The Most Important Development You Never Knew

The Most Important Development You Never Knew

Most people in the cryptocurrency industry have heard of the consensus mechanisms called Proof of Work (PoW) and Proof of Stake (PoS). Today I want to introduce you to a lesser known proofing mechanism and why this mechanism is so important.

Proof of Work

In a Proof of Work, one is effectively playing a lottery system. The way it works is a person called a miner competes against others to solve a mathematical hashing algorithm. This is effectively done through a trial and error type of system.


Without getting too technical about all this, it works by each miner changing a number in a block header as fast as they can, hashing, and checking to see if that their hash is a correct solution. The first miner that find the correct solution broadcasts this to the network.

Other miners then come along and verify that information which in turn authenticates the transactions that have been placed in the block and the first miner gets the rewards. It is considered a lottery style mining system because each miner is competing against each other miner to be the first to solve a block.

After a block is solved, miners move on to the next block and the process begins all over again. 

This process is incredibly intensive and relies on the power of either a CPU or a GPU depending on the setup. As every miner wants to be the first to solve the block equation, special computers called mining rigs have been created that are fine tuned just to perform this task.

As this task relies on CPUs and GPUs, it also increases one's electric bill - which is why often people argue that the energy consumption of PoW mining is far greater than the reward of cryptocurrency. 

Proof of Stake

Proof of stake was launched in 2012 as a means of solving the energy consumption problem created by PoW. This system runs more like a game of roulette. In technical terms it is much more difficult to explain this system so I will try to keep this brief and only give the overall concept. 


Staking works by holding coins in your wallet. Those coins are used as a betting mechanism. Your wallet is betting on various blocks. When a new block of transactions is added to the blockchain, if that block was a block your coins were betting on, you win part of that reward.

Behind the scenes various mathematical formulas are used to select what block is added next and to ensure no bad blocks are added to the chain. 

In this system, the more coins you are holding, the more chances you have to win - as you are able to place bets on more blocks and larger bets on blocks. 

Keep in mind this is a VERY simple explanation of proof of stake. It is actually considerably more complex than I have explained. 

The overall point is - less energy is used in Proof of Stake than in Proof of Work. 

However Proof of Stake has some flaws. The most controversial flaw is that a pure Proof of Stake system cannot begin in a decentralized way. The reason for this is somewhat obvious.

When you start off, no coins exist to be staked. This means someone has to generate coins and issue them to others before any staking can begin - thus it is not decentralized. 

To combat this problem there are hybrid solutions that combine both Proof of Work to create coins with Proof of Stake - but this again can become energy intensive - although generally less intensive than Proof of Work alone. 

Another problem that exists with Proof of Stake is the inability to have a finite number of coins. With proof of stake there must ALWAYS be more coins to generate in order to give staking rewards. 

Proof of Capacity

Most people are not at all aware of this, but in 2014 a completely new consensus mechanism was created by a small cryptocurrency project known as Burst. This consensus is called Proof of Capacity or sometimes Proof of Space. 


This mechanism solves the problems of energy consumption without any of the flaws of Proof of Stake. On top of this it actually prolongs your computers hardware, something neither Proof of Stake nor Proof of Work can claim - and in fact Proof of Work does exactly the opposite and shortens your hardware's lifespan.

So how does the Burst Proof of Capacity work? It works by using empty space on your computer's hard drive for mining. Instead of using extensive computer resources to quickly change the numbers of the block header and hash for a solution, Proof of Capacity using a technique referred to as plotting.

In plotting a list of possible solutions is stored in on the miners hard drive before any mining actually takes place. The larger ones hard drive, the more plots they have to store these solutions. The more hard drives they have, the more they can plot as well. This means anyone no matter what type of computer they have can effectively be part of the process.

During the mining process, these plotted solutions are matched to see if they are the correct answer to the equation, and if so that is the miner that gets the reward. 

This is considerably more efficient than Proof of Work in that there is not a need for intensive algorithm solving. In fact not only is it more efficient it is actually over 40,000,000% more efficient.

As already mentioned, the Burst Proof of Capacity will actually extend the life of your hardware. The reason for this is hard drives, unlike other components of a computer, actually last longer the more they are used.

By plotting your hard drive and constantly examining the solutions contained within the plots you are using sectors that may otherwise go "bad" and you are keeping your hard drive constantly in use. This is great for the lifespan of your computer and also allows you to keep your hard drive long after other components of the computer have died.

The Burst Story

In the opinion of this author, Burst is one of the most undervalued cryptocurrencies in the entire industry. The story behind burst is a story of hard times and issues after more hard times and issues. 


It was started in a similar manner as bitcoin. A person known only as Burstcoin appeared on the bitcoin talk forums and announced the project. No one knows who this person is or was. One year later, they simply disappeared leaving a community in complete disarray.

The community has met with many other difficulties along the way, including having an unruly admin take over their reddit channel requiring a new Burst reddit channel, a group of developers coming along and promising to help and after all whitepapers were updated the developers just left the project leaving a public untrusting, and countless other issues.

My point is, despite being a great project, Burst has had a lot of issues to deal with over the years and they are still trying to pick up the pieces. 

Setting this aside, the technology alone makes this one of the best projects I have run across in crypto-space and I highly encourage others to check this project out and help them where they can.

The PoC Infograph


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