Why to mine Chia coin?

Abstract: Chia coin pioneered the delayed recovery function of paper wallet, transfer retraction and limited wallet functions, which makes Chia the only digital asset that is closest to traditional financial instruments.

Multi-Signature and Atomic Swaps:

Multi-signature and atomic swaps are the building blocks for more complex smart transactions and are at the heart of many simpler control and custody arrangements. This allows a company to require two of three signatories to spend money from a wallet, or complete a trade between Bitcoin and Chia, without having to trust the other parties to propose and complete the swap. The IETF BLS signature protocol also makes multiple signature schemes easier and safer for participants, because signatures can be combined and do not have to occur in sequence or at the same time or place.

Authorized payee wallet:

For example, a whitelist of authorized payees allows a company to delegate spending authority from a controller to a payroll administrator, who can only pay to addresses set by the controller or financial director. This mitigates the possible consequences of a successful email phishing attempt or a hack of the payroll administrator. It also makes embezzlement difficult. We intend to use our distributed identity wallet to make this particularly flexible, but first implemented our reference version in the form of a parent wallet and child wallets.

Transfer withdrawal:

When one organization sends coins to another on the blockchain, two things need to happen. A certain amount of block confirmations must occur to prove to the recipient that the coins sent are valid and not a double spend where the coins received will not be considered valid by the network in the future. The second activity simply confirms that the payment transaction is actually in progress, as it may take some minutes for it to be considered final by the recipient. Transfer retraction adds a time period where the sender can withdraw funds after the initial transfer has moved onto the blockchain. By adding a third key that can retract or speed up the transfer of the underlying coins of the transaction, the risk of sending transactions can be reduced and an escrow business model can be implemented. With a shorter recovery escrow period - for example 1 block less than the recipient's block number that they would otherwise consider final - the sender can now detect an error after sending a transaction, correct the typo in the recipient's address, catch the bad transaction back, and resend a correct one. For certain tightly controlled use cases, a longer retraction period can be implemented so that all transfers from a wallet can be audited and canceled if it is later discovered that they were improper. In the online shopping model, consumers can entrust the recycling escrow period to the transportation company. When the shipper receives the package, the transportation company will release the funds to the retailer. If the goods are not delivered to the shipper within the agreed time, the funds will be returned to the buyer.

Wallet limit:

A limited wallet allows you to create a wallet that can only spend a certain amount of coins within a specified time. You can put a year's living expenses in the wallet, but limit yourself to spending only 1/52 of the funds in the wallet per week. If the wallet is stolen, or hacked by a third party, once you have confirmed that you have lost control, you can use the main wallet to transfer back the remaining balance of funds that have not been stolen. Chia released a limited wallet on the testnet in August 2020.

Paper wallet with delayed recovery function:

Current best practice in cryptocurrency is to keep a paper wallet as a backup of your active or hot wallet. This is necessary for many reasons, including that hardware can fail and it is easy to have your hardware lost or stolen. However, there is a high chance that a paper wallet can be stolen and have complete control and steal all of your funds. A paper wallet with delayed recovery allows you to store a smart transaction that can initiate a delayed process to recover the funds in your hot wallet, but it is not a copy of your private keys. If someone steals your paper wallet and initiates a recovery, your active wallet can recognize this and transfer the funds to a new wallet that you control. Initiating a backup recovery can optionally require a security deposit to further deter attempts to steal funds from a paper wallet.

Digital Identity Wallet:

Chialisp implements a digital identity wallet with deep recovery options and allows individuals and organizations to add identities and permissions on top of a permissionless blockchain. Users can delegate control of their identity to family or legal advisors in a pseudonymous manner in a way that can be recovered by the trustor or the trustor's own identity can be recovered and used. This enables certain types of trust/trustee relationships and is also a path to digital inheritance. This also gives asset providers on the ChiaNetwork blockchain a way for end users to complete processes such as KYC/AML and present that proof from their digital identity wallet to be able to obtain equity, hedge fund subscriptions, or government-backed stablecoins. If an asset issuer or verification service determines that someone's identity has changed, they can also easily revoke these credentials.

Color Coins:

Colored coins allow individuals, financial institutions, businesses, and governments to issue on-chain assets that inherit the smart transaction capabilities of the Chia Network blockchain and rely on the global decentralized security verification provided by Proof of Spacetime. ERC-20 tokens are the most recognized form of colored coins, but they are very limited. The Solidity smart contracts they rely on present security risks. In addition, they do not feel like a native part of the Ethereum blockchain to the end user, and require wallets and digital currency exchanges to enable each asset individually. Recent security research shows that they can also be easily counterfeited on exchanges. Chialisp colored coins inherit all of Chialisp's capabilities, which makes them more suitable for high-compliance asset issuance and enables them to be more natively applicable to Chia wallets.

Unlike Solidity, Chia colored coins can be used to create ephemeral value, so applications on the Chia blockchain generally do not require flash loans. This has been one of the Achilles' heel of DeFi on Ethereum. Ephemeral colored coins combined with Chia's native exchange capabilities and partially completed transactions of arbitrary complexity are superior building blocks for the kind of arbitrage applications and transactions that DeFi projects are trying to build.

Application of Chia Color Coins:

On the corporate side, a US-based hedge fund could use Chia Colored Coins to manage subscription ownership and have investors present digital IDs to prove their citizenship, investor qualifications, and KYC/AML status - all natively on Chia Network's blockchain. Governments can issue stablecoins backed by their domestic currency to anyone who completes the required KYC digital ID. Colored coins on Chia Network's blockchain can be used for corporate gift cards, debt issuance, equity issuance, and any related asset issuance, tracking, and management.

Since Chialisp is a general-purpose development language and environment, all of these sample functions can be mixed and matched as needed for the use case. Developers can leverage the toolset provided by Chialisp to create new and currently unimaginable features without changing the Chia Network's protocol or environment, while Chialisp will provide the security and auditability of these controls and applications. We believe that Chialisp will become the best tool for the emerging De-Fi movement.

The choice of Chialisp and BLS signatures makes the implementation of payment channels simpler and more straightforward than current payment channels in Bitcoin or Ethereum. The payment channel space is developing rapidly, so the company hopes to adopt the best technologies that emerge from the second layer community after the launch of the Chia Network mainnet.

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