Proof-of-Capacity (PoC)

The process involves two distinct phases. First, plotting pre-computes and stores potential solutions (plots) on a hard drive. Second, mining involves rapidly reading these stored plots to find a valid solution for the next block. This separates the computationally intensive work (plotting) from the fast, low-energy verification (mining).

PoC is significantly more energy-efficient than Proof-of-Work (PoW). Once plots are generated, the act of mining consumes minimal power, as it primarily involves reading data from storage drives rather than performing continuous, competitive computations. This reduces the environmental impact and operational costs for participants.

Mining participation relies on readily available and reusable consumer hardware—hard drives and SSDs. This lowers the barrier to entry compared to PoW, which requires specialized, expensive ASIC miners. It also promotes a more decentralized mining landscape, as standard computers can participate effectively.

Security is derived from the amount of allocated storage space. To execute a 51% attack, a malicious actor would need to control the majority of the total network's storage capacity. Acquiring and plotting this much space is costly and detectable, providing strong Sybil resistance. The security model is based on physical resource ownership, not computational power.

In PoC, the allocated storage space acts as a form of stake. Miners commit a physical resource (disk space) to the network, which is forfeitable if they act maliciously (e.g., attempting to double-spend). This creates a direct economic disincentive for bad behavior, aligning miner incentives with network security.

A key vulnerability where a miner can cheaply mine on multiple competing blockchain forks simultaneously, as the primary resource (storage space) is already committed. This can undermine consensus finality and enable double-spend attacks. Unlike Proof-of-Stake, where staked assets are slashed for misbehavior, PoC lacks a direct economic penalty for mining on multiple chains.

The protocol incentivizes the accumulation of massive, cheap storage, which can lead to centralization among entities with access to low-cost, large-scale hard drive arrays (e.g., data centers). This creates a barrier to entry for individual miners and increases the risk of a 51% attack if a single entity controls the majority of the network's plotted storage.

An attack where a malicious actor reuses the same pre-computed storage plots (the 'plots') to participate in consensus on a cloned or forked version of the blockchain. Since generating plots is computationally intensive but using them is cheap, an attacker can leverage their initial investment to attack the network or a fork without additional cost.

A class of optimization attacks where attackers seek to compromise the Shabal256 or other PoC hashing algorithms. The goal is to find a method to generate valid proofs faster than legitimate plotting, either by using more computational power (less memory) or by finding algorithmic shortcuts. A successful attack would break the fundamental cost assumption of PoC.

The low marginal cost of submitting proofs allows an attacker to create many pseudo-identities (Sybils) to gain disproportionate influence in leader election. Grinding attacks involve manipulating minor, controllable inputs to the consensus algorithm to unfairly increase the probability of being selected to create the next block, requiring robust, verifiable random function (VRF) design.

The initial, computationally intensive process unique to PoC. Plotting involves pre-computing and writing cryptographic hashes, known as plots, to a hard drive. This one-time process creates the data that will later be scanned during mining. Plotting speed depends on CPU and RAM, but once complete, mining requires minimal computation, only fast reads of the stored plot files.

The specific cryptographic hash function at the core of many PoC implementations, notably used by Burstcoin and Chia. The Shabal256 hash is designed to be memory-hard during the plotting phase, making it resistant to ASIC optimization for that stage. Its outputs are stored as plots, and miners scan these pre-computed hashes to find valid solutions faster than recalculating them.

The fundamental computer science principle that PoC leverages. A space-time trade-off solves a problem by using more memory (disk space) to reduce computation time. PoC applies this by performing the hard work (hashing) once during plotting (storing results on disk), so that the frequent mining operation becomes a simple and fast lookup, trading storage space for reduced ongoing computational effort.

The first cryptocurrency to implement a practical Proof-of-Capacity consensus mechanism. Launched in 2014, Burstcoin pioneered the use of hard drive space for mining, establishing the core PoC concepts of plotting and nonce scanning. It serves as the foundational case study for PoC's viability and its challenges in achieving widespread adoption and security scrutiny.