A new green cryptocurrency called Chia uses a less energy-intensive method of minting new coins. Here are 6 things to know about the digital asset before it starts trading on Monday
A new green cryptocurrency called Chia (XCH) is set to start trading on Monday, May 3.
Chia uses "proof of space" and "proof of time" instead of bitcoin's "proof of work" to mint new coins.
The rise of Chia is already causing shortages and price increases at hard drive and SSD manufacturers.
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A new "green" cryptocurrency called Chia is set to start trading next week. It was created by Bram Cohen, the inventor of BitTorrent, and uses what's called "proofs of space and time" to "farm" rather than "mine" new coins.
The model is a less energy-intensive method of producing digital assets compared to bitcoin's "proof of work" concept, which has led that currency to be criticized for using as much energy as some entire nations.
Chia and the company behind it, Chia Network, have already attracted significant attention from investors.
Chia Network boasts big-name backing from the likes of Andreessen Horowitz, Naval Ravikant, and Cypherpunk Holdings, according to data from Crunchbase.
The company also has attracted publicly traded crypto mining companies like iMD Companies.
"We're going all-in on Chia," Rick Wilson, iMD CEO, said in a recent press release. "With our extensive research, we believe that Chia is here to stay and will be utilized on a global financial level. We believe our early decision to farm Chia will result in increased revenues for iMD."
Chia Network released a Business Whitepaper describing its new cryptocurrency (XCH) on February 9 and launched "farming rewards" on March 19.
Chia will begin transactions and trading on May 3.
Here are six things to know about the new cryptocurrency before it starts trading.
The 'proofs of space and time' model
The "proofs of space and time" model is central to Chia's value proposition. The idea is that users, called "farmers," will "seed" their hard drives or solid-state drives (SSDs) with software that puts cryptographic numbers into specific "plots."
These "plots" are then awarded with blocks from the blockchain based on the percentage of total space a farmer has compared to the entire network. Then a VDF server, known as a "Timelord," verifies that block, allowing the chain to move forward and awarding XCH to the farmer.
Chia Network says the system will provide better security than Ethereum and reduce the energy expenditure costs required by bitcoin's "proof of work" model.
Read more: A 29-year-old self-made billionaire breaks down how he achieved daily returns of 10% on million-dollar crypto trades, and shares how to find the best opportunities
Hard drive and SSD shortages and price increases
Chia's "proofs of space and time" model may be an energy saver, but the method is already creating issues for hard drive and SSD suppliers.