What Is Chia Network (XCH)?
Chia Network (XCH) is a layer 1 blockchain that uses its own custom-designed programming language called Chialisp and a novel consensus mechanism called proof-of-space-and-time (PoST). The combination of these two allows the blockchain to use less energy without compromising network security. In contrast to most other blockchains, Chia Network is a public, for-profit, open source company that aspires to become listed on NYSE or NASDAQ. Its blockchain is aimed at enterprise use, which is why Chia Network plans to have XCH on its balance sheet in case of a listing.
Chia Network’s first proof-of-time function was released in 2019, with the first beta version of its blockchain launching in 2020. Chia Network achieved full functionality, including wallet functionality, transactions and smart contracts, with its mainnet launch in 2021.
Who Are the Founders of Chia Network?
Chia Network (XCH) was established in Delaware in 2017 by Bram Cohen, the founder of the popular peer-to-peer file sharing platform BitTorrent. The project is headed by an experienced senior management team, including former NASDAQ CEO Gene Hoffman as chief operating officer (COO) and former Overstock.com CEO Mitch Edwards as chief financial officer (CFO).
Chia Network is also backed by an illustrious list of cryptocurrency-focused venture capitalists. It raised $61 million in funding in May 2021 with the participation of leading VCs that included Andreessen Horowitz, Slow Ventures, Naval Ravikant, Galaxy Digital and others.
What Makes Chia Network Unique?
Chia Network (XCH) improves upon proof-of-stake (PoS) and proof-of-work (PoW) by using a less electricity-intensive consensus mechanism. The network achieves Nakamoto consensus by combining proof-of-space (PoS) with proof-of-time, (PoT) which both function in distinct manners.
Proof-of-space requires miners to keep unused storage on their hard disk drives. In this scenario, miners install special software that allocates free space, which is then used to solve a challenge – similar to puzzle-solving in proof-of-work (PoW). The software stores a collection of cryptographic numbers on the miner’s disk and, upon block creation, a challenge number from the previous block is taken. Miners scan their numbers to check if they have a number close to the challenge number that is required.
On the other hand, proof-of-time demonstrates the passage of time through Verifiable Delay Functions, in a way that is similar to the Solana (SOL) blockchain. The Timelords – nodes that document time – ensure that time is correctly documented for solving the proof-of-space functions.
In addition, Chia Network has its own programming language called Chialisp. This is an on-chain programming language that is smart contract-compatible and takes most important components of Ethereum (ETH), Solidity, and Bitcoin Core but keeps Bitcoin’s UTXO model. Doing so allows for simultaneous transactions instead of sequential, making Chia Network a faster and more energy-efficient blockchain compared to its rivals.
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How Many Chia Network (XCH) Coins Are There in Circulation?
The current supply of XCH is 22,582,025. 21 million XCH were pre-farmed to help fund the creation and administration of Chia. According to the Chia Network (XCH) whitepaper, farming rewards follow this schedule:
- 64 chia will be created every 10 minutes for the first three years after launch
- 32 chia will be created every 10 minutes in years four through six after launch
- 16 chia will be created every 10 minutes in years seven through nine after launch
- Eight chia will be created every 10 minutes in years ten through 12
- Four chia will be created every 10 minutes for every year after year 12
That means the network itself controls most XCH and only 21 years from mainnet launch, the farming rewards will catch up with the size of the strategic reserve.
How Is the Chia Network Secured?
Besides following a unique approach in combining an adapted proof-of-work consensus mechanism with proof-of-time, Chia Network (XCH) is governed by a traditional corporate structure. It eschews the crypto-native model of a decentralized autonomous organization (DAO) in favor of being a traditional joint-stock corporation.
Chia Network intends to list the company’s equity on a stock exchange, as it believes that this model aligns incentives better than other models. As such, ownership of coins has no influence on the governance of the Chia blockchain, which is a distinct approach to the model of other public blockchains.