Proof-of-Capacity (PoC) is a consensus algorithm used in blockchain networks to validate and secure transactions. In PoC, participants demonstrate their capacity to store a certain amount of data by allocating disk space to the network. This storage capacity is then used to mine new blocks and validate transactions, with the likelihood of mining a block being proportional to the amount of storage allocated. It is a more energy-efficient alternative to proof-of-work (PoW) algorithms, as it does not require continuous computational work but rather relies on the storage space available to participants.