What is Chia? (XCH)

Tiempo de lectura: 5 minutos

Chia (XCH) is a new cryptocurrency launched in March that has become popular because of its innovative consensus, and therefore mining, system that uses storage instead of computational power or stakes (coins). Another key factor in its popularity is that the founder of Chia Network (the company behind the project) is Bram Cohen, a well known figure in the software development industry for being the creator of BitTorrent, the well known P2P file transfer protocol.

Chia is touted as a greener cryptocurrency than Bitcoin and Proof of Work coins while being more secure than Proof of Stake coins, as outlined in its business paper.

Chia Network says that thanks to Proof of Space and Time, the new consensus system, Chia is also more decentralized because storage is a more accessible resource.

Because of this vision, they use a different terminology than the conventional cryptocurrency terminology. Mining is known as farming, and is done in plots (space on disks). In fact the name itself comes from the chia seed.

Space and time test

While Bitcoin uses Proof of Work with ASICs and other currencies with GPUs, Chia uses storage as a resource to farm or mine. The logic behind using scarce resources to secure blockchains is that they have a cost and the more resources that are used to mine a currency the more expensive it becomes to attack it.

If in a Proof of Work the higher the computational power the higher the probability of mining a block and receiving the reward, similar to having more lottery tickets, the same happens with the Proof of Space and Time. The more space you have cultivated (dedicated to Chia) the more likely you are to earn chias by producing a block.

Unlike the Proof of Work, this system does not require hardly any energy since it is only necessary to keep information on hard disks and make periodic readings. This information is the “lottery bulletins”, so the more space used, the higher the probability of winning blocks.

In more detail, the information stored in the plots consists almost entirely of hashes and pointers. Each block produced shows the network a challenge and the farmermeros have to search their plots for a number close to that challenge and produce a proof, the proof space. From there the network follows guidelines so that only the best proofs win and the respective farmermeros mine the next block earning the reward.

But for the system to work, time trials are also needed. In Proof of Work systems the difficulty is periodically adjusted so that blocks are mined every X amount of time. For example in Bitcoin a block is mined approximately every 10 minutes. This is done to limit the rate at which the blockchain and coin supply grows.

Only Proof of Space lacks this time constraint and therefore a Verifiable Delay Function (VDF) is used to generate a proof of time. The VDF is a sequential function, that is, you cannot use other machines in parallel to compute it as in Proof of Work, so it minimizes the cost and requires some time.

The timing test does not need to be processed by the farmer himself, there are servers known as Timelords that produce this test on the farmer’s blocks. Only one of these servers in the network is sufficient for it to be operational.

Now, this opens up attack possibilities because if someone has a Timelord that is faster at processing the test than the rest, they can produce blocks faster and potentially attack the network without needing to have more than 50% of the space.

¿Qué es Chia? (XCH)

How to farm Chia

To create a plot and farm it requires the Chia software, obviously offered as open source.

While farming has a negligent energy cost, the process of creating plots is more expensive and requires a lot of writes, CPU and additional space. This is why this process should be performed on a disk that allows many write operations so that it does not melt down. 

This initial phase can last from hours to days but once the plot file is created it can be stored on a simple HDD and kept farming indefinitely at little or no cost.

The most common parcel size is 108.8GB (also known as k=32) and its generation requires 256.6GB of storage temporarily.

In addition, as in other cryptocurrencies, farmers can join together in pools to increase their profitability and not depend on luck. In the pools, farmers are rewarded according to the space they offer.

¿Qué es Chia? (XCH)


Unlike Bitcoin, Chia does not have a limited supply. The monetary policy is as follows:

    • 64 XCH every 10 minutes for the first 3 years
    • 32 XCH every 10 minutes for the next 3 years
    • 16 XCH every 10 minutes for the next 3 years
    • 8 XCH every 10 minutes for the next 3 years
    • 4 XCH every 10 minutes in perpetuity

This design offers greater security assurance over supply limited currencies such as Bitcoin. All blocks offer a constant minimum reward that discourages 51% attacks.

On the other hand, Chia Network, the company founded by Bram Cohen, has pre farmed (equivalent to pre mined) 21 million chia coins. In other words, it controls virtually the entire chia supply.

In the business paper, Chia Network explains that with these coins they will finance the development and adoption of their system, and they also plan to go public so that their shares will function as a Chia ETF (the company’s equity depends solely and exclusively on Chia).

Similarities with Bitcoin

Chia uses a refined UTXO model, similar to the one used in Bitcoin. Therefore they believe that the state model used in blockchains like Ethereum is not ideal.

Other similarities with Bitcoin include the use of bech32m addresses (a better version of the native SegWit addresses), graftroot (a possible upcoming Bitcoin upgrade) and Taproot (the Bitcoin upgrade that will go live at the end of the year).


But unlike Bitcoin it uses a Lisp based language (like Clarity developed by Algorand and Stacks) known as Chialisp. Chialisp allows for greater smart contract functionality and is optimized for security and simplicity.

Features include coloured coins (similar to Bitcoin’s colored coins and more secure than Ethereum  ERC20 tokens), decentralized identity wallets, wallets with spending limits, advanced multi signature schemes and atomic swaps.


The main criticism that Chia receives is the impact it may have on the hard disk market. Mining with Bitcoin ASICs does not influence other sectors because they only have that purpose, in the case of mining with GPUs it has affected the gaming industry by increasing its price and producing shortages due to the huge demand.

There is no reason to think that Chia cannot have a negative effect on the storage industry, especially if Chia maintains its price or there are high expectations for the future.

Chia Network considers it a good thing that Chia is being mined with storage as we all, both businesses and families, have and need storage, but this is a double edged sword. This implies that if the price of hard disks increases due to a high demand for Chia’s farmeo use, everyone, companies and families, will end up paying for it (at least temporarily).

While advertised as a green currency it may cause an increase in hard drive production which will clearly have an environmental impact as well.


As we have seen, Chia is a very peculiar and at the same time controversial cryptocurrency. Its design seems to seek the best of Bitcoin and systems with greater smart contract functionality but avoid both the Proof of Work because of its energy cost and the Proof of Stake because of its tendency to centralize supply (especially problematic when there is a pre mining as in this case).

The impact on the hard disk industry remains to be seen, and in general its own development as a currency and technology.

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