A single block of bitcoin transaction requires as much electricity as it takes to power a regular home for a week, and BitTorrent inventor Bram Cohen wants to fix that.
The legendary coder has started a new company called Chia Network that will launch a cryptocurrency to compete with bitcoin, TechCrunch reports.
The new cryptocurrency Chia will be based not on bitcoin’s electricity-burning proof of work (PoW), but on proof of time and storage. Described as an “eco-friendly” cryptocurrency, Chia will harness cheap and abundant unused storage space on hard drives to verify its blockchain.
“The idea is to make a better bitcoin, to fix the centralization problems,” Cohen told TechCrunch. The two main issues he sees in bitcoin are in environmental impact and the instability that arises from the few bitcoin miners with the cheapest access to electricity exerting outsized influence.
Bitcoin uses PoW to verify the blockchain. This makes bitcoin ultra secure: it is prohibitively expensive for anyone to make a fake blockchain as it would not have as much work demonstrated as the real one. Users could try to fake all of the work that is led to the creation of the current bitcoin blockchain, but it would take a ridiculous amount of computing power to pull that off.
But over time, bitcoin’s proof of work protocol gives a massive advantage to those who operate in regions with low-cost electricity and naturally chill air to cool the mining rigs. This leads to a centralization of mining power – and thus a centralization of control over the bitcoin network.
Chia Network uses a different system, relying on “proofs of space” in file storage. People already often have file storage which means they can participate in “farming” (Chia’s version of “mining”) at no additional cost.
Meanwhile, by combining proofs of space with proofs of time, Chia Network disarms a wide range of attacks to which proofs of space have been previously susceptible.
In operation, while creating Chia, there is a permanent immutable history that gets added to the blockchain. The “farmers” have to prove that they have used resources with proofs of space and time (storage space) to mint new blocks. In exchange, the “farmer” gets rewards and transaction fees for all transactions they include.
Once a new block is minted, the farmers would collectivity switch to “farming” on top of the new block.
Asked about how to attract people to switch over from bitcoin to Chia, Cohen plans to “do some smarter things about its legal status and do a bunch of technical fixes that you can do when starting from scratch.”
Cohen invented the ubiquitous peer-to-peer file transfer protocol in the early 2000s, which offered a solution to the bandwidth scarcity problem, by allowing anyone to distribute large files without having to invest in expensive infrastructure.
In recent years Cohen has taken a strong interest in cryptocurrencies. In a talk he held at the Stanford blockchain conference this year, Cohen said that Bitcoin is wasteful. He suggested that a cryptocurrency that pins the mining value on storage space rather than processor time will be superior.
Cohen started Chia Network in early August, teaming up with early bitcoin exchange Tradehill’s COO Ryan Singer and they’ve raised a seed round for Chia to ramp up hiring. For the funding, Cohen declined to reveal the amount it had raised, claiming that the company has gone through “a very hot round”.
As TechCrunch reports, the goal of the company is to have early sales of Chia in the second quarter 2018, with a full launch of its cryptocurrency by the end of 2018, though Cohen added: “that’s a stretch goal”.
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