BitTorrent Creator to Launch “Proof of Space” Based Cryptocurrency

Bram Cohen, who co-founded peer-to-peer file sharing platform BitTorrent back in 2001, is reportedly about to launch a new cryptocurrency based on a “proof of space” consensus algorithm, which he claims makes it a greener version of bitcoin.

According to Wired, Cohen has created a cryptocurrency startup called Chia, which aims to make its crypto acceptable to the whole financial industry while protecting our planet. Cohen’s startup, the Chia Network, is set to move to offices in San Francisco.

Per Wired, its neighbors will include the US Securities and Exchange Commission (SEC). Cohen, who serves as CTO as chairman at Chia, is reportedly “happy” to have the regulator right next door, presumably as he believes regulations help fight scammers. The SEC has been focusing on initial coin offerings (ICOs) and scams in the cryptocurrency space.

The Chia Network won’t launch an ICO, as it’s going public through a traditional initial public offering (IPO). It’ll file to list shares on a small-cap public stock exchange by the end of the year, instead of selling its Chia coins – the name of Chia Network’s cryptocurrency – to the public.

The report notes the company’s revenues will come from “helping banks build system to use the cryptocurrency… for functions like international transfers.” Notably, the Chia Network will own a “significant chunk” of all available Chia coins.

Cohen’s file-sharing protocol BitTorrent was wildly successful and won interest from Silicon Valley giants like Facebook, which reportedly used it to speed up internal software updates distribution. The entrepreneur ended up raising $30 million to launch a startup to monetize the platform, BitTorrent Inc, which was officially acquired by Tron in July of this year.

Cohen himself left BitTorrent’s day-to-day operations to cofound Chia in August of 2017, and left his seat at the company’s board after Tron’s acquisition. Chia, per Wired’s report, was created after Cohen looked at bitcoin’s flaws and tried to “design substitutes that are less dangerous to the planet, and more palatable to banks.”

Per the entrepreneur’s words Satoshi Nakamoto – the pseudonymous creator of bitcoin – was “not really a great protocols engineer.” This, as the cryptocurrency incentivizes mining through its proof-of-work (PoW) algorithm, which consumes a huge amount of electricity. As CryptoGlobe covered, crypto mining threatened energy shortages in Iceland.

Proof of Space

While Chia Network’s cryptocurrency will also be mined, it’s set not to consume enormous amounts of electricity. This, as participants in the network will reportedly maximize their chances of winning by amassing disk storage space.

Per Cohen, there are already “countless computers with spare storage in the world that could start farming” the cryptocurrency, while functioning regularly. Wired’s post reads:

Chia’s system depends on two new cryptographic protocols, one that verifies the storage a computer has committed to farming, and the other that guards against fraud while determining which farmers win rewards for verifying transactions.

The Chia Network itself has recently launched a competition that invites participants to test the security of its protocols. The winners will be able to win $100,000 denominated in bitcoin, as the Chia cryptocurrency will be launched “sometime next year.”

The cryptocurrency is reportedly designed to hold funds in escrow, automate contracts, and even allow for chargebacks. Cohen was quoted as saying:

The idea is to make Chia the premier cryptocurrency based off of our technology. A competitor to bitcoin, but better.

The Chia Network has already raised $3.4 million from investors, including Greylock Partners and Andreessen Horowitz, which invested in Coinbase. Ryan Singer, the startup’s CEO, expects “some complicated conversations” with the SEC, although he believes an IPO is the right move to “professionalize the relationship between us and investors.”