Chia COO Explains What the New Eco-Friendly Crypto is All About
Move over Bitcoin and Doge, there’s a new crypto in town. Chia, which was founded in 2017, has a key differentiator from other ones — it is said to be eco-friendly.
Bitcoin has faced backlash for a while because of its enormous carbon footprint. According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin currently consumes around 110 Terawatt Hours per year — 0.55% of global electricity production — which is roughly equivalent to the annual energy draw of small countries like Malaysia or Sweden, the Harvard Business Review reports.
Chia, which was founded by Bram Cohen, the creator of BitTorent, uses hard drive space as the commodity used to choose validator and validate transactions. In turn, Chia — deemed “green money” — uses somewhere between 300 and 10,000 times less electricity for the same security level as proof of work, Chia Network COO and president Gene Hoffman told GOBankingRates.
In comparison with other blockchains, Chia reduces energy consumption. Its blockchain replaces “proof of work,” which is the consensus protocol used by Bitcoin and Ethereum, with what it calls “proof of space and time” consensus protocol “that eliminates the unfairness, energy inefficiency and centralization of proof of work,” according to the company website.
Instead of using “power hungry specialized computing resources, Chia relies on storage space coupled with the added variable of time (via a “verifiable delay function” or “VDF”) to ensure the integrity and security of the blockchain,” the website notes.
“Your empty drive space can make you money while you help secure the network. And if you decide farming is not for you, you delete your plot files and put more family photos on the drive instead,” Hoffman said.
“Farming” doesn’t require a lot of energy consumption, compared to mining (used for Bitcoin) and the company says it believes that cryptocurrency should be easier to use than cash, harder to lose and nearly impossible to steal.
Per Chia’s website, “anyone who wants to validate transactions should be able to farm without single-use hardware or a big electricity bill.”
Chia was created as a reward to chia “farmers” (the analogue to Bitcoin’s or Ethereum’s “miners”). The goal of farming — verifying and ensuring the integrity of transactions on the Chia blockchain — is to utilize unused disk space to help validate financial transactions. Farming in the Chia network is a very lightweight process that leaves your computer free to do other things, the company explained in a statement.
“My farm runs on a Raspberry Pi [computer] with an external USB disk and sits under my TV. I barely notice it is there. If you tried to mine BTC or ETH in your living room you’d hate it,” Hoffman says.
The company has significant backers, including venture capital firm Andreessen Horowitz, which was also an early investor in Coinbase, entrepreneur Naval Ravikant and venture capital firm Greylock Partners.
Chia intends to be listed on global exchanges soon, although while declining to comment on the matter, Hoffman said that “both Coinbase and Bitstamp have mentioned [them] publicly as an asset they were looking at to list.”
The company says it is expected to gain widespread digital exchange listing, along with rapid worldwide adoption in the financial, corporate, commercial and governmental sectors, it says in a statement.
Asked about the criticism the company is facing regarding the surge in hard drive prices due to chip shortages, Hoffman shared that “in the very short term [they] did cause some panic buying in the hard disk drive market. However, over the long term there are 7ZB of space in the world and the entire storage business plans to ship about 1.3 ZB this year. The total amount of storage currently allocated to Chia is about 2.5 EB and that may double in the next couple of weeks. If we use 5 EB then 0.005ZB/1.3ZB = 0.38% of all the storage that will be shipped in just this year.”
“We think the supply chain will calm back down as we’re just not that big a component of the storage market compared to say AWS,” he added.
Hoffman said that the team is “looking to take the company public somewhere between Q4 of this year and the middle of next year but there are many factors that may move that timing.”
As for the ultimate vision for Chia, Hoffman said that on the “high finance” side of financial technology, it is “to fix how international and domestic payments work, bring all the equity and debt markets together with currency markets that trade 24/7, drive down all the costs of these while driving up transparency.”
“On the day to day, we’re going to make sure immigrants have a much less expensive way to transfer money home than the current offerings and those in move volatile nations have money that’s more secure both financially and practically than anything they have today. We in the west take a mostly functioning currency and banking system for granted, but even here the banks and financial technology treat the poor quite badly,” he added.
Finally, when asked about celebrity technology endorsements, which have been driving prices of cryptos recently, (hello Elon Musk), Hoffman said that they “usually strike us as kind of odd beyond the folks who are serious about technology. Does Kevin Rose count? I know he’s quite a farmer already.”
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