The two biggest consensus mechanisms known in the crypto universe are Proof-of-Work and Proof-of-Stake, created by Satoshi Nakamoto and Sunny King(PeerCoin), respectively. Since creating these mechanisms to support the underlying technology of blockchain, there have been many other alternatives to reduce energy consumption and introduce a new method of mining using hard disks called Proof-of-Capacity, which was first coined in the proof-of-space whitepaper.
The two biggest cryptocurrencies following this green alternative to mining are Chia Network and Burstcoin. Even though they are at a very different stage right now in terms of development and growth, both of them are using similar consensus mechanisms to secure and validate payment transactions.
This innovative mining method was first presented in 2014 by an anonymous developer in the Burstcoin community. The entire project was built with the help of community collaborations. They are the pioneers to introduce PoC mining that requires minimal hardware, as the entry barrier for BURST is low compared to bitcoin and ethereum. In the case of Chia Network, the creator of BitTorrent, Bram Cohen, has huge support from many investors such as Andreesen Horowitz, True Ventures, Slow Ventures, and many more. This obviously gave them a huge advantage over Burst to accelerate their adoption and market their services into the mainstream media.
Many people in the community say that Chia Network is a complete replica of their system and only succeeded because of investments and marketing. Now, that is a huge claim to throw against a company that just raised $61 million with the help of Richmond Global Venture, which will likely put them at a valuation of $500 million. To verify the validity of these statements made by the Burstcoin community, we bring you this article outlining different aspects of both cryptocurrencies.
History of Burstcoin and Chia Network
The underlying technology and purpose of decentralization remain the same for bitcoin and burstcoin. Still, it was introduced by an anonymous creator to solve some major problems in cryptocurrencies at the time. A community of top-notch developers came together to build a payment system using the NXT platform. They mainly wanted to address three issues:
- High energy consumptions
- Unfair advantage is given to the large miners
- Lack of security
Burstcoin community formulated an algorithm that aligns with POC to increase mining efficiency and decrease network dominance by a handful of miners. In one of the community websites, it has also been reported that burstcoin is 400-times more efficient to mine than ASIC-based cryptocurrencies. This entire project was a collective effort, so there was no founder’s reserve or any party storing most coins. As the community didn’t apply for ICO and didn’t have any pre-mined coins in circulation, burstcoin could not draw attention and reach a bigger audience. To fix such problems and enhance the software, a new group of developers came together to form the PoC Consortium. These newly joined members of the community took burstcoin to a whole new level by introducing Dymaxion.
The Dymaxion concept was mainly a compilation of all the proven channels used to serve blockchain technology. The developers took inspiration from the Lightning network to integrate effective payment channels and have done the same to achieve anonymity features, coloured coins, and tangle technology. The foundation of burstcoin is the same as Bitcoin’s decentralized network. Still, to enhance security and provide multiple features to the users, the community used technologies associated with Monero and Zcash. After building the base layers to integrate on top of the basic bitcoin blockchain, burstcoin slowly expanded its user applications and desired properties.
Unfortunately, the team associated with this project left the community post-dymaxion before they had a shot to execute their scaling plans. The only positive for burstcoin right now is that it has some sophisticated and highly effective projects that can make a difference in the defi space.
Chiacoin is founded by Bram Cohen, the creator of the BitTorrent network, to mainly overcome the shortcomings of popular cryptocurrencies like bitcoin and ethereum. The company has penned a new name for its consensus mechanism called “Proof of Space and Time” (PoST). The proof-of-space is very similar to the mechanism used in burstcoin, and they have introduced a time parameter to add security and time predictability to the network.
Chia Network has taken an unorthodox approach by listing their shares on NASDAQ and NYSE, as they believe it adds a lot of credibility. This open-source development company has a large portion of XCH on its balance sheet, and even a more surprising part is- they allow publicly traded equity to function like an ETF for chia coins.
Unlike burstcoin, the chia network had a proper roadmap to reach users and get ahead in the implementation process. In August 2018, the company released their first open-source library for the public, and they later decided to release sources on their proprietary proof-of-time cryptographic protocols. Chia Network uses something called “Verifiable Delay Function” (VDF) to calculate time predictability.
After six months, the company released the world’s first green paper announcing its methods to optimize the system algorithm. In 2019, they conducted alpha implementation procedures for the network’s blockchain testnet.
Once they released the beta version in April 2020, it was fully functional with smart transactions and security features, but it was not reliable in every situation. To make the system more supportive for the user, the company made some changes to the consensus algorithm based on an idea taken from Proof-of-Stake Longest Chain Protocols Revisited.
Fast forward to this year: Chia Network is now a public blockchain running on the mainnet with an initial period of six weeks. As they now receive huge funding, they have more options to experiment and take their payments system to the next level.
Tokenomics of Burstcoin and Chia Network
The state of burstcoin is non-existent with zero revenue streams, and the community has not even provided any financial reports for the project. The money they raised mainly comes from fundraising and donations, and in some cases, mining pools also help. For the coin to gain value, it would need to generate more areas of interest for the users and bring them on to their platform. Since April 24, 2021 the protocol was seamlessly upgraded from Proof of Capacity to Proof of Commitment
Here are the token details:
Market Cap- $48 million
Circulating Supply- 2.12B (98%)
Token Price- $0.02303
Chia Network (XCH)
With China cracking down on crypto mining, greener alternatives like Chia Network attract many users and companies. As the team believes that digital money should also be green, the company supports the government. Many top investors trust it can take over bitcoin in terms of decentralization and energy consumption. Surprisingly, the Chia network has a pre-mine supply of more than 10.5 million XCH (with a current value of 8,7 billion USD).
Here are the token details:
Market Cap- $433 million
Circulating Supply- 514,760.00 XCH
Token Price- $843.34
Note- The above mentioned values are not verified with the CMC team and they have been self-reported by the company.
Why did Burstcoin fail?
Burstcoin was supposed to be the cryptocurrency for the next generation, but it failed to deliver value as a digital asset. It had every property to be the next bitcoin and provide users with reliable payments solutions, but everything fell apart once the community got divided. Burstcoin had a strong foundation in one area, and that was community contribution. If we take that away, there will no longer be any improvements made to the software and blockchain technology. If we look at the comparison between bitcoin and burstcoin in terms of energy consumed and TPS, we can clearly see that burst was outperforming. This was in 2018, so just imagine if the team were still together and worked on developing the global software for decentralized finance.
Even though Chia Network is completely based on Burstcoin, it went way ahead and reached new heights of achievements every year, while burstcoin was barely improving on core development. The best way to express the attitude of the burstcoin community is given below:
Burst is a community coin, it has no CEO and hopefully never will. It can never be organized like a company, but there can be teams working on different aspects of the project. We do not need to incorporate professional policies, but we should also not create an unhealthy environment. We need to do all this as if it was with one voice and to share the same vision towards a common goal.
If we only consider the technical aspect of the project, it remains one of the world’s top cryptocurrencies. So, how did the Chia network become so successful by using the same system? Marketing and funding- that’s it. In our mobile-first world, we need to have an online presence to bring more users and spread awareness about the technology. None of that was possible for burstcoin because they had no single authority to take charge of different business avenues.
Right now, the BURST alliance has taken over the community to implement new updates and help the coin survive this consolidation phase. Even the community members are confident that the projects created by previous developers are rock solid with high-level use-cases, so the only issue with burstcoin is creating awareness on social media and accumulating funds.
Chia Network and Burstcoin have so many similarities, and they offer almost the same feature set. Colored coin developments and other integration services would also be possible if the community had the right resources at the right time. So, even though it failed to overcome its challenges, we cannot take anything away from the community and how they have developed some superior blockchain projects.
Note: The concept of “Colored Coins” was initially presented by developers on bitcoin blockchain in 2013-14.
Community-driven projects like Burstcoin have so much potential to solve some major payment and software developer problems. Chia Network may raise more money from known investors, but it adopted the idea of PoC from Burstcoin, so it is only right to see the projects in real-time and draw more attention. The value of almost every cryptocurrency nowadays is increasing with the number of active communities, so we should also try to pay more attention to such projects with a more solid technical foundation. The idea of storage mining and green alternatives to bitcoin is fascinating, but none have proven to be a store of value, and long-term reliability is still unknown.
Born and brought up in India, Karthikeya Gutta is a crypto journalist and freelance contributor for ItsBlockchain. He covers various aspects of the industry with in-depth analysis and research. His passion towards blockchain and crypto ecosystem is mainly because he believes it can really change the world and help millions of people.
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