Chia Network: Revolutionizing DeFi with a Sustainable and Efficient Blockchain
The Chia Network aims to reduce costs and improve efficiency in DeFi transactions and payments by significantly reducing its electricity consumption.
Chia project focuses on innovation and the adoption of blockchain technology in various sectors, including government, businesses, and application development, providing a more secure, regulatory compliant, and environmentally sustainable blockchain infrastructure.
The network has its own token, XCH, which serves a specific purpose. In this article, we will explore the advantages and disadvantages of XCH and what it brings to the table.
What is Chia Network and How Does the Protocol Work?
Chia Network is a Layer 1 blockchain launched in 2021 by Bram Cohen, an American programmer who also founded BitTorrent, the world’s most popular torrent client.
The project aims to transform the cryptocurrency ecosystem by establishing a protocol that uses storage space to replace blockchain miners/validators. It utilizes its own programming language called Chialsip and follows the UTXO model of Bitcoin developed by Satoshi Nakamoto.
Chia Network operates on an innovative system called Proof of Space and Time (PoST), which combines Proof-of-Space (PoS) and Proof-of-Time (PoT) mechanisms. Farmers allocate a portion of their hard drive’s storage space to participate in block validation. Time lords prove that a sequential function has been executed a certain number of times. This system ensures the security and progression of the blockchain.
Unlike most other Layer 1 blockchains, Chia Network is governed by a traditional corporate structure. It is not a decentralized autonomous organization (DAO) as it aims for enterprise use and plans to be listed on the NYSE and NASDAQ.
The Creation of Chia (XCH) Token
XCH is a utility token created to reward participants who secure the network. It is marketed as a ‘green’ cryptocurrency due to its low energy consumption.
Chia Network has strategically allocated a significant reserve of 21 million XCH to support ecosystem growth. This approach, described in their whitepaper, differs from the traditional pre-generated token allocation and aims to enhance stability and network longevity.
The Issue with Pre-Generated Tokens
Pre-generated tokens raise concerns among crypto enthusiasts for reasons such as centralization, control, equity, distribution, and market manipulation. These practices contradict the principles of decentralization, fairness, and transparency cherished by the cryptocurrency community.
Halving and Supply of Chia Network
The maximum circulating supply of XCH is slightly over 30 million tokens, and there is no pre-defined maximum amount. The Chia Network whitepaper outlines how new tokens are created, with the production rate decreasing over time.
Chia Network did not hold a pre-sale or initial coin offering (ICO) for its XCH token.
How to Farm Chia (XCH) Token
To start farming Chia, it is recommended to use a hard drive or SSD with a minimum of 1.5 terabytes of space, which may increase over time.
The steps to farm Chia tokens are:
- Download and install the Chia Network blockchain client software on your device.
- Create a Chia wallet to store your XCH.
- Initiate Chia farming to allocate unused space on your hard drive and create plots.
- Connect your plots to the Chia network to start farming XCH.
- Keep your computer connected to the Chia network to validate transactions and actively participate.
The more storage space you allocate, the higher your chances of earning XCH rewards. The creation of plots can take several hours depending on the allocated space and your computer’s processing power. Once created, plots can be used indefinitely as long as the hard drive remains in good condition.
Chia mining does not require specialized hardware but requires decent processing power and a reliable internet connection. Operating multiple plots simultaneously can strain your CPU, so it is advisable to use a computer with a powerful processor.
Does Chia Farming Damage Hard Drives and SSDs?
Concerns have been raised about the impact of Chia farming on hard drives, especially SSDs. The initial plot creation phase involves intensive data writing, which can potentially reduce the lifespan of SSDs. However, once plots are created, farming activities have a lesser impact on the disk’s lifespan. The impact varies based on the type of disk used and farming practices.
Where to Buy XCH Token
The XCH token, with a significant market capitalization, is available on major centralized platforms like KuCoin, OKX, and MEXC. The fees and security may vary between platforms. There are various methods of acquiring XCH tokens, including bank transfers, credit cards, and other cryptocurrencies like Bitcoin.
Conclusion
Chia Network presents itself as a secure and reliable blockchain, aligning with the current need for low energy consumption. Its roadmap adheres strictly, suggesting a potential future introduction to the stock market. However, traditional institutions remain wary of crypto-related enterprises, which could pose a risk to Chia’s listing and overall ecosystem.
