Proof-of-capacity

Proof of capacity and proof of capacity like algorithms which are known by a variety of names such as proof of storage, proof of space, and others are mechanisms which require the use of a tangible resource of some form of memory or disk space allocation to create a proof which shows a financial interest in the network. These proofs may then be used in a consensus mechanism for a blockchain or other decentralized protocol to guarantee that miners have correctly stored the information they have committed to store.

Early research on proofs of space was done in 2015 by Dziembowski et al and Ateniese et al. Burstcoin is a cryptocurrency with a current implementation of a proof of storage and the Chia network is in development.

In order to produce proofs of capacity hard drives go through a process known as plotting. Plotting is the only energy consuming part of the proof of capacity mining process and is significantly lower consumption than proof of work. Miners utilize available space to store nonces, creating through repeated hashing of data, in a plot file. Generating this plot is a one off cost to set up, which can then be used to prove to validators that the space has been allocated and thus mine coins.