SteemitCryptoAcademy Season 2: Week 5 Homework (by @alphafx) | Consensus Algorithms

Hello Steemit Crypto Academy,
Proof of Capacity is a new technology. It is used by fewer miners than PoS or PoW. However, this algorithm is more environmentally friendly compared to others. It was enjoyable to study this subject as I have a master's degree in renewable energy. I thank the Professor for including this topic in the assignment.

Introduction
When it comes to crypto money mining, one of the two protocols on the agenda is Proof-of-Work (PoW) and the other Proof-of-Stake (PoS). It is more possible to come across these two platforms in many articles or posts. However, there is another protocol that is less shared. The name of this protocol, which is a mining algorithm, is Proof of Capacity (PoC). I will try to explain what PoC is and how it is used with the help of this homework.
I thank Professor @alphafx for explaining this issue.

What is Proof of Capacity?
Proof of Capacity (PoC) is an algorithm that facilitates miners' business processes. PoC is also known as a consensus algorithm. The Proof of Stake and Proof of Work methods use bet size and computational power, respectively, to determine who can validate a transaction. PoC methods use available storage space to do this. The larger the storage space, the more solutions are stored.
It is a platform created for miners to calculate their problems before they start their transactions. Miners get coins on this platform, which offers faster solutions than other platforms. The block times of miners who focus on solving more complex problems occur as 1 block on average every 4 minutes. This period is a successful time compared to Bitcoin transactions.
PoC is not much different from PoW except for one big differentiator in PoC. Instead of doing a large amount of work to validate each block, the work is done from the front in a process called "plotting". It is very important in PoC that the "work" is done once during the plotting rather than each new block, allowing the PoC to realize a huge efficiency savings over PoW systems.

How Does Proof of Capacity Work?
Drawing is simply the process of creating drawing files, which are files that store a large number of pre-computed hashes. Each drawing file contains one or more groups of 8192 complexes, these groups are called nonce. A nonce is exactly 256KiB in size. Additionally, each nonce is divided into 4096 pairs of hashes, referred to as pairs scoop.
The drawing process takes the miner's burst address as an input, which ensures that the drawing files can only be used by a single miner. Once the plot files are created, the actual mining process can take place. The miner will receive relevant information for the current block from the wallet, including a 32-byte hash called "production signature" from the previous block, block height and base.
With this information, the miner can create a new "generation hash" that he will then use to determine which bucket to control in each nonce. With each viable scoop, the miner will then perform an additional hash with the next generation signature before splitting the hash into the base target. This will result in a "deadline" refund. The miner with the smallest deadline earns the right to mine the next block.

Source: https://coincentral.com/what-is-proof-of-capacity/

Proof of Capacity consists of two components. These are Plotting and hard disk mining.

• Plotting
  Plotting constitutes the second of these stages. Thanks to plotting, unique plot files can be created.
  Plotting uses a different function. The name of this function is Shabal. This algorithm is much more difficult to compute than the SHA 256 variant used in the Bitcoin protocol. As I explained before, miners can avoid this difficulty by pre-calculating the solutions for the Shabal algorithm. And they can collect these solutions on the hard disk. So how is plotting the hard drive applied?
  Nonces are generated when plotting the hard drive. The data should be hashed continuously until the nonce is resolved. Nonces each contain 8,192 hashes, and these are grouped together into several pairs called "scoops".
• Mining on the Hard Drive
  One of the results of the calculation will be the scoop number. The nonce corresponding to the scoop number between 0 and 4,095 will be used to calculate a unit of time called "deadline".
  This is completed for all nonces on the hard drive and then the shortest deadline is chosen. This deadline refers to the time after the last block is created until a new block is created. If the production time is shorter than other miners, the new block is allowed to be created and the miner is eligible for the block reward.
  

Benefits of Proof of Capacity
PoC has many advantages. These;

• Proof of Capacity is ffficient because mining with a hard drive is more energy efficient. After Elon Musk's tweet about the relationship between Bitcoin and coal, this issue has become even more important.
• CoP has more varieties than other algorithms. This is because there are fewer barriers to acquiring a hard drive. These discs are quite inexpensive and open the way for more miners to join this platform.
• Equipment parts can be reused after mining is finished.
• Mining can be continued with old hard disks. It is not necessary to buy a new disc.
• Proof of Capacity is cheap, mining do not purchase a new computer or external HDD.
• In summary, because there is a lot of storage space, the hardware is cheap, and the competition is less, more people can be involved in PoC mining, which means a more decentralized network.

Disadvantages of Proof of Capacity

• The data drawn on the hard disk is used only for the extraction of coins.
• Larger hard drives can be purchased in Proof of Capacity mining. If a person buys much larger hard drives, he can produce most of the coins himself. This will not be a fair gain either. The decentralization of the network can be adversely affected.
• The proof of capacity is a relatively new technology and has not been rigorously tested and challenged in the real world.
• It should be known that mining will be in danger by hackers. Precautions need to be taken to protect against malicious software.

Example of a PoC system: the Chia
Chia is an open-source cryptocurrency project aimed at reducing waste. Chia is a blockchain protocol invented by Bram Cohen, founder of BitTorrent. The project published the Green Book in July 2019.

Source: https://www.chia.net/

Conclusion
It has an important place among Proof of Capacity mining algorithms. The perspective on Crypto mining is changing in this way. Many people see this method as a solution because they think it does not harm the environment. At the same time, PoC is a completely decentralized ecosystem.
It is not as common as PoS or PoW. Considering its advantages, it will be preferred more in the near future. I think Proof of Capacity will increase its impact as technology develops. Especially being environmentally friendly will make this algarithm more preferable.
I want to thank Professor @alphafx for allowing us to study this topic.

cc: @alphafx