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Bitcoin and all other cryptocurrency mining has tangible implications. Now the new cryptocurrency Chia is causing concern among some observers.
Cryptocurrencies per se are rather abstract entities – and yet they repeatedly have very concrete and tangible effects.
Most recently, for example, the auction of an NFT artwork caused an unexpected digital art boom – similarly to the Coinbase bot boom among investors.
And the enormous rise in the price of the cryptocurrency Bitcoin caused graphics cards to suddenly become more expensive: For weeks, certain 3D graphics cards from providers like Nvidia or AMD were even barely available.
Besides corona-related production and delivery difficulties, one of the main reasons for this was cryptocurrency mining.
Because professional miners used the high computing power of Geforce or Radeon graphics cards to be able to mine cryptocurrency more efficiently.
Now the crypto boom is affecting another PC hardware component: Hard drives. The hype surrounding the new cryptocurrency Chia is the main reason for this. It doesn’t rely on computing power, but on storage space.
What is the Cryptocurrency Chia?
According to its own website, Chia was developed by programmer Bram Cohen. The name is familiar to those interested in the industry: Cohen is also the inventor of the file-sharing technology BitTorrent.
The basic idea of the cryptocurrency Chia: It is supposed to be more energy-efficient and thus more environmentally friendly than the established currencies such as Bitcoin or Ethereum.
This is because many high-performance computers are operated day and night to mine these currencies. Professional miners mine in countries where electricity prices are particularly low, partly because CO2 emissions are not priced in there.
So, electricity is anything but green there – and large-scale mining is becoming an environmental problem.
Chia, meanwhile, uses a new Nakamoto-style consensus algorithm, according to its developers, which does not rely on the particularly energy-intensive proof of work, but on a combination of time and storage capacity. Accordingly, mining coins consumes less power than mining Bitcoin or Ethereum.
The idea of using the storage capacity factor for a cryptocurrency is not entirely new. The currency Burst Coin has been using a similar method called Proof of Capacity for years – also with the claim of being more environmentally friendly than other cryptocurrencies.
What is Proof of Work (PoW) for Bitcoin and the Rest of the Gang?
Proof of Work is a consensus mechanism used to generate new blocks of a blockchain. the principle: miners have to solve a complex task with the help of their computer hardware.
Whoever solves the task for a new block first can attach it to the blockchain and receives a reward – for example, a certain amount of Bitcoins.
The Proof of Work principle is also intended to validate all new transactions: Anyone who has solved the complex task with the help of their hardware proves their work performance on the network.
A hash is generated from the solution or the miner’s new block and checked by the network. If it is found to be valid, the block can be added to the blockchain – otherwise it does not “fit” on the chain.
The more users mine and the more computing power is used, the greater the complexity of the task – the generation of new blocks thus takes longer and longer, which is why the miners use even more computing power.
The Chia cryptocurrency, on the other hand, relies on Proof of Space and Proof of Time.
What is Proof of Space and Proof of Elapsed Time in the Chia Cryptocurrency?
Chia uses a combination of Proof of Stake (PoS) and Proof of elapsed Time (PoeT):
In the Proof of Elapsed Time consensus algorithm, a random amount of time is chosen for each node within the network. The user simply has to wait for this period of time.
The node or user with the shorter waiting time generates the new block, is allowed to append it to the blockchain – and receives the reward in the form of coins.
Proof of space, on the other hand, allocates unused hard drive space as storage space. To provide proof of space, users must install software that stores a collection of cryptographic numbers on the hard drive.
The system behind the cryptocurrency should actually be more energy-efficient than mining Bitcoins and co. – but it already had a noticeable effect on hard disks before the cryptocurrency had even been launched.
Will Hard Drives Become More Expensive Because of Cryptocurrency?
Currently, the phenomenon can be observed primarily in Asia: In fact, the demand for professional hard drives, for example with storage capacities of 18 terabytes, is increasing significantly in some countries.
The first providers have even announced special mining hard disks. If the hype about Chia turns into more, it is quite conceivable that the prices for SSD hardware will also rise in this country.
When Can You Buy Chia?
The cryptocurrency was launched on May 3 and has been tradable since then. At the beginning, there were data carriers with a capacity of about 2.5 exabytes in the crypto network.
This corresponds to about 155,000 hard drives with a storage capacity of 16 terabytes.
How Much is Chia Worth?
Chia has set out to compete with Bitcoin. The new currency was launched at the beginning of May. In fact, the value first raced up quickly, but then crashed.
In the meantime, Chia has settled at a value significantly below the starting price, but that could change again.
