blockchain. It was selected for its resistance to optimization by Application-Specific Integrated Circuits (ASICs), aiming to keep mining decentralized and accessible to users with standard hard drives. The algorithm is used during both the plotting and the mining phases to generate and verify proofs.

A fundamental computer science concept where memory (space) can be used to reduce computation time. Proof of Capacity is a direct application of this principle. By pre-computing and storing hashes (using space), a PoC miner saves immense amounts of computational time and energy during the ongoing consensus process, flipping the resource expenditure model of Proof of Work.