- Gene Hoffman, president COO of
Chia , told Insider the company welcomes government regulation. - Hoffman said volatility was 'required' before mass adoption of
crypto and the technology that underpins it. - Chia coin minting uses less energy, but has been criticized for creating electronic waste.
"During adoption phase, volatility is almost required," he told Insider in an interview. "It's kind of like saying that we're gonna adopt the internet in the late 90s without having volatility in internet stocks. Was not going to happen that way."
In the heady days of the late 1990s, traders chased anything remotely connected to the internet. Amazon was one of the market darlings at the time and could often rise or fall anywhere up to 60% in a month in the run-up to the bust in early 2000.
Chia's XCH token, which only began trading on May 3, has been no exception. It debuted at $1,498 and fell by two thirds in just three days. It has since swung from highs above $1,600 to lows this week below $540, according to data from CoinMarketCap.com.
But Hoffman thinks these are just teething problems before there is the mass adoption of cryptocurrencies and the
And others agree - billionaire entrepreneur Mark Cuban has likened cryptocurrencies to the dotcom bubble of the late 1990s. Cuban said in January he expects some coins will survive future crashes to become the crypto world's equivalent of Amazon or eBay.
Chia was founded by BitTorrent inventor Bram Cohen in 2017, and promotes its "proof of space and time" process as a much more energy-efficient way of mining coins than bitcoin's "proof of work." The company raised $61 million in its latest funding round.
Proof of work is an algorithm in blockchain technology that is used to confirm bitcoin transactions and rewards miners with new coins. It's also highly energy intensive and makes bitcoin one of the less climate-friendly coins out there. Rival coin
Chia's XCH token earns its green credentials from the energy use of its mining process. Rather than "mining" for coins, the network's users "farm" them.
Chia "farmers" generate and store cryptographic numbers into "plots" onto their hard drives or solid state drives (SSDs) - a newer, faster type of storage device. A farmer's plot can win the chance to create a block and receive a reward on the blockchain based on the proportion of total space a farmer has filled up compared to the whole network.
A server - called the "Timelord" - verifies the block and awards XCH tokens to the farmer in a process the company calls "proof of space and time".
But Chia has received criticism for simply creating a new kind of waste, specifically burnt-up hard drives and SSDs. Demand for these storage devices has skyrocketed in Europe, while some IT businesses in Vietnam said they ran out of stock last month.
"There's no free lunch," Hoffman said. "It's hard to say that being a thousand, 10,000 times more efficient for the same security isn't a massive innovation."
Hoffman also said that burning through SSDs can be avoided: "If you use the $79 cheap-y SSD and try to plot a bunch against it you might burn that up, but the $99 will last you a lifetime," he said. "So the people who are complaining about that are buying the wrong tool for the job."
Regulation is key to survival
Aside from bitcoin's carbon footprint, the prospect of ever-tighter regulatory scrutiny has been one of the key drivers in the drop from the token's record high around $65,000 in April, to closer to $30,000 now. And this hasn't just affected bitcoin. Ether, Ripple's XRP, meme currency dogecoin, Polkadot's DOT, or Cardano's ADA are all down sharply from the highs of earlier this year as a result.
Hoffman said Chia embraces government regulation - a major incentive behind the company's plans to go public "relatively quickly," possibly via a blank-check company, or SPAC.
"Everyone who's kind of merged their equity with their coin has generally been doing an illegal securities offering, and that can't scale, that cannot be adopted, that cannot become the thing that governments run central bank digital currencies on," Hoffman said.
Part of cryptocurrencies' appeal is their decentralized nature - no one government or central bank controls them - and the degree of anonymity they afford their users.
But Hoffman believes people want transparency.
"You want to see the audited financials and the quarterly reports," he said. "These are not crazy ideas if you're trying to build trust."
And he hopes that by listing his company on the stock exchange, and keeping its corresponding XCH token as a separate asset, investors will be protected against wild swings in coin prices when using it.
For a more in-depth discussion, come on over to Business Insider Cryptosphere — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve.
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