It’s been a very exciting and action-packed year for cryptos. Skyrocketing prices and news headlines have drawn major attention as the crypto industry finds its place in the world. Just over a month ago, the total crypto market cap exceeded $2 trillion, which goes to show just how much growth has been taking place within this evolving industry.
Bitcoin is worth more than six times than it was 12 months ago. Dogecoin is literally on its way to the Moon and NFTs (non-fungible tokens) have taken the art world by storm.
But with all this attention comes new scrutiny as critics have been highlighting the very high energy consumption which relates to Bitcoin data processing and mining as these processes use large amounts of electricity, and according to them, produces no real value.
But as we all know, the crypto world’s resilience knows no bounds and a new digital currency believes it has the answer to energy efficiency.
Chia (XCH) has just begun trading a week ago and promises a decentralized form of payment with the same levels of security provided by other cryptocurrencies while remedying these flaws in energy consumption.
What makes Chia so different ?
The idea for the Chia digital currency came from Bram Cohen, founder of the peer-to-peer file sharing system BitTorrent. Cohen claims that Chia will be more environmentally friendly than other cryptocurrencies and possibly more reliable too.
Most cryptocurrencies, including Bitcoin, use the “proof of work” system which creates or “mines” the currency by solving mathematical puzzles using computers. Solving a puzzle is proof that your computer has completed the work.
The work performed by these computers uses immense amounts of electricity and very specialized hardware such as the graphics processors needed for Bitcoin mining – which has created a shortage for these processors on the marketplace.
Some experts have estimated that Bitcoin mining is more energy-intensive than copper mining and that the process for mining Bitcoin uses as much, or even more electricity than some entire countries.
Chia, on the other hand, uses a system called “proof of space and time” – yes, it does sound like one of Einstein’s theories, but this system should be using far less electricity than “proof of work”.
Instead of solving mathematical puzzles as proof, users of this alternative system must prove that they have reserved a specific amount of hard drive space at a precise time – so storage space is of greater importance than processing power.
This will result in lower energy consumption as users don’t need as much computing power or cooling systems for processors as the costs of storage are much lower than computation.
So yes, Chia does sound like the healthier alternative. It’s like the diet or sugar-free version of cryptocurrencies, even the name sounds like a health tea. But the need for more storage space has seen prices for hard drives surge in some parts of the world.
Chia had already used more than an exabyte of storage even before its official launch – it would take about one million powerful home computers with a 1TB hard drive to store this amount of data.
Even so, it’s always refreshing to hear about new crypto projects that are striving to break the common misconceptions about blockchain and cryptocurrency and it will certainly be interesting to see what happens to the “eco-friendly alternative” in the months to come.