Proof of Capacity mining is a new protocol that will allow miners to mine without the need for expensive ASICs. This will save energy, reduce waste and create a more sustainable future for cryptocurrency.
The blockchain energy consumption is a proof of capacity mining that allows users to mine cryptocurrency without using up too much electricity.
Miners are an important component of the bitcoin ecosystem since they serve as validating participants, ensuring that all transactions are legal. Transactions may be validated in a variety of ways by these miners. Proof-of-Work (PoW) and Proof-of-Stake (PoS) are the two most popular at the moment (PoS). However, each of these mining methods has its own set of disadvantages that make scaling a cryptocurrency more difficult. There is a compelling alternative that a growing number of bitcoin fans are recognizing and actively pursuing. Proof-of-Capacity (PoC) is the fundamental consensus mechanism for the BurstCoin cryptocurrency. In this review, we’ll walk you through the present situation before explaining this one-of-a-kind algorithm that many believe could help cryptocurrencies grow more effectively.
Issues with PoW
Proof-of- Work is the first consensus algorithm, and it’s still in use on Bitcoin and other cryptocurrency networks. In order to validate transactions and mine blocks, PoW requires solving complex mathematical problems known as “hash functions.” Because these hash functions are difficult to solve, they need a lot of computing power. Electricity is also required to run these devices. As a consequence, the miner bears a cost that makes it impossible for any dishonest miner to spread false transactions. While the crypto-economic concept is still brilliant, the consequence is skyrocketing energy prices. By the end of 2018, the cost of mining Bitcoin is expected to reach at least 0.5 percent of total electricity consumption. Furthermore, mining is dominated by a huge number of corporations engaged in a race to develop the most sophisticated mining rigs. The “small man” who can’t buy the machines is inevitably undercut by them.
Issues with PoS
Proof-of-Stake is a different method that depends on certain “nodes” staking their money while participating in transaction verification. If the consensus algorithm’s trust is broken, these nodes are immediately at risk. They have “skin in the game” when it comes to the coin’s reliability since they have staked their coins. These staked-coin nodes will serve as validators in a number of transaction-verification consensus rounds. The verifications will give greater weight to the nodes who have staked the most bitcoin. The advantage of this over PoW is that there is no arms race to build the greatest mining rigs, and no energy is wasted. When it comes to PoS, however, there is one glaring issue. This is the centralization problem. Blockchain technology is the polar opposite of centralization. When a single miner or node has too much power, it may behave maliciously and cause damage to the broader decentralized network. Those nodes who have staked the most coins have greater influence over the network using PoS. This exposes the network to the risk of richer nodes acting dishonestly or even coordinating harmful activities. Of course, the community is constantly working to improve this vulnerability in PoS mining. There are options for hybrid models that mix PoW and PoS, for example. An completely new algorithm, such as Proof-of-Capacity, may be a superior option.
What is Capacity Proof?
Proof of Capacity is a consensus method that uses a computer’s hard disk rather than its raw processing capability to reach an agreement. The miners will “plot” space on the hard disk in order to participate in transaction verification. Unlike PoW mining, the answers to hashing issues are solved ahead of time and saved on hard drives. As a result, prior to the “consensus round,” each miner will hold a huge number of these answers. When the specified round has been reached, the protocol will examine all of the miners’ solutions. Those who find the quickest method to solve the problem will be given the block and will therefore get the block prize. PoC is also very clever in how it attempts to combat the danger of ASIC miners. The mining algorithm is much more complex than conventional PoW methods. This implies they can’t be solved in real time and must be saved ahead of time. PoC’s block time is also much shorter than those of other PoW currencies. Block timings are about 4 minutes, compared to the Bitcoin chain’s 10 minutes. This also makes it much more difficult for ASICs to compete effectively. The mechanics of plotting and mining on a hard drive are a little more complicated, but there are plenty of Proof-of-Capacity mining tutorials that go through this in detail.
What are the Advantages?
Because of the benefits that PoC mining offers over more conventional methods, it has received much praise. The following are some of them:
- GPUs and ASICs need more power than hard disks. As a result, they can be mined with much less energy than conventional currencies. Many people’s energy worries will be alleviated as a result of this.
- Because it is ASIC resistant, many of the bigger mining farms will be unable to seize control of the network. They can’t utilize their high-tech equipment to the detriment of smaller miners.
- Anyone may mine the currencies using their hard disks. Hard drives, unlike ASICs and more powerful GPUs, are relatively inexpensive and do not need specialization.
- Following up on the preceding argument, the lack of expertise is also advantageous for post-mining applications. These hard disks may simply be wiped clean of their data and utilized as usual. The same cannot be true for ASICs with a high level of specialization.
These benefits may be one of the driving forces for John McAfee’s support for the protocol. He tweeted support for BurstCoin as his currency of the day in December of last year, claiming that it “uses 400 times less power than Bitcoin.” As more members of the cryptocurrency community become aware of the advantages of PoC mining, currencies like Burstcoin are expected to gain traction.
More expansion is required.
While there is a lot of hope for the future of PoC mining, it would be naïve to think that the technology will be without growing pains. It is presently only being utilized on one blockchain, and its long-term viability will only be known if it is deployed at scale. Proof of Capacity is still a relatively new technology, and there may be some unanticipated consequences. Indeed, even Satoshi Nakamoto may not have seen Bitcoin’s meteoric rise and the ensuing possible catastrophe. Only time will tell whether new solutions like Proof of Capacity can assist cryptocurrencies in adapting to a changing environment.
DISCLAIMER: The activity of the cryptoassets discussed in this paper is uncontrolled. This post is not intended to provide financial advice. Always do independent research.
Bitcoin mining is an energy-intensive process. Proof of Capacity Mining is a new technology that allows for the use of less power without sacrificing security or decentralization. Reference: bitcoin mining electricity cost.
Frequently Asked Questions
How much energy does proof of stake save?
Proof of stake saves a lot of energy.
How much electricity does mining bitcoin use?
The amount of electricity used for mining bitcoin is difficult to estimate, but its safe to say that its not insignificant.
Is proof of stake good for the environment?
Proof of stake is a consensus mechanism where mining power is distributed based on the amount of coins held. The process requires a lot less electricity than proof-of-work, which means it can be better for the environment.
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