Chia is the newest blockchain protocol created by Bram Cohen of BitTorrent Fame. Chia is a “Green” alternative to the popular consensus algorithm, Proof of Work, and a more secure and decentralized alternative to Proof of Stake. Cohen invented a new consensus called Proof of Space and Time (PoST). The growing energy waste of Bitcoin and inevitable centralization and security risks posed by Proof and Stake motivated Cohen to create a first-of-its-kind alternative.
Total disk space dedicated to the network is the driving principle of Chia. A “space farmer” can “plot” over-provisioned hard drive space to prove that a certain amount of space is available to the network. There are 4608 block rewards a day and one of these plots will “farm” 2 of Chia’s native tokens (XCH) per block reward, this equates to 64 XCH awarded every 10 minutes. Think storing bingo tickets on your hard drives and every 10 minutes you call “Bingo!” if your plot is a winner. The block rewards are cut in half every 3 years following a similar halving model to Bitcoin. After year 12, the block rewards will remain fixed at 4 Chia every 10 minutes with no hard cap. Chia’s farmers will always be compensated with rewards and transaction fees and there are no security concerns with mining incentives found in fixed supply blockchains.
Chia is the first “Nakamoto Consensus” protocol since Satoshi Nakamoto created Bitcoin in 2009. Transactions are recorded with the Unspent Transaction Output method. The Chia team believes UTXO has numerous advantages versus an account-based recording system.
In addition to a completely decentralized blockchain, Cohen and team built a developer language called ChiaLisp. ChiaLisp is the backbone of the development community. DApps and level 2 transactions on the Chia blockchain are possible utilizing it’s transparent and auditable code structure. Chia’s development team believes the most exciting feature are Coloured Coins. It is easier to describe what Coloured Coins can’t do, but in short they are a token issuance of any coin, asset and stable coin. Everything in Chia is a coin. I encourage everyone to learn more about the power of Coloured Coins, here, here and for the more technical minded here.
The Chia Network company will function differently than any cryptocurrency project to date. Instead of an ICO or an illegal securities distribution, the Chia Network has opted for an IPO. You heard that right, an initial public offering for a blockchain protocol. The Chia Network’s valuation will largely be tied to the prefarm of 21,000,000 XCH from the genesis block. This prefarm is not an ICO and not a payment directly to developers. The Chia Network will use the pre-mine to fund the adoption and usage of Chia in enterprise applications. Initial plans are to create a services and consulting division within Chia as well as to use the pre-mine to fund startups or projects built on ChiaLisp. The best comparison is Red Hat and Linux.
For more information on the business side of the Chia Network, please read their comprehensive “Business White Paper” and check out our recap of the corresponding zoom sessions. https://chiadecentral.com/business-white-paper-zoom-calls/
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Thanks for reading and Happy Farming!
