By now, many would have heard of blockchain, the decentralised public ledger that is used for storing information on all who participate in transactions in a way that distinguishes each and every block in the chain through a hash, which are cryptographic codes created by special algorithms. Sometimes, the term decentralised ledger technology (DLT) is used to refer to blockchain technology, which again points to the decentralised nature of the blockchain, where data is stored in these blocks across peer-to-peer networks versus everything being stored in a centralised network.
But before going into what OMC Group Sdn Bhd’s (OMC Group) Authorised Proof of Capacity (APoC) is about, a bit of history is needed. Blockchain was invented in 2008 to serve as a public transaction ledger for the bitcoin protocol, with the original consensus algorithm used to validate, audit, store and secure these transactions known as Proof of Work (PoW). Later, Proof of Stake (PoS) was created as an alternative to PoW, with the Ethereum protocol among those transitioning to PoS.
“How these transactions are validated is through nodes, also known as miners, that solve the complex mathematical puzzles which creates the special algorithms that then validates transactions on a block within a chain.”
The First Miner
The first miner or node to successfully solve the puzzle then gets rewarded, for example with bitcoin or ether if mining through the Ethereum protocol. The problem with nodes using PoW is the amount of computing power needed to solve these puzzles, while those using PoS have to stake their project cryptocurrency to validate transactions.
To solve the need for using huge amounts of computing power, which needs lots of electricity, Proof of Capacity (PoC) was created. PoC is a consensus algorithm allowing miners to pre-calculate the answer of the puzzles and store them in the hard drive. Therefore, the larger the hard drive, the more pre-calculated answers that can be used for storage, which means that miners have a better chance to get rewarded.
APoC, on the other hand, was developed over two years by OMC Group in partnership with parent company AIO Synergy Holdings Bhd to serve the enterprise market or what is also known as the business-to-business market. APoC miners uses the same consensus algorithm as PoC, which means that they can use devices such as OMC Group’s Point-of Sales (POS) devices that has blockchain technology incorporated into it as miners to validate transactions too since POS devices are mini-computers in their own right.
Similar to PoC, APoC does not consume lots of electricity and makes it easier to solve the puzzles through pre-calculated hash in storage or capacity. This ensures that computers do not have to constantly work on calculations, hence using less electricity while any capacity can be easily taken from the computer’s hard disk.
As for the use-case, OMC Group is using APoC to build a consortium blockchain, emulating investment banking group JP Morgan Chase & Co’s Quorum, an open-source blockchain platform for smart contracts. OMC Group has plans to develop finance-related applications through its own consortium blockchain while there are plans in the pipeline to extend this technology to a business-to-consumer model.
In the security aspect, there is also more control over who can participate in the ecosystem that OMC Group is building. For instance, the company is keen to expand its merchant network by helping businesses build up their blockchain applications through OMC Group’s secure and performance-driven platform that is ideal for private transactions within a known group of authorised participants.
APoC is also much faster in terms of transaction speed. As a consortium blockchain, unlike a private blockchain, authorised participants/miners are allowed access and own the decentralised ledger. For the enterprise market, this is actually a good step to adopt blockchain technology as there are elements of both decentralisation and privacy.