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The Proof of Capacity Consensus Mechanism
Although the PoW consensus mechanism worked ably when Bitcoin was new, the network has grown at an enormous speed. To keep block timings sustained, the Bitcoin system is configured to increase mining difficulty. As a result, the mining difficulty has increased to the point that only the most powerful devices, known as Application Specific Integrated Circuits (ASICs), are capable of mining bitcoins. To be able to solve the hash functions, they need a lot of computing power as well. With every miner who is not able to compute the hash functions in a timely manner, the energy invested towards that end will become useless. The consequence of this is that energy costs are spiraling out of control, which is believed by many to be terrible for the environment.
Though PoS mining is less energy-demanding, many cryptocurrency supporters are concerned about some of its drawbacks. Within PoS mining processes, these drawbacks include the concept of centralization. Hence, it encourages coin hoarding since those who hold the most coins tend to have the most say when they stake them. As a result, small-scale mining operations will not have that much influence on crucial choices made by the bigger nodes.
There is a critical need for new mining methods that are not as energy-dependent as PoW and those that provide adequate network decentralization. This is where the Proof-of-Capacity consensus mechanism comes into play. Proof of capacity…
