Complete Guide to Chia Crypto
Posted by Frank Gogol in Crypto | Updated on June 20, 2023
Cryptocurrency is one of the most varied and volatile economies. Ever since Bitcoin, thousands of altcoins have flooded the market, many of which are presenting some sort of real-world use.
Chia is one of these tokens. Hailed as a “green” alternative to Bitcoin, Chia utilizes a different way to mine rewards from the blockchain system that doesn’t use as much energy as the original cryptocurrency giant.
To evaluate if this cryptocurrency is worthy of your investment, we’re going to discuss everything you need to know about the Chia crypto.
What is Chia Crypto?
The Chia crypto token is relatively new, only launched in 2018 by the founder of the decentralized torrenting client, BitTorrent. It has had a successful launch and raised about $61 million in funding last May of 2021, backed by cryptocurrency venture capitalists.
XCH runs on the Chia Network and has its specialized programming language called the Chialisp. Unlike most mainstream crypto and altcoins, the Chia Network is a public and open-source network, even though it is a for-profit endeavor.
Why was Chia Crypto Invented?
The very first cryptocurrencies, which have since become market giants, all rely on a “proof of work” verification method.
This means that to mine new cryptocurrencies, computers on the network will compete to mine a block. In turn, this means that computers, or “miners,” with the most computing power will be the ones most likely to win the blockchain and be awarded the newly minted coin.
This method creates two core problems: increased centralization and higher energy consumption.
The first issue other cryptocurrencies have is that they provide greater power to entities that can hoard computing power. This situation is contrary to cryptocurrency’s general principle of decentralization. After all, entities with the most computing power can also hoard all the mining and, thus, control the cryptocurrency’s network.
This can already be observed in the Bitcoin network, where some companies hold a big chunk of the mining power. Although nothing drastic has happened with the Bitcoin network yet, the effects are still up for debate.
By nature, proof of work systems uses massive amounts of electricity to operate. This is because many computers, along with auxiliary systems like maintenance and cooling systems, have to run 24/7 to compete with other computers for the rewards.
Since most of the world’s electrical power runs on fossil fuels, this makes mining for other coins a significant contributor to fossil fuel burning – and all the environmental consequences that come with it.
Chia Network’s answer
Due to these critical issues, many developers have been looking for alternative means to create the same benefits that traditional crypto tokens have but without all the problems.
Chia’s creator envisions the crypto token as a “greener” alternative to more significant cryptocurrencies like Bitcoin. It does this by simply replacing the proof of work system with a less energy-intensive alternative.
With this, Chia Network can achieve the same security and immutability as major crypto networks without the dangers of centralization and negative environmental impacts.
How Does Chia Work?
As mentioned repeatedly, the Chia Network is presented as a greener alternative to crypto bigshots like Ethereum and Bitcoin. This claim primarily arises from their verification method.
While traditional proof-of-work is considered labor and energy-intensive, Chia’s alternative is much less environmentally damaging.
This is called the “Proof of Time and Space” method. Although it’s a complex blockchain mechanism, it can be summarized into two parts: plotting and farming.
Plotting: Proof of Space
Chia works through the proof of space and time concept. To understand the main differences between the two, you first have to know how proof of work operates.
Simply put, proof of work is a system where individual computers compete to answer arbitrary mathematical computations to win the blockchain, called the ‘hashes.’ The winners get the reward.
Hashes require extensive calculations to solve, so ‘miners’ with the highest computing powers are the ones who will win the majority of these blocks. Computers also need to be turned on 24/7 not to miss a chance to work on a new block.
Chia Network’s answer is the proof of space and time.
The main aspect of this method is the proof of space, where instead of processing power, individual computers bet their storage space. Operators, called “farmers,” will “plot” out about 100 GB of space in their hard drives. The Chia Network will then store those plots with numbers.
Farming: Proof of Time
After that, the network will send out a unique, random string of numbers to farm the blockchain, and whichever “plot” of space has all of those numbers will win the block.
The more hard drive space you have, the more random numbers you will store. This translates to a higher chance of winning the next mining block.
All the while, the network will also need to verify that you’re not cheating the system by saying that you’re storing the numbers even while you’re not. To do this verification, Chia will also keep pre-made calculations in the plots of space, and every once in a while, will send out a query for those calculations.
If your computer responds, then it has proved that it’s currently storing the numbers at the predefined plot at that point in time. If not, then it will be removed from the round. This happens simultaneously with farming.
How to Buy Chia Crypto?
Since the Chia token (XCH) is relatively new to the show, you can’t get it on most major cryptocurrency exchanges like Binance. However, you can get it on other altcoin trading platforms such as KuCoin.
In this section, we’re going to teach you how to buy Chia crypto.
- Sign up for your exchange of choice.
- Depending on the policies of the exchange, you may need to become a fully verified member before trading.
- Most altcoin exchanges don’t accept direct cash transfers, so you first need to buy a major coin such as Bitcoin.
- Transfer your Bitcoin from your wallet to the exchange that hosts Chia tokens.
- Buy Chia tokens with the funds you deposited to the exchange.
How to Sell Chia Crypto?
Once your Chia tokens have gained in value, you may want to start selling them. Exactly how you can sell your Chia token will depend on the exchange that you will use. However, for the most part, they all have similar processes.
- On your exchange, buy a popular coin like Bitcoin with your Chia tokens.
- From the platform, transfer the resulting amount to your external wallet.
- From your external wallet, transfer it to another exchange that will support converting your token to cash.
- Transfer your cash from the platform to your bank account.
Investing in Chia Crypto
The Chia token was created to solve the many problems associated with traditional cryptocurrency, and so far, everything seems to be doing well.
If you want to invest in the Chia coin after reaching this far, you have everything you need to make a sound decision.