To pull all that off, Cohen needs to repeat his technical success with BitTorrent—and avoid the legal and business challenges that followed. Cohen’s file-sharing protocol was wildly successful, and won interest from companies such as Facebook, which has used it to speed the distribution of internal software updates. Yet despite raising more than $30 million in funding, BitTorrent Inc., the startup Cohen cofounded to maintain and monetize his free-to-use creation struggled to build a business. In 2005 the company agreed to work with the Motion Picture Association of America to remove links to copyrighted content from its search engine. Cohen left day-to-day operations at BitTorrent to cofound Chia in August 2017, and vacated his seat on the board this past July.
On the technical side, the Chia cryptocurrency is the result of Cohen looking hard at the guts of Bitcoin and trying to design substitutes that are less dangerous to the planet, and more palatable to banks. “Satoshi was not a really great protocols engineer,” Cohen says, referring to the pseudonymous person or persons who announced bitcoin in 2008 using the name Satoshi Nakamoto.
Bitcoin’s environmental problem is rooted in the way Nakamoto’s design secures digital transactions. It incentivizes people to run “mining” software that races to solve cryptographic puzzles and win transaction fees or newly minted bitcoin. Although the currency is still a niche interest, one analysis last year estimated bitcoin mining consumes as much power as Serbia, a country of 7 million people.
Cohen gives his version of mining the more bucolic name “farming.” Similar to bitcoin, participants compete to win Chia cryptocurrency in a race that also processes transactions. Unlike in Nakamoto’s system, maximizing your chance of winning depends on amassing disk storage space, not running more powerful—and energy-hungry—hardware. Cohen reckons that there are already countless computers with spare storage in the world that could start farming Chia alongside their existing uses. Anyone motivated to buy more storage just to earn cryptocurrency wouldn’t have an outsized effect on the world as bitcoin miners do, he says.
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. Anyone curious about the details can read the two peer reviewed papers Cohen has coauthored with academic mathematicians. On Wenesday, he launched a competition that invites the mathematically minded to test the speed or security of the cryptography behind Chia farming. The winners will receive $100,000—denominated in bitcoin because Chia has not yet launched its currency.
When the Chia currency does launch sometime next year, Cohen says it will be attractive to financial institutions because of its greater flexibility than bitcoin. Like Nakamoto’s cryptocurrency, Chia is built around a distributed, unchangeable ledger of past transactions. But it’s also designed to support custom add-ons that can automate contracts, holds funds in escrow, or implement features such as chargebacks not supported by bitcoin’s design but central to how the financial system deals with fraud. “The idea is to make Chia the premier cryptocurrency based off of our technology,” Cohen says. “A competitor to bitcoin, but better.”