What is Chia cryptocurrency?
Chia, is one of the newest cryptocurrencies.
This latest form of digital money was created by Bram Cohen. For the uninitiated, Cohen came up with BitTorrent, which is a way of downloading and sharing files via the internet.
Chia is actually part of a bigger platform. The Chia Network began in 2017 with the aim of improving blockchain transactions.
The coin and network take their name from the Chia seed which reflects the platform’s environmental focus.
Why is Chia cryptocurrency different?
Cryptocurrencies typically use a process called ‘mining’ in order to create coins.
Fundamentally, mining is simply solving really difficult maths puzzles and then having that work verified. This entire method is known as ‘proof of work’.
A big problem is that proof of work uses up enormous amounts of energy. More energy than some countries use.
This energy use is (as you’d imagine) pretty bad for the environment. So bad in fact, that Tesla has stopped accepting Bitcoin as payment.
Chia cryptocurrency is different because it doesn’t use proof of work. Instead, it uses something called ‘proof of space and time’.
So, how does Chia cryptocurrency work?
Proof of space and time uses up otherwise empty computer storage space. In theory, anyone with redundant capacity on their laptop, phone or PC can do it.
To earn Chia, users ‘farm’ instead of mine.
Farming works like this:
- Farmers (Chia users) store cryptographic numbers (basically just a super long string of digits) on their hard drives.
- These stores of numbers are known as ‘plots’ (see what they did there with the analogy).
- Numbers are then released by the blockchain and farmers check their plots to see if they have one that is close to the one released.
- Processes are in place to verify the numbers and ensure that farmers are consistently allocating space for new plots.
The easiest way to get your head around it is to think of it as a lottery or a game of bingo. The caller shouts out a number and if you have it (or come close to it) you win. So, the more lottery tickets or bingo cards you have, the greater the chance of winning.
It’s the same principle for Chia. The more plots you have, the more opportunity there is to farm some Chia crypto.
Is Chia cryptocurrency really green?
It’s greener in the sense that creating it doesn’t use vast quantities of energy. However, like all coins, there are two sides.
The idea that Chia makes use of empty space on your hard drive might be better for the environment in principle. But remember, the more plots you have, the bigger the wins.
That means serious farmers won’t simply settle for using leftover storage space on their devices. Of course not. It means that farmers will buy more storage. Lots and lots of storage. In fact, some retailers have reported huge demands for HDDs and SSDs (types of digital storage).
Popularity leads to scarcity, which more often than not leads to price hikes. And that’s already happening in some markets where prices for storage devices have almost doubled.
So, is Chia really green? It might not consume as much energy as Bitcoin, but is buying up electronic hardware to farm a digital currency any better for the environment? In the end, the decision is yours.
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