Proof of Storage Consensus
In my last blog post – discussed many different types of consensus algorithms, including one called proof of storage, which prompted quite a bit of questions about what it is. So, this is an opportunity to go into more detail.
First, many people have noted that Chia, the new proof of storage network, has caused a hard drive shortage and for prices to spike, as reported in many locations, including here.
This may actually be a very good thing, since there is hope that Chia could replace other networks like Bitcoin and Ethereum, which are very environmentally wasteful because they use a proof of work protocol, requiring huge amounts of electricity. As an alternative, a network with similar properties, but much lower electricity consumption, would be huge environmental benefit – Chia has even earned the label the ‘eco-crypto.’ Not such a bad label.
So, how does it work? Well, it’s very similar to a proof of work protocol that we examined earlier, with a search for a random number which, when appended to the hash of the data, has a certain difficulty level, or (sort of) leading numbers of zeroes.
With proof of storage, the algorithm is very similar, however, the problem, such as the cryptographic hash algorithm, is much slower and also has many fewer possibilities (which expand over time). Hence, there is a huge benefit to pre-compute the values of the outcome, and then hope that one of your pre-computed values solves the problem. The more pre-computes you can store, the more likely you are to have one. This is analogous to the more lottery tickets you have, the more likely. You are to win the lottery.
When you set up a Chia farm, there are two major steps once you have your storage in place.
- Plotting: This is where you pre-compute and store the values on your storage. Your storage is not useful until it has been plotted, and plotting can take a long time! There are many potential methods to increase this, but still, it takes a while.
- Mining: This is where your miners are actively trying to solve the consensus algorithm and be rewarded with Chia, using your plotted storage. This is less electricity intense than Bitcoin or Ethereum because the lookup is a simple table to see whether you have a pre-compute, not the sophisticated hashing required for the other networks.
Unfortunately, Chia is very wasteful of one thing – storage. Just like how Bitcoin wasted compute capacity (such as GPUs and ASICs) (and the resulting electricity), Chia is very wasteful of storage capacity – storing enormous quantities of data, just in the hope that the lookup will be successful. This waste has caused hard drive costs to spike at the moment, and also made them unavailable for many other uses, especially SSD drives, which are most suitable for this application.
Yet, this is probably a good tradeoff, as hard drives are less energy intensive, and if a resource is going to be wasteful, it would nice for it to at least consume less electricity.
It will be interesting to see if Chia starts to replace Ethereum, or maybe even Bitcoin, but for now, it’s a novel network that many miners are finding interesting.
Long live Proof of Storage!