Why is Chia suddenly so popular?

The origin of Bitcoin is the financial crisis in 2008. Satoshi Nakamoto left a message in the Genesis Block: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."

Satoshi Nakamoto used an unchangeable timestamp to write the phenomenon of centralized currency over-issuance and arbitrary money printing into the blockchain, and used the blockchain to announce the birth of Bitcoin, a decentralized and trustless cryptocurrency; but as the Bitcoin network slowly expanded, ordinary home computer CPUs that were originally capable of mining Bitcoin were no longer able to mine Bitcoin at all, and then GPUs and the current ASIC chips were used for mining. It can be said that this is getting further and further away from Satoshi Nakamoto's original intention. At the same time, the huge energy consumption generated by Bitcoin mining has also attracted the attention of more and more people.

Bram Cohen, the creator of Chia, believes that Bitcoin mining is “the waste is just gross and horrible.”

Based on this, Cohen began to create Chia Network, a green blockchain based on POSapace and Time (a consensus mechanism based on time and space) that aims to create a low-energy, easier-to-use, safer and more decentralized blockchain.

At the same time, it said in Linkin "Here we go again", aiming to continue to make a decentralized project like BitTorrent that everyone can participate in. It is believed that the success of Chia will change the current cryptocurrency landscape.

Proof of Space (PoSpace), also known as Proof of Capacity (PoCapacity), was first proposed by Dziembowski and Ateniese et al. in 2015. Proof of Space is very similar to Proof of Work, except that storage is used instead of computation. Proof of Space is related to the memory difficulty function and proof of retrievability, but there are also significant differences. Proof of Space is a piece of data sent by the prover to the verifier to prove that the prover has reserved a certain amount of space. In order to ensure effectiveness, the verification process needs to consume a small amount of time and space to ensure efficiency. If the prover does not reserve space for proof, it is difficult to pass the verification. The way to implement Proof of Space is to use an illegible graph, that is, the verifier asks the prover to build a difficult-to-piece-together graph label, the prover submits the label, and then the verifier asks the prover to randomly select a few labels from the submitted labels. With the release of Bitcoin, relevant scholars and technicians began to study alternatives to mining mechanisms in the context of cryptocurrency, including PoSpace. So far, some related theories and applications of PoSpace have begun to be published.

Think of Proof of Space as a way to prove that you are not using some storage on your hard drive. Users of the Chia blockchain will "seed" unused space on their hard drives by installing software that stores a set of encrypted numbers on disk as a "plot". These users are called "farmers". When the blockchain broadcasts a challenge for the next block, a farmer can scan their plot to see if it has the closest hash to the challenge. The probability of a farmer winning a block is the percentage of the total space held by the farmer across the network. Proof of Time requires that a small amount of time has passed between blocks. Proof of Time is achieved with a verifiable delay function that takes a certain amount of time to compute but is fast to verify. The key idea of ​​VDFs is that they need to be computed sequentially, and since having many parallel machines does not generate any benefit, this minimizes the waste of electricity. There can be relatively few VDF servers ("Timelords"), since the fastest VDF servers will always come first, and it only takes one fast and fair Timelord on the network to complete a block and move the chain forward.

Chia Network was founded by Bram Cohen, the creator of BitTorrent. It includes Gene Hoffman, former founder and CEO of eMusic.com and Vindicia, and Mitch Edwards, former acting CEO of Overstock.com. The Chia blockchain has an active open source developer community with many contributions to the code base. Many people contribute to the Chia blockchain in areas including research, peer review, development, testing, documentation, and translation. (Official website introduction)

On the technical level, it goes without saying that Cohen, the founder of BT Download, is in charge. Gene Hoffman and Mitch Edwards, who have rich experience in blockchain, are in charge of operations. In addition, BT's popularity and usage in the open source field will definitely help the promotion of Chialisp (Chia smart contract development language). From this point of view, the team is still very complete.

(1) AngelList was founded in 2010 as a matchmaking platform for startups, angel investors, and job seekers seeking jobs in startups. Initially, the platform provided online matchmaking for technology startups that needed seed funding. Since 2015, the website has allowed startups to raise funds from angel investors and allowed investors to invite other approved investors to invest together.

Naval Ravikant is a partner and CEO of AngelList. He was a partner and angel investor of Epinions and vast.con, and has invested in dozens of companies, including Twitter, Uber, Yammer, Stack Overflow and Wanelo. In February 2017, he was selected as the 10th TechCrunch's Angel Investor. He has invested in 183 projects and 64 exits. In 2001, Naval entered the venture capital industry. He first worked for August Capital for a short period of time, and then set up a small fund to specialize in angel investment.

(2) Andreessen Horowitz (a16z) is an American private venture capital firm founded in 2009 by Marc Andreessen and Ben Horowitz. The firm is headquartered in Menlo Park, California, United States. From 2006 to 2010, Andreessen and Horowitz were active investors in technology companies. In addition, they jointly invested $80 million in 45 startups such as Twitter. During that time, the two became super angel investors. In May 2011, Andreessen Horowitz was ranked the top venture capital firm by Investor Rank based on the firm's network and level of syndication with other venture capital firms. Andreessen was ranked 10th on the 2011 Forbes Midas list of hot tech investors, while he and Horowitz were ranked 6th on Vanity Fair's 2011 list of new startups and 7th on CNET's 2011 list of the most influential investors.

3. Greylock Partners was founded in 1965 and is one of the oldest venture capital firms and one of the top venture capital firms in Silicon Valley, with over $3.5 billion in assets under management. The company focuses on early-stage companies in the consumer, enterprise software and infrastructure, and semiconductor sectors. It has invested in a series of well-known companies in the early stages, including Facebook, LinkedIn, Instagram, Pandora, Dropbox, Airbnb, etc.

The above three are all top global investment institutions, so it can be said that their endorsement is very strong. At the same time, it should be noted that many people have said that Danhua Capital has invested in Chia. No relevant information has been found on the official websites of Danhua Capital and Chia, so there is no need to over-publicize it for the time being.

5. Decentralization Analysis

Unlike other projects, Chia has not conducted an ICO or private placement on Coinlist. Except for the 21 million strategic reserves, all other funds must be obtained from 7 mines on the hard drive. In this regard, some PZs in China claim that they can obtain Chia token quotas. Please be careful to prevent property loss. The project founder also explained this on Twitter.

Chia's use of hard drives for mining has indeed lowered the threshold for mining. At the same time, there is no staking, unlike FIL, which requires staking of tokens. It can be said that its openness is comparable to that of early Bitcoin. Perhaps this is exactly the original intention of Cohen to create BT. Everyone can participate, and Chia also has decentralized blood flowing in its veins.

Currently, the average coin production per T of computing power is about 0.032, and the computing power of the entire network is also growing rapidly.

It is very difficult to mine with ordinary computers. Professional mining machines have already appeared. The most important thing is the mining machine's P disk capacity (PLOT drawing). The final PLOT file size is your computing power value. The computing power packaging process requires a higher configuration of the solid-state drive. Currently, the 2T type with an M.2 interface has the best effect.

Since the transfer function is not available on the CHIA mainnet, its value is estimated. We use FIL, a project with similar strength and background, as a comparison project to estimate its value:

First, we estimate the market value of Chia in the first year. It also originated in 2017, and its strength is no less than FIL. It is reasonable to use the circulating market value of FIL in the first year of its launch as a benchmark. The current circulating market value of FIL is 11,597,892,098 US dollars, which is rounded to 10 billion US dollars. In the first year, Chia will generate 64*6*24*365=3363840 plus 21 million strategic reserves. The total amount in the first year is 24363840, 1 (xch) = 10 billion/24363840 = 410.44 (US dollars) (The above data is calculated as a theoretical value for reference)

It can be said that there is huge room for imagination in Chia’s mining revenue, which is why Chia has such a hot performance in the circle of friends.

Based on the Chia team, investment institutions, technical strength, originality and global consensus, the overall risk of the project is relatively low. The only thing that needs attention is the current investment in mining machines. The main network has been online for less than a month and there are still many uncertainties that need to be dealt with. The assessment of mining machine manufacturers is very important, and I must also strengthen my studies and actively follow up on the progress of the project.