This week in the Finoverse we delve into the proof of space and time, with Chia's network's CEO Bram Cohen. Former BitTorrent creator Bram is on to his next project. The Chia network uses hard drive space to create the first new Nakamoto Consensus since Bitcoin in 2009. A sustainable blockchain of the future? We spoke to Bram to find out how that works!
Walter Jennings: Welcome to Waves in the Finoverse. I'm Walter Jennings, the host of a podcast brought to you by Finoverse. We're talking with the wavemakers, creating ripples, waves and tsunamis across finance, crypto, FinTech, Web3 and beyond. Listen weekly to hear the changemakers talk firsthand about their experiences in this dynamic industry. Welcome to Waves in the Finoverse. I'm your host, Walter Jennings. And I'm joined today by Bram Cohen, the CEO and founder of Chia Network. Welcome.
Bram Cohen: Thank you. Good to be here.
Walter Jennings: Yeah, now listen, for those who haven't been introduced to Chia Network, this is a blockchain. Perhaps you could introduce us a bit more to the company in the project.
Bram Cohen: Yeah, so Chia is very much based of like Bitcoin, right? Bitcoin is supposed to be secure and distributed, decentralised. Chia is very much the same thing. But it switches instead of proof of work. It uses proofs of space and time. So it's securing the thing instead of having this custom hardware that's burning electricity all the time, is you have just storage media that are helping secure the network all the time, and they're just sitting around bored, so it's not burning lots of power, which makes it much more green. Also, there's lots of excess storage in the world. And storage is very commodity, so it winds up having a lot more stuff backing it up. It's much more distributed in nature.
Walter Jennings: Okay, we're going to pick that apart a little bit because there are two or three really great concepts in there. First off for an audience who hears Bitcoin they immediately think of currency and Bitcoin is both, form of investment but and also a blockchain or,
Bram Cohen: Yeah, so there is Bitcoin is the tokens that are denominated in Bitcoin and Chia they're also the tokens that are denominated in Chia and they are held on the Chia blockchain that keeps track of who has what, although Chia also unlike Bitcoin. Bitcoin, for the most part, only supports very, very simple transaction, where Chia actually has full smart coin functionality.
Walter Jennings: Okay. And also along with the coin, it is a blockchain which is a immutable proof of ?
Bram Cohen: Secure distributed database.
Walter Jennings: Fantastic. Now, when did you develop Chia? And what was the pain point you were trying to solve it?
Bram Cohen: Well, Chia, the company was started in 2017, I've been noodling on what the general approach should be for a while they immediate plans at the very beginning, were let's make something that instead of being proof of work is based off proofs of space and time, and does something better for unchained the for the on-chain programming environment. And all I had to do, to do this was invent proofs of space and event proofs of time, figure out how to stitch them all together and figure out a new on chain programming environment.
Walter Jennings: So okay, well, we'll again pick that one apart now for newcomers to blockchain proof of work is?
Bram Cohen: So when the key insight to Bitcoin, the thing that was new that Satoshi Nakamoto really came up with is what's called Nakamoto consensus. So when you talk about having a secure distributed database, this sounds like a contradiction in terms. How could you possibly have this? How can we make it so that you and I, without any coordination with anyone else, without knowing who to trust can figure out what the current state of the databases?
So Satoshi came up with this idea that the blockchain will have a weight, something that you can verify locally that a certain amount of blood, sweat and tears went into generating the thing that it was expensive to do. And when you and I get into an argument about what the current state of the thing is, we compare the histories that we have, and whichever one has greater weight than the other one wins. And so we immediately come to consensus, at least between the two of us when we have a disagreement here, and then we can talk to some other person and maybe they have something that's greater weight or not, but that will still come to consensus very quickly that the vast majority of the time when there's disagreement, it's really just because something new has been added. So it's not changing the old stuff. And as things get varied, over time, the chances that they'll get reordered go down very rapidly over time.
The next question there as well, okay, well, this will get you consensus, but how do you get anyone to participate in this activity of spending blood, sweat and tears to actually generate blocks? On the thing and the answer to that as well, our database is going to be a database of money. And it will reward people for this process of mining using its own native tokens. So that's the core idea behind bitcoin.
Walter Jennings: Right. And obviously, there's some serious downsides to that, including the environmental impact of the use of energy.
Bram Cohen: Yeah, the actual spending of the blood, sweat and tears, it seemed to be a bad thing. So with Chia with proofs of space, the idea is you want to leverage something that already exists in the world and mass quantities that's being underutilised. So you are at no extra expense, because people have already put in the resources to make this stuff, leveraging these things to get security in the thing. And there's only really one thing that fits the bill. And that's storage capacity, where there's a lot of extra storage capacity in the world, both in the form of storage that people have acquired but are not yet utilising it's been deployed, but not yet utilised. And also old storage that is no longer reliable, that's getting thrown out, is still good for our farming office.
Walter Jennings: Okay, now, your proof of space time. You said were some challenging concepts to invent.
Bram Cohen: So the hero of the show here is the proofs of space, proofs of time come in, because they're what's called a grinding attacks, because it doesn't require any real electricity to run the history, people can potentially attack the system by trying out a million or a billion different alternative histories and find one that just works out better for them. So one of the techniques involved in keeping this from happening is you make it, so that there are things that take a certain number of iterations to do that can't really be paralysed, that kind of finish up the proofs of space. So these are alternate between the two of them. And that can make it, so that like if someone wants to attack the thing, they can do it at like no real cost to do but if they want to reorg the last 10 years of history, it's going to take them 10 real years to do that. And by the time they're done with of course, the real blockchain will have moving forward much more than they're playing catch up.
Walter Jennings: I understand you've got more than 100,000 nodes? Don't call it money. You call it farming?
Bram Cohen: Yeah.
Walter Jennings: So tell me how are rewards allocated for farming Chia?
Bram Cohen: Very much the same kind of way that it happens in Bitcoin, that when blocks are made, whoever it was that found the block gets rewarded in Chia for doing that, and everyone's chances of finding the block are exactly in proportion to the amount of space they have dedicated towards the farming activity. And then there are pools where, when there's people who are very small farmers who would make a block on average, once every million years or something like that, there are pools that will smooth this out. So they will give very small amounts to the pool itself is big enough that it gets a significant number of blocks. And there's a lots of participants in this process of making their blocks. And they reward even the very small people who are participant pins for their contribution to the pool as a whole.
Walter Jennings: Now, regrettably, I don't speak Chialisp, can you introduce us to that language?
Bram Cohen: Well, I have.. I run the risk of just saying a bunch of technical jargon here.
Walter Jennings: And what's the.. Let's go, we can unpick it.
Bram Cohen: So if you compare like the way on-chain programming works in Bitcoin and Ethereum. In Bitcoin, it's very simple that everything that exists are what in Bitcoin are called UTXO's, we call them coins in Chia, which I think is a better term for them. But it coin is very simple. It's like here's how it has to get spent. And here's how much it's worth. And Ethereum has a much richer data set of like actual code is sitting there on chain, which very straightforwardly allows a lot of much more advanced functionality. But it is both hard to audit this and kind of dangerous. And then on top of that, because things aren't all flattened to the same kind of thing, things don't like really interoperate well with each other and aren't really automatically very extensible. So Chia is within the coin set model. But the actual programmes that get spent are implemented in list which is a Turing complete language and is very expressible. And with using a few tricks, it turns out it's possible to get basically all the kinds of functionality that people build in Ethereum and within this much simpler, more reliable, more auditable extensible and interoperable model.
Walter Jennings: Okay, I want to switch gears from technical to business. And what are the best use cases for the Chia network blockchain? Are there any areas where it really stands out and the types of users that are drawn to build on this chain?
Bram Cohen: Well, we're still very much building things out right now, our big beachhead thing is getting carbon credits tokenized on chain, like making it so that the like high-quality carbon credits that like Paris Accord agreement, the Paris accord countries have, are actually reported on chain to create liquid markets and get real prices for these high quality carbon credits.
Walter Jennings: I've heard about the challenges of tokenizing carbon credits. What .. Why is that one area's been proven so difficult?
Bram Cohen: Well, there are two levels to it. Number one, you don't want it burning lots of power in the process of doing that. There's no way people are going to do that proof of work chain.
Walter Jennings: You're not going to tokenize a carbon credit and spend more energy.
Bram Cohen: And then they really want to do it on something that's actually decentralised, actually reliable not like mudge, nudge, wink, wink. So something like Ethereum, which has a long history of there, just being these constant hacks just at the programmatic level. And then the actual consensus rules getting rerun all the time and where it's Nakamoto coefficient is actually terrifyingly low. It's really not that distributed, that just doesn't look good from a security and reliability standpoint for doing these things. So Chia, actually, by all that, like objective metrics of security does very well and is an environment designed for being reliable when you implement these kinds of things and is very green. It really fits the bill very well for carbon credit tokenization.
Walter Jennings: What is the scope for growth for Chia in terms of usage and liquidity?
Bram Cohen: Well, there's lots and lots of ways it can go, and it's still kind of early days for us. We're trying to get listed on more exchanges right now. There's a bunch of projects going on, thing that I personally am working on right now, that I think has a lot of promise and was really fun for me to work on. I'm working on making it, so people can pay play poker directly against other people with no casino in the middle and it getting adjudicated on the blockchain.
Walter Jennings: Oh, well, that sounds like a killer app.
Bram Cohen: Yeah.
Walter Jennings: One of the reasons that Chia has proven successful has been it's green credentials. How are you finding the importance of green in the DeFi and blockchain space,
Bram Cohen: Using proof of space has many benefits. I think the very immediate benefits we get actually off of proof of space aren't so much the being green as the security aspects of it. That because it requires very little resources to keep farming, that even when you get swings in coin price, it doesn't cause like the work difficulty on the network deployment down to nothing. So we had some big changes in coin price. And despite that happening, the amount of net space backing everything has hardly gone down at all. So we continue to have very, very strong security. Despite that, which is what you really want, you want it to be reliable no matter what.
Walter Jennings: Yeah, no, the fluctuations in the markets, not just in digital assets has been extremely well, what's it like to be the CEO of a coin, and ride those gyrations that must have been unsettling.
Bram Cohen: I'm old, I've been around since the .com. boom, and it's psychologically unhealthy to worry about it, right? Like, what's happening today has very little impact on where the price is going to be years from now, the price today is just people's minute to minute expectations about where it will be in the future changing. It doesn't actually affect where it will be in the future. And so it's just psychologically unhealthy to pay too much attention to that and worry about it too much. So I'm just heads down building great technology.
Walter Jennings: Tell me how it has been as a growth company managing the growth, what keeps you up at night?
Bram Cohen: Things that keep me up tend to be things that I don't really have much control over. I kind of feel like all the stuff that I have control over is doing well. In earlier years the things that were scary then was I always tell people don't have invent new math here anywhere in your product roadmap, and I'm a total hypocrite on that one and..
Walter Jennings: So do as I say not as I do?
Bram Cohen: Yeah, I got away with it but like literally the proofs of space construct like I personally came up with and are proof of time verifiable delay function construct. Some of our advisors were very serious academics came up with that, and this is like really serious math to make these things happen. That wasn't really clear. It was so before we started, so thankfully we got past that one.
Walter Jennings: And Bram, how do you find the talent? How do you keep the talent? How do you manage your growth?
Bram Cohen: Well, we actually have a community now. And we've mostly been hiring out of our community in terms of getting developers and things like that.
Walter Jennings: So the folks who are farming at home?
Bram Cohen: Not so much farmers, but people who are like hacking on Chialisp and full node software and things like that. Those we've done a fair amount of hiring out of the community,
Walter Jennings: It's one of the things I do love about blockchain is the strength of the community. They're really passionate.
Bram Cohen: Yeah, adopters. Yeah, well, and I think cheer really gives something for people to sink their teeth into there's like really meaty, good technology to work on there.
Walter Jennings: Bram, thank you for the conversation about Chia. I'm going to switch gears once more. We tend to end our shows with a segment we called tracks in the Finoverse. And we're asking people to share with us the music that powers their journey through their work.
Bram Cohen: Well, if I just go off the track that's playing in my head right this moment it's God is God by Juno Reactor.
Walter Jennings: Oh, phenomenal song, but we'll let the listeners hear that. Thank you for joining us on Waves in the Finoverse. Bram Cohen, CEO and founder of Chia Network. Thank you so much for joining us.
Bram Cohen: Yeah, thanks for having me.