Proposed in 2014, POC mining so far still hasn’t drawn much attention. Is it because the algorithm for POC mining is not advantageous enough? No, POC is a consensus algorithm that utilizes the idle space in a local computer’s hard drive for mining. It is similar to POW, but replaces calculation with capacity, making it particularly user-friendly in terms of mining cost, power consumption, and mining environment. At the same time, POC mining can also be applied to malware detection, anti-spam, and protection against denial-of-service (DOS) attacks.

However, POC mining has a serious drawback, which lies in its incentive mechanism. A mining consensus mechanism that ignores interests is not attractive to users. The Plot files in POC, besides mining, cannot be used for other purposes. Therefore, despite its low cost, low threshold and low operating cost, POC mining still hasn’t won the favor of the market.

Burst, a pioneer in POC mining, has gained huge popularity before. Under its deficient incentive mechanism, early participants mined coins at low cost, but those that joined later could not receive sufficient returns from the currency layer, which reduced the enthusiasm of users, and slowly pushed this excellent POC model off the stage. Undoubtedly, the project team and users must reach consensus on the construction of an incentive mechanism, so has the incentive issue been completely solved?

To resolve the consensus mechanism issue, BHD has adopted the dual incentive method, so that both early and late users can get rewards they deserve from the currency layer: under conditional mining, miners can obtain all the benefits; in the case of the conditional withdrawal of miners, the operations team will receive the majority of the rewards from block generation.

According to the description in their white paper: in the first month after launch, unconditional mining is granted to miners; no matter whether they hold BHD or not, they can get 100% of the income, that is, 25 BHDs per Block, so the revenue is proportional to the total number of Plots. While the 25 BHD in the first month greatly motivates the miners, the mining conditions applicable to the second month not only maintain the sustainability of the price of BHD, but also make it surge as driven by market demands: the conditioned mining begins in the second month, that is, to run a 1TB node, users need to keep 2 BTCHDs in the node account. When a block is generated, the whole network will verify the balance in the node account. If there are less than 2 BTCHDs, the user can only get 25*1/3=8/33 BTCHDs as rewards. The remaining 16.67 BTCHDs will be directly credited to the promotion account.

For conditional mining starting from the second month, if a user does not meet the conditions he can only get 30% of the income, but he can get 95% if he does, and the other 5% will be put in the foundation for promotion. After receiving 25 BHDs as reward in the first month, all miners naturally want to get all the benefits in the following months. However, every 1TB requires the pledge of BHDs, otherwise miners can only get 30% of the income. That is to say, each miner needs to reserve part of his BHDs, which promotes the transaction of BHD, since such a model stimulates market demand and controls the malicious selling and market-crushing prices in traditional mining. In this way, the market will be in a virtuous cycle of demand and output.

 

Furthermore, the CPOC mining model can also prevent economic model attacks. With the buyer-seller and mining models, all miners are incorporated into a community of ecological interests and use coins as a new type of production material to replace the original power consumption resources, so that the entire ecology of BHD keeps expanding independently.

After solving the problem of insufficient consensus incentives, POC mining can give full play to its strength — without consuming much power and resource, miners do not need to sell coins in order to pay for electricity in this depressed market, that is, the consistency and recognition of interests can be established. Meanwhile, the value of power can be deposited in the currency system to stabilize the value of the currency layer. Under CPOC, a hard disk is scanned once every few minutes. At other times, the hard disk is in standby state, with power consumption close to zero, making CPOC a naturally low energy consumption model.

More importantly, POC mining is anti-monopoly. Monopoly exists in traditional mining and power industries. The producers of mining machines are not only suppliers but also direct competitors of miners. When manufacturers introduce better ones, miners have to update their own mining machines, otherwise they would be eliminated by the market. In such cases, miners will be trapped in a vicious circle of continuously increasing investment after output, while mining machine suppliers can make a big fortune from this. What is more tragic, individual miners cannot rival mining fields, either in power cost or calculation force. The high threshold and large investment have impeded a large number of users who intend to invest.

 

Boasting low threshold and small investment, POC mining can fundamentally eliminate monopoly. As it consumes almost zero power, it also prevents users from being exploited twice by speculators. Miners’ income will be more measurable, and the linear value retention rate of civil PC hardware can ensure that miners can hedge the secondary market in a relatively secure manner.

BHD’s mining model has not only made up for the lack of incentives in traditional POC mining, but also enlarged its advantages. In such a complete eco-community of common interests consisting of the market, miners, and demand, the price of BHD could maintain growth in a bear market and achieve leaps in a bull market, eventually generating a hundred times the profits.