Investing in cryptocurrencies can be a great way to make money online. Thanks to the good publicity Bitcoin gained within the past few years, cryptocurrencies as a whole have received more attention from the mainstream.
Given that the growing popularity of digital assets assures an increase of value in the future, people that want to ride the crypto wave should invest now rather than waiting for mainstream adoption to drive prices higher.
But bitcoin isn’t the only cryptocurrency traders can invest in. Today’s cryptocurrency investors can choose from a wide selection of currencies, such as Ether, Dogecoin, and Litecoin.
One unique currency traders can invest in is Chiliz (CHZ). Designed to back blockchain tools for the sports and entertainment industries, the cryptocurrency Chiliz can give traders access to fan privileges that are unavailable through any other currency, digital or fiat. Here’s everything you need to know about Chiliz.
What is Chiliz?
Chiliz was founded in 2018 by Alexandre Dreyfus. The goal behind the currency’s conception was to help sports and entertainment fans connect with their favorite sports teams and artists. CHZ achieves this goal by allowing traders to purchase branded fan tokens, which are digital assets that can earn holders exclusive fan privileges.
Unlike most cryptocurrencies, which run on Proof-of-Work (POW), Chiliz runs on a Proof-of-Authority (POA) blockchain.
What Are Fan Tokens?
Often likened to traditional club membership, fan tokens are non-expiring digital assets that are tied to specific fan organizations, usually sports and music fan clubs. Traders who purchase fan tokens with CHZ can then gain access to exclusive club perks, such as invites to games, chatrooms, and events. Fan tokens also give holders the right to vote on organizational matters. In sports clubs, voting rights can give fans the power to influence kit designs, bus designs, and starting lineup.
Though fan tokens were created to give holders unique new ways to show fan participation, they have also spawned a secondary market for trading. This allows holders to sell their fan tokens for profit. Prices depend on how much holders value fan token-exclusive benefits.
What is a Proof-of-Authority Blockchain?
Most cryptocurrencies, including Bitcoin, use the proof-of-work consensus mechanism to secure their blockchain. For transactions to be considered valid in the Bitcoin blockchain, it has to be verified by miners of the bitcoin network. With the proof-of-work mechanism in place, miners must first solve a complex mathematical problem before their verifications can be considered valid.
These complex mathematical problems usually cost miners a significant amount of energy. By requiring excessive amounts of power and resources, the proof-of-work system disincentivizes miners from verifying invalid transactions. The proof-of-work system thus plays a key role in keeping the blockchain trustless and decentralized.
However, the proof-of-work system has attracted a lot of criticism due to the excessive energy spending it promotes. Thus, in 2017, developers pitched an alternative: the proof-of-authority mechanism. Unlike proof-of-work blockchains, proof-of-authority blockchains limit their network of transaction validators to a select group of “authorities.” Rather than proving their integrity by staking energy, authorities instead stake their identities.
To be considered trustworthy, authority candidates must register their identities on a public notary database. Thus, cryptocurrencies powered by POA blockchains, such as CHZ, are more energy-efficient than other coins.
Is CHZ worth buying?
The cryptocurrency Chiliz can be a good investment. By buying CHZ, investors can buy and use fan tokens. They can also participate in the secondary fan token market and profit from fan token trading. As long as fans value the privileges fan tokens offer, the value of CHZ will stay steady. Furthermore, given that many cryptocurrencies today are under scrutiny due to their excessive energy consumption, it might be wise to invest in energy-efficient currencies like CHZ.