Old Bitcoin miners talk about the development history and prospects of “capacity proof” PoC mining

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Hpool CEO Yang Jia learned to talk about the advantages and disadvantages of PoC over PoW and its capacity to prove the current status and prospects of the mining industry.

Original title: “Distributed Roundtable Issue 4: Talk about the past and future development of PoC”
Interviewee: Yang Jiaxue, CEO of Hpool

PoC is the abbreviation of Proof of Capacity, which is called the capacity proof mechanism. It uses hard disk capacity to replace the computing power of the PoW mechanism to reach a consensus.

In fact, PoC existed as early as 2014, but it has been tepid. With the development of PoC projects such as BHD, IPFS, CVNT and the vigorous publicity of the community, more and more people have begun to pay attention to PoC. The fourth issue of the distributed roundtable invited Hpool’s Yang Jiaxue Alex to talk about the past and future of the PoC mechanism!

Sue: Can you compare the advantages and disadvantages of PoC/PoW/PoS in cluster mining?

Alex : The early PoW consensus algorithm belongs to the era of computing power . Bitcoin/Litecoin/Ethereum all fall into this category, and the basic principles of computing and mining are based on hash collision. It is characterized by its high dependence on a large amount of cheap electricity, and it is easy to be ASICized (professional mining equipment mining) and centralized after reaching a certain scale.

The current PoC consensus algorithm belongs to the era of storage power . The difference is that after the hash collision is completed at one time, the result can be stored in the capacity, and then the network will verify the result each time the block is exploded. The greater the storage power, the higher the probability of exploding the block. The capacity is the computing power. Just use the capacity itself as the amount of computing power to prove it. The current PoC+PoST projects ( BHD/MASS/Filecoin, etc.) are based on this basic principle: After the storage is full, the algorithm is used to prove the storage rate, and then the capacity is used to explode the block to gain revenue.

So, how can our ordinary hard drives become storage and mining equipment? First, you have to fill the empty hard disk with data that meets the requirements of specific currency mining according to a specific algorithm (such as the random number data required by the specific PoC algorithm of BHD and MASS, or the PoST algorithm of Filecoin. After the verifiable storage data), it is the effective capacity that can be recognized by the consensus algorithm of each public chain, and then this effective capacity can be used to prove the participation in the block production process (based on the effective capacity size has a certain probability) to obtain the explosion block reward. In the hardware configuration of mining, only a part of the computing equipment needs to be purchased. After the data is filled & sealed into the storage device at one time, the computing equipment can serve a new batch of storage devices. The computing equipment can be based on the length of time. Recycling, because the longer the time the computing equipment can be recycled, the lower the marginal cost of computing-so you can also find a professional service provider to rent computing equipment, and the miners only purchase the storage hardware.

Let’s talk about the PoS mechanism. PoS did not appear independently at first but was a mixed consensus with PoW . The first currency was a currency called Peercoin (PPC) . PoS can help PoW solve the 51% attack problem. The 51% attack problem refers to the fact that if you have 51% of the computing power of the entire network, you can fork, roll back blocks, and you can initiate double-spending attacks to forge transactions to make profits. The miner who has 51% of the computing power may be one or more miners. As an individual, he is not necessarily the holder of Bitcoin, so in addition to mining to maintain the network to obtain revenue, he can also use computing power to attack to obtain revenue. When the PoS+PoW hybrid mechanism attacks the network, it is equivalent to you have to be the holder of 51% of a coin plus 51% of the coin holder to attack the network, but when you hold 51% of the coin % Launching an attack is tantamount to attacking one’s own assets. The hybrid mechanism is equivalent to the dual defense mechanism of the algorithm plus human business interests to strengthen the security of the algorithm.

PoS has the effect of restricting human nature, and can upgrade the security of the PoW algorithm after a mixed consensus with PoW . When PoS becomes independent, although it is difficult to complete the characteristics required by public chains like BTC, it is indeed possible to use methods similar to DPoS to reduce the number of basic nodes and increase the number of high-performance nodes to build a high-performance network. EOS is a typical example. Case.

Regarding the pros and cons of computing mining and storage mining, we must first talk about the characteristics of mining . Mining means that miners are maintaining the security of a public chain ledger data, the storage of ledger data, and public chain transfer and accounting. It is also in fair business. The issuance of public chain currency issuance through competitive competition. So why let miners do this? Because neither the PoW nor the PoC algorithm solves the problem of decentralization, but decentralization. Centralized power is not necessarily a problem, but the uncertainty of human nature plus the uncertainty of centralized power. Financial assets should get rid of uncertainty. Whether a good public chain consensus algorithm is safe is judged by the following three key points:

  1. Whether all the miners who maintain the node can find a collusion to attack or control the network for profit;
  2. Whether the authority can find all nodes to control the network;
  3. Can hackers find most of the network nodes to use technical means to attack or control the network?

In the early PoW network, due to the general-purpose computing equipment CPU, GPU, etc. used by most miners, they did not rely too much on cheap electricity, and basically achieved the above three points of security. However, as PoW mining increasingly relies on cheap electricity, it has led to the concentration of equipment and sites. Although the economic scale is getting larger and larger, the physical nodes are becoming more and more concentrated. The nodes can communicate and collude. Technological oppression (administrative agencies and hackers) can also quickly find them to control the network, and the disadvantages of PoW centralization have become more and more obvious. At the same time, the cost of network PoW with the same security level in terms of network maintenance costs is higher, which is why the new public chain uses less and less PoW algorithms. PoC has returned to the original state of PoW. It has very low power dependence and is a general-purpose device. It is even better than the ecology of early PoW. It improves the security level of the network and reduces the security cost of the network. In terms of applicability, Filecoin’s storable file algorithm may bring a new round of application ecology to the industry.

Old Bitcoin miners talk about the development history and prospects of ``capacity proof'' PoC mining

Sue: Can you introduce the detailed steps of PoC mining? What role does the mining pool play in it?

Alex: The mining pool is a task distribution tool. Assuming that you account for 50% of the computing power of the entire network, the probability of generating blocks is basically infinitely close to 50%. But if your computing power only accounts for one hundred thousandth of the entire network. In order to prove the validity of this one ten thousandth of the computing power and verify your income, it may take several years for you to burst a block. If your lucky value is relatively high, it is possible that you will burst in a year. But if your lucky value is particularly low, it may take more than ten years for you to burst. In view of the fact that most people’s computing power is not too high for the total network computing power, it is necessary to integrate computing power at this time, combine various large and small computing powers into one share, and divide them equally according to the percentage of computing power contribution. Income, so that each explosion block can see its own income.

The specific method is that the mining pool integrates everyone’s computing power, combines the computing power to increase the probability of block explosions, and then allocates these tasks to everyone . It’s like the mining pool has contracted a golden mountain. It doesn’t matter how much a single person digs. The total blocks mined by the mining pool are distributed to everyone according to everyone’s workload. Collaborative mining. A single miner only needs to prove your real workload. (Even if you dig one percent of it), all miners will be rewarded according to the proportion of their workload no matter who blasted the block. The positioning of the mining pool in PoW and PoC is relatively consistent. It is a task distribution platform, which smoothes the income of miners and is more conducive to statistics. In the storage ecology, it also provides cooperative mining services with a mortgage model.

Old Bitcoin miners talk about the development history and prospects of ``capacity proof'' PoC mining

Sue: What are the advantages of cluster mining over individual mining? What is the entry barrier?

Alex: The most friendly thing for individual miners is to join the mining pool. On the contrary, the extremely large computing power does not need to enter the mining pool. The main purpose of the mining pool is to turn the income of scattered miners into a collective collaborative process. The concentration of miners in multiple mining pools will not affect network security because the mining pools do not physically control these devices. For example, if a mining pool does evil, these mining machines can choose to go to other mining pools, or split into more small mining pools or even their own solo.

Cluster mining in PoW can reduce various marginal costs . At the same time, a large enough amount of equipment can be used to obtain cheap enough power resources, and the equipment is monopolized in the hands of several leading mining machine manufacturers; in PoC projects, whether it is a cluster or an individual Mining, the marginal costs of large and small mining scales are very close and relatively fair. In fact, there is no barrier to entry for PoC mining. Even your own mobile phone space can be used for mining; like an idle computer at home, you can easily participate in storage mining.

Although all belong to storage mining, the threshold of recent Filecoin is different from PoC. Its mechanism and algorithm are currently the most complicated, and the threshold will be relatively higher, because it is mainly aimed at storage applications, not Consider issues such as consensus costs. However, the device is still better than PoW and is a general storage computing device.

Sue: Can you analyze the leading companies in PoC mining pools? (HDPool/Uupool/AWpool) What are their characteristics and advantages?

Alex: In my impression, most of these PoC mining pools may come from traditional Internet companies, so they have done a very good job in user experience/product design. We at Hpool are themselves a group of early industry participants. We pay more attention to security with the actual income combination of algorithms. In particular, safety must be the first priority, and then this benefit is second. Safety can’t be done, and the product is useless no matter how good.

Because the mining pool looks like an Internet product, but in fact it is more like a financial asset service platform in the blockchain industry . The core of financial assets must be safety and revenue first. For example, if you invest in a financial asset now, if its product is average, but its security is the best, then its revenue is good, and users are still very good. Favored. Of course, under the same security benefits, users will choose the one with better user experience. But you can’t know everything, so you can only focus on one aspect, such as the development of a new project, new algorithm tools, and product research on new economic models. Some projects do not have ready-made tools, we at Hpool will spend cost and time to study from the ground up from scratch. We should be more focused on the research and development of the underlying tools. The Hpool brand is also a relatively large endorsement, because we insist on the storage algorithm track for a long time.

Sue: Among the current PoC mining projects, which project do you prefer?

Alex: At present, several PoC projects that we have studied in depth are: BHD/CHIA/MASS. The positioning of BHD is Bitcoin in PoC . It is the first project to use the mortgage model on the public chain, and it is relatively innovative in the economic model. Secondly, it is also the deepest and oldest project currently in its entirety. From this point of view, the positioning of BHD in PoC is a bit like the positioning of BTC in PoW. Because Bitcoin’s position in PoW at that time benefited from its temporal precipitation and creation nature. The reason why Bitcoin is difficult to surpass is because of these historical irreversible factors.

Chia’s positioning is very similar to BHD . Its founder is the founder of the BitTorrent protocol. He is a very academic person, which is both its advantages and disadvantages. The advantage is that academic innovation may create new things. The disadvantage is that the current product has not yet landed, but we are continuing to pay attention to this project.

MASS is a bit like Ethereum in PoC , but it is more like the infrastructure of this underlying public chain. The Ethereum we see is actually a partial application-oriented development; but in fact, there are very few bottom-level consensus innovations in the entire industry. As we discussed before, there are only a handful of innovations in the underlying consensus, that is, PoW/PoS/PoC, and even Defi is not considered an underlying consensus. MASS is a bit like the underlying telecommunications system of the blockchain.

This kind of bottom-level innovation is actually very important, but also very difficult. Our entire industry has been around for ten years, with a lot of various projects, but there are currently very few underlying consensus on large-scale applications like PoW.

Each of these projects has its own development direction, and it is hard to say which project is optimistic about. As a mining pool, we at Hpool will continue to pay attention to and offer mining pool services to every innovative project. We are very optimistic about the storage track, and the next five to ten years may be based on the momentum of the underlying storage development. We found that in the new projects, more and more storage-based algorithms are getting better and better, and the volume is getting bigger and bigger.

Sue: Arweave has become more popular recently. Has the mining pool been deployed on this project?

Alex: Recently, the Arweave community is very popular. We have been paying attention to this project and have done research and development in advance. Hpool will officially launch Arweave in September and is currently in closed beta. The ecological pool on the Hpool homepage can already see the AR column, and for this purpose a brand new cooperation model has been developed. Because it is a dual proof mechanism of PoA and PoW , the PoA part of the proof is given to the Hpool mining pool to assume the storage, and then miners only need to provide the proof of PoW. This is equivalent to the mining pool, in addition to task distribution, can also work with miners to do a hybrid proof new cooperative mining model.

I just attended a conference about Arweave recently, and we also carefully compared Arweave and Filecoin. Arweave has retracted the goal of web3.0 back to the distributed and autonomous storage based on the blockchain, simplifying the problem, not overly predicting the behavior of each participant, but using the result assessment and sufficient business game economic rewards. Realize the operation of the system, which is more similar to the Bitcoin network. Do not judge who the mining tool body is, what electricity is used, whether it is a graphics card or an ASIC, but as long as the results verify the correctness of the data, you can get rewards. The only thing to set is the macro parameter boundary. If the national system is used for comparison, Arweave is similar to macro-control . In contrast, Filecoin similarly needs to set the rules for all walks of life in the domestic industry very finely , but it cannot allow the program to perform 100% of these complex regulations. To give a typical example, Arweave requires 10,000 nodes in the entire network to store the same data (called persistent storage). But it is not mandatory for 10,000 miners to store the same data. Its reward rule is to store data on the entire network. Similarly, the less data is stored, the higher the reward. The meaning is to encourage miners to find the kind of data with the least amount of storage. So in response to the problem of too few data backups, Arweave directly used incentives to solve the problem.

Secondly, Arweave’s functional bias is also different from Filecoin. Arweave also solves a cost problem. With the same 1K data, it is much cheaper than the Ethereum public chain. For example, on the public chains of Ethereum and Bitcoin, the gas fee we pay is the cost of network communication and storage. After Arweave is mature enough, some new projects in the future may no longer need to build ledgers on the public chain. Instead, putting the ledger directly on Arweave can directly reduce the cost of data storage.

So what data is suitable for storage on it? Human public information data is very suitable to be placed on it, such as books, basic scientific knowledge, Wikipedia information, map information, biological gene bank and so on. But for private information, it is difficult to determine the value of the information. For example, I have stored a garbled code, and it is a part of my very important private key field. At this time, no one but the store can judge its value. But public information (human mathematics/history/humanities/map information) can be passed up, so Arweave is also called the Alexandria Library.

Old Bitcoin miners talk about the development history and prospects of ``capacity proof'' PoC mining

Sue: What do you think of Filecoin? If it succeeds, will it bring progress to the industry?

Alex: I still remember very clearly, we have experienced the historical memory of BTS. At that time, many of our users in the old currency circle missed Ethereum because of BTS . Because BTS had its sensibility and ideal place back then, and it had realistic engineering feasibility. At the time, Ethereum was too idealistic, and the entire framework was too big to be realized.

But at that time, everyone habitually ignored one thing. Whether it is BTS or Ethereum, they will not necessarily follow the path conceived by the founder or the community . They will be achieved in the future because they provide new technological innovation and Other effects of random chemical reactions generated by the complexity of reality.

For example, Ethereum was originally designed to be a world computer, but it has not been able to achieve the goal of a world computer so far, but it does not affect Ethereum’s first change of blockchain finance because of the realization of blockchain-based smart contracts. Products have indeed had a transformative impact on the industry.

The same is true for Filecoin. We now see that Filecoin has various problems, and it is almost difficult to realize the vision of web 3.0 in the short term, but this project does make blockchain storage a reality, even if the initial performance may be poor and there are many algorithmic problems. But it is conceivable that, for example, the assets in the smart contract are not ledger assets, but NFT assets of various file types. This example alone can bring about a huge chemical reaction.

As for the impact of Filecoin on PoC, we have always regarded Filecoin as a storage algorithm project. This large framework is divided into two categories, one is PoC dedicated to the underlying component of the public chain; the other is storable projects, such as Arweave and Filecoin are our support objects, we are a mine of universal storage algorithms Pool, Filecoin will only have a positive effect on the ecology of storage algorithms, and the widespread popularization of storage algorithms will bring more demand and users.

Old Bitcoin miners talk about the development history and prospects of ``capacity proof'' PoC mining

Sue: What is the current era of PoC mining? What are the future prospects?

Alex: We think this kind of low-level project of storage algorithm should be a blowout state . Since 14 years, there have been several papers in academia talking about how to prove the validity of storage mathematically. The basic logic of PoC type and storage type comes from these basic designs.

In the current algorithm improvement and functional improvement, it is also a blowout state, and even now it is not the highest peak. After sufficient commercial screening in the future, some of the best and safest algorithms will be precipitated. Now more and more excellent teams are constantly trying to error algorithms and finding better application scenarios. In the next five to ten years, storage algorithms are bound to become more and more prosperous.

Sue: Could you tell me what opportunity Hpool was established under? Can you introduce the background?

Alex: The birth of Hpool stems from our consistent strong interest in technological innovation. Before 2015, we were thinking about why the underlying consensus protocol has not been able to iterate and evolve better. As the problems of PoW become more and more obvious, there is an increasing need for better technical solutions.

At this time, I discovered the PoC algorithm and discovered the first PoC currency called BURST (burst currency) , so I began to understand it in depth, study the advantages and disadvantages of the algorithm, find defects and research solutions, and also pay attention Is there any other better consensus algorithm. It’s just that, so far, no hardware that can be used for algorithm verification in computers is more suitable than storage.

Old Bitcoin miners talk about the development history and prospects of ``capacity proof'' PoC mining

By 2017, we established the Hpool mining pool and obtained investment from Wanxiang Blockchain and Fenbushi Capital. Since the initial storage ecosystem was too small to support the company’s positive cycle, the mining pool has been relying on burning money to persist in R&D and operation. With the passage of time, the storage ecology has begun to take shape, and the mining pool can basically make a balance. We believe that in the future, the market for storage algorithms will become larger and larger, and the ecology will become more and more perfect, and we will continue to go further and further in storage algorithms.

Sue: Can you introduce the company’s business? What pain points can be solved for miners?

Alex: First, for example, PoC’s writing service or Filecoin’s sealing service (both collectively referred to as writing service), we all have outsourcing solutions.

Second, cooperative mining. At present, we will provide corresponding cooperative mining services for Filecoin/BHD/MASS mortgage mining models.

Let’s talk about the mortgage mining model of PoC. PoC is like a sharable blockchain telecommunications system. Miners can mine multiple currencies without increasing costs, which means that the same telecommunications facility provides accounting and security services for multiple public chains. But the problem is also here. Increasing the income of multiple currencies without increasing costs is also a kind of selling pressure on the currency itself. Because the miners themselves are not only public chain service providers, but also arbitrageurs. How to solve this problem? The PoC mortgage model can perfectly solve the problem of public chain symbiosis. For example, if you want to obtain the mining revenue of a certain public chain, you must first hold the currency of this chain and mortgage it, otherwise the mining revenue will only be the unsecured part of the block reward. This model is implemented Both symbiosis and mutual protection of the economic model. In addition, apart from the shortcomings of centralization, power dependence also has a neutral feature that is that the basic power minting cost will be deposited into the currency value, and the PoC power dependence is too low. Part of the cost of precipitation is well balanced in the mortgage model. Using the fluctuation risk of funds and the pledge cost to supplement the original power loss minting cost The two core functions of mortgage mining are to solve the internal protection mechanism of the PoC consensus when various public chains symbiosis, and at the same time solve the minting cost compared to the power dependent PoW Low characteristics .

Filecoin’s mortgage mechanism is to prevent miners from losing storage files at no cost. Currently, most storage projects will have mortgage models. Because the price of the currency fluctuates, sometimes the value of your mortgage currency will far exceed the money to buy the equipment. At this time, our Hpool service will include matching token holders and miners in the market to cooperate in mining, and distribute the newly-produced income to token holders and equipment holders in accordance with the weight ratio of the current market. In this cooperation model, the mining pool mainly earns some spreads in matching service fees.

Finally, there is equipment hosting service. We Hpool and many IDC organizations have deployment equipment, which will be provided to our miner users at a fair price. The advantages of storage mining can be mined at home, and after large-scale, it can also be hosted in a formal IDC. PoW has obvious advantages in low-cost power sites, clear property rights and guarantees. It will not be in remote and sparsely populated areas. The safety of equipment and maintenance personnel are guaranteed. IDC environment constant temperature, constant humidity, dust-free, large UPS and backbone network lines can make equipment Safe operation without any reason, while ensuring a long life of equipment.

Sue: What plans and layout will the mining pool have in the future?

Alex: Speaking of the future layout, we will continue to study more storage-related algorithms and explore more models. For example, we did not have this model for Arweave before. Miners had to do their own storage. Now, the mixed model of Arweave allows mining pools to cooperate with miners for mining. Secondly, we are currently expanding some of the IDC computer rooms, allowing miners to station at a fair price.

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