What are proof-of-capacity (PoC) and proof-of-activity (PoA)?
Home > What are proof-of-capacity (PoC) and proof-of-activity (PoA)?
Killian Bell
May 10, 2023 7 mins read

What are proof-of-capacity (PoC) and proof-of-activity (PoA)?

Proof-of-capacity (PoC) and proof-of-activity (PoA) are two blockchain consensus algorithms that are used to determine which miners will validate new blocks. Like the other consensus methods used within the industry today, they help ensure all transactions are valid and that all blockchain data is accurate and up to date.

In this AAG Academy guide, we’ll explain both proof-of-capacity and proof-of-activity in detail, and look at how they work. We’ll also cover the pros and cons of each of these consensus algorithms, and answer some frequently asked questions.

What is proof-of-capacity (PoC)?

PoC, which stands for proof-of-capacity, is one of a number of consensus mechanisms that was designed as an alternative to the extremely energy intensive proof-of-work (PoW). Instead of relying on powerful computer hardware that is only getting more and more expensive every year, PoC takes advantage of the empty space on a mining node’s hard drive.

Rather than having to find a solution to a complex cryptographic problem, as is the case in PoW, miners in a PoC system already have the possible solution stored somewhere on their systems. The larger the hard drive, or the more free space they have, the more possible solutions they can hold, which increases a miner’s chance of processing a block and claiming a reward.

Proof-of-capacity is sometimes referred to as proof-of-space (PoS), and it originates from a concept created by “Dziembowski” in 2013. Signum, formerly known as Burstcoin, was the first to implement PoC in 2014, and other cryptocurrencies have followed suit since then.

How does proof-of-capacity work?

The proof-of-capacity process is broken down into two stages, the first of which is called “plotting.” During the plotting process, a hashing algorithm creates a list of all possible nonce values on a miner’s hard drive. Each nonce contains 8,192 hashes, which are paired into “scoops.” The output of this process is called a “plot file.”

The second stage of the process is the mining itself. It begins with a mining node generating a scoop number, then using that scoop’s data to calculate what’s called a deadline value. This process is repeated for every nonce stored on the miner’s hard drive until a minimum deadline can be chosen. Other miners then get an opportunity to forge a block within that deadline.

For instance, if one mining node lands on a deadline of 42 seconds, other miners can try to forge a block within that time. If none of them succeed, then the miner that generated the deadline can forge the next block themselves — and collect the reward for doing so. Once the block is forged and verified, it can be added to the rest of the chain.

Pros and cons of PoC

One of the biggest upsides to the proof-of-capacity algorithm is that it is incredibly efficient. It consumes considerably less power than PoW and does not need the same level of computing power. In fact, any regular hard drive, even those on Android and Linux systems, can be used for PoC. There is no need for constant upgrades that add more power.

What’s more, hard drives used for PoC, which can now be obtained very affordably given that much of the computing world has made solid-state drives the default standard, can be easily repurposed for other uses later. If a miner decides they no longer want to participate in a PoC network, the drive can be wiped and used for other things.

PoC does have its downsides, however. Right now, very few cryptocurrencies use the PoC algorithm, so those interested in PoC mining don’t have many options. More importantly, there are security concerns around PoC — most of which are centered around the possibility of mining drives being infected with malicious software, which could disrupt an entire network.

What is proof-of-activity (PoA)?

PoA, which stands for proof-of-activity, can be thought of as a combination of proof-of-work (PoW) and proof-of-stake (PoS) — the two most common and most well-known consensus algorithms used within the cryptocurrency industry today. PoW is still employed by Bitcoin, while PoS has been utilized by Ethereum since “The Merge” in late 2022.

PoA uses a very similar mining process as PoW, in that powerful mining nodes compete against each other to create new blocks, but it then switches to a PoS system, in which chosen validators fill that block before it is added to the rest of the chain. By combining both of these mechanisms, PoA greatly reduces the chances of a 51% attack.

Proof-of-activity was first proposed in a research paper published in 2014 by a group of crypto developers and experts. Its authors described it as a new protocol that solves some of the biggest drawbacks of both PoW and PoS. However, PoA has some big cons of its own.

How does proof-of-activity work?

As we touched on above, proof-of-activity works by taking advantage of a miner’s computing power to generate a new block, as is the case with PoW. This process involves creating new hashes over and over again until they find one that is valid, based on the rules laid out by the network. Over time, this gets more and more difficult, and requires even more power.

Once a new block is created with the miner’s reward address inside it, the miner’s job is done. It is not a miner’s responsibility to fill the block as it is in a PoW system. Instead, the empty block gets passed over to validators — chosen using the proof-of-stake system, which favors those who have staked the most tokens — to be validated and signed.

If a block does not receive the necessary number of signatures during the validation process, then it is disregarded and the next block is distributed among a new set of validators. This continues until a block receives enough signatures to be considered complete. Finally, the block is added to the rest of the chain and transactions can be recorded in it.

Pros and cons of PoA

The biggest advantage of PoA is the primary reason why it was created: Its two-step process, which merges the PoW and PoS systems, makes it more secure than those algorithms alone. It means PoA is virtually immune to a 51% attack because it is impossible to predict how a block will be validated, or which validators will sign it.

By far the biggest downside to PoA is that it is just as inefficient and energy intensive as PoW. It requires specialized hardware that can deliver tremendous computational power, which is not only expensive to acquire, but also costly to run — and unfriendly to the environment.

References

Frequently Asked Questions

Decred (DCR) is the biggest project that uses the proof-of-activity consensus algorithm today.

In addition to Signum, a number of other cryptocurrencies use PoC, including Chia, SpaceMint, and Storj.

The biggest advantage of proof-of-activity is its increased security. As a hybrid of both proof-of-work and proof-of-stake, it is virtually immune to a 51% attack.

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About the author

Killian Bell
Senior content writer
United Kingdom
Senior copywriter for AAG Marketing team with the focus of educating our community on all things web3, blockchain and Metaverse.

Disclaimer

This article is intended to provide generalized information designed to educate a broad segment of the public; it does not give personalized investment, legal, or other business and professional advice. Before taking any action, you should always consult with your own financial, legal, tax, investment, or other professional for advice on matters that affect you and/or your business.

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