The founder of BitTorrent and a few of Bitcoin’s community development team are working together on a new altcoin that could revolutionize the way transactions are mined. The major problem facing Bitcoin today is the excessive power and hardware requirements for mining. The initial concept was to give people the freedom from financial institutions, central banks and governments however the decentralized nature of crypto currencies is now under scrutiny as big business still wield considerable influence over it.
The high cost of mining has put it beyond the reach of average people; and the majority of it is controlled by Chinese conglomerates. The market for mining hardware and mining itself has been cornered by Chinese companies such as Bitmain, the supplier of ASICS chips used in mining rigs. An estimated 80% of all Bitcoin mining is carried out in mega-factories in China, where there is a tight grip on the monopoly.
Aside from this centralization of a decentralized entity power consumption is another huge problem Bitcoin faces. Recent reports indicate that a single Bitcoin transaction uses the same amount of electricity as the average American household does in a week. There are roughly 278,000 Bitcoin transactions per day which now equates to 0.12% of the world’s electricity consumption. In today’s eco-conscious world we are constantly seeking ways to reduce our carbon footprint, not add to it.
BitTorrent founder Bram Cohen thinks he has the answer and it lies in his new token, Chia Network. At the moment most crypto currencies use a proof of work concept which involves hash calculations and power hungry mining machines. The fundamental change with this new token from the San Francisco based company is that it will be based on an entirely different process called ‘proof of space’ or ‘proof of time’.
According to Cohen who told reporters “The idea is to make a better Bitcoin, to fix the centralization problems” referring to China’s dominance in Bitcoin mining. “We’re calling it farming instead of mining because it’s greener. You don’t need lots of power in order to farm with proof of space.” Expensive mining rigs and high power consumption is not required with farming, it can leverage the unutilized storage capacity that you have on your system, in a way where your actual file system doesn’t even notice that it’s going on. The rewards are directly proportional to the resources you put it.
The token is slated for launch in 2018 but no further specifics were provided on the company website. Bringing mining or ‘farming’ back to the masses could be the only way to be truly decentralized.