Chia is the new kid on the cryptocurrency block, billing itself as an eco-friendly answer to bitcoin that seeks “to make digital currency easier to use than cash” and has already generated plenty of excitement since its launch in March.
Unlike bitcoin, which runs on a “proof-of-work” system that requires miners to deploy whole banks of computers to solve complex but arbitrary mathematical calculations in competition with one another, a battle that devours huge quantities of cheap electricity, Chia’s platform is based on “proofs-of-time-and-space”.
Chia's defining feature is its innovative consensus algorithm. Chia combines two concepts, proof of space and proof of time, to create a new algorithm that's both secure and significantly less energy intensive than proof of work. The team hopes that the energy efficiency will also translate to a more egalitarian mining economy since the financial barrier to start farming is reduced. That way, the team reduces the risk of a centralized economy similar to Bitcoin’s. With Bitcoin, one company, Bitmain, controls more than 40% of the network’s mining power.
Proof of space
In proof of work, a miner races other miners by using its computational resources to find the right hash to create a new block. Theoretically, the time taken to find the right hash is a a good proxy of how much computational power a miner has dedicated to mining. Ideally, the more computational power a miner dedicates to mining, the more likely the miner is to win. In proof of space, the more storage space a farmer dedicates to farming, the more likely the farmer is to win.
Proof of space has certain advantages over proof of work; for instance, it's more energy efficient - your computer is still generating proofs to solve a problem related to the “closeness” to the most recent block, but all these proofs are pre-generated, saved on your hard drive, and can be accessed in each block interval in the future (rather than being generated anew in each ~10 minute block interval which could lead to high energy consumption seen in Bitcoin). Plus, proof of space is designed to be more egalitarian (disk storage is cheap, widely available, and often unused).
The trade-off with using proof of space is that it’s vulnerable to more attacks than proof of work. One example is the case when a rogue farmer decides to build a new blockchain from the genesis block with greater weight than the original. This is possible because its cheap to do so with a basic proof of space algorithm. Because the network follows the blockchain with the greatest weight, this allows the farmer to unilaterally control the blockchain.
Proof of time
To mitigate these attacks, the Chia team introduced proof of time. Very simply, to create a block in Chia, the block needs to first go through proof of space and then go through proof of time. While proof of space is used to determine the winning block, proof of time is only used to ensure that a certain amount of time has passed before the block is created. In aggregate, proof of time ensures that the blockchain has taken a set amount of time to create and this solves the problem of powerful farmers quickly building a new blockchain with greater weight.
At a high level, Chia's block producing process follows this pattern: farmers use their allocated space to farm blocks. The blocks are then passed to proof of time servers to finish. Once a block is complete, a proof of time server broadcasts the block and the winning block is appended to the blockchain. Only farmers are reimbursed for their work, proof of time servers do not get rewarded for their work. The team assumes that network participants will "do it to keep everyone else honest".
Blockchain characteristics and performance
Outside of the consensus algorithm used, he Chia blockchain is similar to the Bitcoin blockchain. Like Bitcoin, Chia uses the Unspent Transaction Output (UTXO) transaction model. Additionally Chia will also have a speed and throughput as Bitcoin. Unlike Bitcoin, Chia will not have a maximum capped supply of tokens. Although there will be three halvings of block rewards, Chia's blocks will always offer newly minted tokens as rewards for farmers.
What are other blockchains similar to Chia
There are other blockchains that use similar consensus algorithms as Chia. SpaceMint and Burstcoin both use a proof of space consensus algorithm. They don't complete it with proof of time. Although it's arguable that Chia is more secure with its proof of space and time combination, both SpaceMint and Burstcoin have their own safeguards against the weaknesses of proof of space.
The live Chia Network price today (October 6,2021) is $170.25 USD with a 24-hour trading volume of $43,230,060 USD. We update our XCH to USD price in real-time. Chia Network is up 3.11% in the last 24 hours. The current CoinMarketCap ranking is #253, with a live market cap of $269,369,671 USD. Chia's ROI with -22% decreased in a month underperformed in 'Smart Contract Platform' category which had 723% growth over the past year. It's underperformed in crypto market which had 7068% growth over the past year. You can track Chia Return On Investment (ROI) on our website for Free.
A capable marketing team and brand awareness have a direct impact on the success of any project. According to our data, Chia's Twitter account saw an increase of 33% in the number of followers over the months from May 22 until October 06 of 2021. You can follow Chia's popularity using our report, which is accessible in our website's popularity.
Our data indicate that Chia's ranking among the markets' cryptocurrencies in terms of market capitalization decreased over the last months, from 118 to 203. Also, its price saw a similar trend, falling from $850.73 to $175.03 today at the time of writing. However, its liquidity score is 50% on the market's average score, which means that it would be easier to sell the Chia if the market is falling. You can find our report about Chia's market capitalization, price, and liquidity score on our webpage.
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