Chia — The Green Bitcoin
In 2009 Satoshi Nakamoto’s dream started, Bitcoin and a decentralized currency was born. By 2018, Bitcoin skyrocketed to USD 20,000, after a brief correction we have seen the price of bitcoin rise recently to over USD 60,000. Through the bitcoin journey, countless people have had to deal with FOMO (Fear of Missing out), FUD (Fear, Uncertainty, and Doubt), Massive wins, and huge losses. With a market cap currently sitting at USD 60,000+, it has undoubtedly made many people a lot richer. However, not all is peachy with Bitcoin, and is it really sustainable for the future?
This is a brief high-level analysis of the problem of Bitcoin and the benefits of Chia, of course, do your own research.
For a brief refresher on blockchain.
The Bitcoin Problem.
Bitcoin is a great idea, at its core, it has removed the need for a third party of trust and it allows for distributed control on the currency. If the network is strong then the currency is strong. however, with the expansion of bitcoin and the price rise, we have seen a couple of issues.
- Power Usage. This has been a big thorn in the bitcoins side. It takes a lot of power to mine bitcoin, this is due to the consensus algorithm within the bitcoin network, PoW (Proof of work). Bitcoin is mined by PoW. Essentially how it works, is the bitcoin network sends out a challenge. all the miners on the network, attempt to beat that challenge with raw compute power. whoever wins the challenge wins the tokens (bitcoins) inside. the challenges rise in difficulty each time. so as they get tougher and more people to try to mine bitcoin. then you require a faster and more powerful machine. This ultimately requires large amounts of power.
- High risk, there has been a lot of price volatility in the past with bitcoin. However, when you look at it, a new currency and technology for securing and transferring money has been created. We need to think about cryptocurrencies similarly to when we move from gold to paper money, or from paper money to credit and debit cards. We are moving into a more sustainable global that will allow everyone to have an equal footing when it comes to currency.
- Speed. Bitcoin traditionally took a while to complete transactions, up to 10mins.
- Designed as a currency. This has limited bitcoin and thousands of other blockchain variants have been created to fill these new blockchain features.
Over the years there have been thousands of cryptocurrencies that have flooded the market to fix these issues and to add their own features e.g. adding applications within the blockchain. However, they all still rely on Proof of Work. This is where Chia comes in.
In 2017 Bram Cohen saw the vulnerabilities and issues with Bitcoin and wanted to make a better and more sustainable Cryptocurrency. this is where he came up with Chia. I would suggest that you read the Green paper or the business white paper however I have summarised some of the key elements of chia below.
What makes Chia different
- PoST. Compared to Bitcoins PoW, chia has designed a new consensus algorithm called Proof of Time and Space. This uses space to create and verify the blockchain.
- Farming? Farming is the new Mining. With Chia, you don't mine in the traditional sense of PoW, instead, you plot hash tables and store them on hard drives. So instead of using power to drive the blockchain, Chia has been designed to utilize harddrive space which removes a lot of the power overhead, as hard drives use a lot less power than GPUs. Creating these plots is locked for CPU similar to bitcoin, but as PoST relies on the % of Netspace you own, then you aren't relying on high power draw to farm chia.
- But how do you earn Chia? Once you have generated a plot, then you move it to long-time storage, this file sits on the HDD. Your node will then receive a challenge from the network and check your plots which need to pass the plot filter. If a plot passes the filter, then it is able to be ‘mined’, and potentially win the block. This works similar to the lottery, the more hashtable (plots) that you have the higher chance you have to win. However, even if you have a small % of the net space, you still have a chance to win. There have been stories of people having a handful of plots and winning. This means, if you have a 4bay Nas, and put in 4 x 16TB HDDs, then you will have 64TB of potential plotted space. A 4bay NAS uses a lot less power than multi GPU mining. If you want to have a look at how much you can earn per the amount of Netspace, have a look at this calculator. Because there is minimal power and compute draw, you are able to farm on underpowered machines, e.g there are farmers out there that use a raspberry pi with external USB hard drives connected to it. This makes it more accessible for the general public.
- Chialisp. Chias on-chain programming environment. Provides new and improved smart transactions.
- Reputable founder and company. Many of you might not know who Bram Cohen is, but you would know and have used his work at some point. he is the creator of BitTorrent. He has had a successful career and history in the peer-to-peer world. He is using this experience in creating a stronger algorithm. Along with him, Chia is a company. They formed “Chia Network Inc. for the purpose of driving adoption of chia and to provide controls, trust, and transparency in how we use our resources for that purpose. These controls will be especially robust should you choose to become a shareholder once we register our equity on a public stock exchange”.
Chia is a new and exciting evolution in blockchain and is one to watch. The exchanges are set to open on May 5, 2021. And there is a lot of hype around that launch, so much so that it has caused a global hard drive shortage.