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Siacoin (SC) Cryptocurrency: An Ultimate Beginner’s Guide
CoinSutra » Cryptocurrency » Siacoin (SC) Cryptocurrency: An Ultimate Beginner’s Guide
The world of cryptocurrencies is becoming more and more crowded each day. There are already 1400+ cryptocurrencies in the market, and that number keeps growing.
Moreover, there are so many ICOs and new projects coming out each day. It might be overwhelming to keep track of all of these new cryptocurrencies and projects.
And not all projects or currencies are worth noticing, as most fizzle out and die while others later turn into scams.
That’s why at CoinSutra, we do this research for you and only equip you with information that matters. In the past I have published following articles on popular Altcoins:
This article will educate you about one such cryptocurrency project worth noticing. Its name is Sia, and it is fueled by its cryptocurrency called Siacoin (SC).
What is Sia Cryptocurrency?
Sia is a cloud storage platform like Google Drive, Dropbox, and Amazon Cloud.
But what sets Sia apart is that it is an open-source, blockchain-based, decentralized cloud storage platform. In short, Sia is a decentralized cloud where data is stored on the blockchain.
Centralized storage services are prone to single points of failure and also the misuse of unencrypted data for higher business profits.
Sia unites together a large amount of unused storage space and couples it with a blockchain to make encrypted and decentralized cloud storage. Thus, it eradicates the need for trusting centralized data centers.
Sia’s official website says:
The long-term goal of Sia is to be the backbone storage layer of the Internet. We believe data should be free. We aim to liberate the unused bits of the world and construct the largest storage super server on the planet.
The idea of Sia – decentralized cloud storage – was conceived at the HackMIT 2020 Hackathon, and is now backed by Nebulous Inc. (headquartered in Boston, USA).
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What is Siacoin?
Siacoin is the cryptocurrency developed to use the Sia platform.
Anyone can rent out extra space on their PC to the Sia decentralized network and get paid in Siacoin. Similarly, any user who wants to use Sia storage needs to pay Siacoins to a host.
This is a special purpose currency for the Sia network which executes file storage contracts on the Sia blockchain. A host has to keep the files for an agreed upon time and in an agreed upon space. Later, after the end of the agreement, payment will be released to the host in Siacoin.
If the host loses the files, they won’t get paid. These file contracts on the Sia blockchain ensure that the host and the user are both satisfied.
Sia was launched into the market two years back on 7 June 2020, and it started trading at $0.000046 per Siacoin.
At present, the Siacoin is worth $ 0.017867 per unit, which is a 38,700% increment in price in just two years.
This increment is so huge that it has brought Siacoin to the 14 th position in the list of top 20 cryptocurrencies by market cap.
Team Sia: Core team of SiaCoins (SC)
The company behind Sia is Nebulous Inc. Nebulous is based in Boston, Massachusetts, USA.
- David Vorick (CEO): In addition to being the CEO, he is also the lead developer of Sia Core. He graduated from Rensselaer Polytechnic Institute with a BS in Computer Science.
- Luke Champine (Co-Founder): Luke studied at Rensselaer Polytechnic Institute with David. He dropped out of college to work on Sia full-time. He is Sia’s core developer and loves programming.
- Johnathan Howell (Sia Core developer): He started programming around age 10. He has an M.A. from Savannah College of Art and Design. He is working on the front-end of Sia to deliver a clean, well-built, and easy to use UX around the core functionality.
- Zach Herbert (Head of Operations): He excels at project and product management. He is studying for an MBA at Harvard Business School and graduated from Boston University where he studied mechanical engineering. He started working with the Sia team in January 2020.
Supply of Siacoins
The supply mechanism of Sia is somewhat unique. There will be an infinite number of Siacoins. To start with, developers mined the first 100 blocks. The reward for the first block was 300,000 Siacoins. After the first block, the Siacoin reward will exponentially decrease by one unit for subsequent blocks.
It means that the:
- 1 st block had 300,00 Siacoins.
- 2 nd block had 299,999 Siacoins.
- 3 rd block had 299,998 Siacoins.
- 4 th block had 299,997 Siacoins.
… and so on… until the block rewards are reduced to 30,000 Siacoins.
After that, for every block mined, 30,000 Siacoins will enter the system.
At present, there are 26.7 billion Siacoins available.
Marketcap of Siacoins
According to CoinMarketCap, Siacoin (SC) has a per unit price of $0.003 with a current market cap of $136,400,518 ($136 million) on a 24-hour volume of $1,811,400 with an available supply of 41,284,111,055 SC.
Buying and Storing Siacoins
Step 1: Get a Cryptocurrency (BTC/ETH/LTC)
To get a cryptocurrency like BTC/ETH, convert your fiat currency to BTC/ETH on any popular cryptocurrency marketplace. For converting fiat into BTC, you can use this guide: Buying Bitcoins Using A Debit/Credit Card.
If you already have BTC/ETH, you can skip this step.
Step 2: Crypto to Siacoin
There are few major exchanges from where you can exchange BTC/ETC for Siacoin:
Out of these, Shapeshift is the easiest way to get ahold of your first Siacoin. If you want to know the step by step process of using Shapeshift, see our guide on how to convert Bitcoin into any other altcoin.
Now that you have bought your Siacoins, move them to a wallet.
Step 3: From exchange to Sia Wallet
At present, Sia only supports desktop wallets on Linux, Mac, and Windows platforms.
- Download the most recent Sia wallet here.
- Run the wallet and wait for synchronization with the blockchain. (This can take several hours.)
- Create a new wallet and unlock it using the seed key displayed. (Unlocking can take several minutes.)
- Click the Receive Siacoin button and send the Siacoin you purchased from the exchange to this address.
The Future of Sia
Unlike many other coins or crypto projects, Sia didn’t start with an ICO or pre-mining. Still, to date, Nebulous Inc. has raised $1.25M in total funding. Prominent investors include Procyon Ventures, Raptor Group, Fenbushi Capital, and angel investors like Xiaolai Li.
The long-term goal of Sia is to compete with cloud storage platforms like Dropbox, Google Drive, and OneDrive. In the blockchain space, Sia’s direct competitors are Storj and MaidSafe, but Sia claims to be better with encryption and decentralization.
The developer’s community is confident that they are making a highly competent product and they don’t believe in mass marketing campaigns for promotion.
Sia- Decentralized Cloud Storage
I think Sia has come just at the right time because the need for data privacy, security, and decentralization is at an all-time high in the market.
And it goes without saying that the future of Siacoin hinges on the success and rate of adoption of Sia cloud storage, which is looking promising at the moment.
And at the time of this writing, the price of Siacoin has increased 50 % in the last 7 days.
The future is looking bright for Sia.
What do you think about Sia and Siacoin? Are you intrigued by its potential? Do you think it’s over-hyped? Let me hear your comments and thoughts in the comments below!
Update: The Siafunds Tokenized Securities Offering (TSO) concluded on Saturday morning. They sold 231 Siafunds at a price of $7,500 per Siafund. Taking into account presale agreements with three investors, we raised approximately $1.5 million.
Sia release v1.3.3 video streaming is featured. This allows you to store video files on the Sia network for a fraction of storage and traffic costs compared to other cloud storage providers.
Useful Siacoin Cryptocurrency Resources
To keep yourself updated on the latest news on Sia:
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Here are more altcoins that you can read about:
A team of Blockchain and Cryptocurrency experts lead by Harsh Agrawal. Trusted by over 1.1 million readers worldwide.
What Is Siacoin? How to Buy Siacoin? Is It a Good Investment?
by Alex Y · Published · Updated
What is Sia (Siacoin) and why do we think it could change the way we look at data storage? Sia is a decentralized cloud storage platform that uses a blockchain to facilitate payments. Is Siacoin a good investment and how to buy Siacoin? Read on and find out more.
Disclaimer: The content below should not be taken and viewed as investment advice, but only information and opinions. This article is for information and illustrative purposes only.
What Is Siacoin?
Siacoin is a cryptocurrency and technology (Sia) that was innovated at MIT at a hackathon in 2020 by David Vorick and Luke Champine of Nebulous Inc, a VC-funded startup in Boston.
You might have heard about Amazon and Dropbox. They are both centralize cloud storage platform and the data is stored on a third party server. Conversely, Sia is a decentralized remote cloud storage that put control of personal data back into the hands of its users.
It removes the centralized server, which reduces the storage costs and at the same time protects the user’s data privacy. A group of data is contained by keys that only the uploader holds. Sia put the users in the control, rather than the server itself.
The distributed nature of the Sia network enables many optimizations in latency, throughput, reliability, and security.
Data files on the Sia network are securely and automatically encrypted with industrial-grade algorithms, using blockchain technology to track and ensure full integrity of the network. The encrypted files are spread across multiple nodes. Nodes are simply referred to data communication equipment.
The decentralized nature of the Sia network enables anyone with storage to get paid, lowering the barrier to entry and reducing the overall price of cloud storage. Their technology could be backing the next Dropbox or Amazon AWS. Siacoin’s blockchain technology could be the solution to the high hosting and storage costs of Amazon and Dropbox.
Breaking into this market is a multi-billion dollar endeavor. The long-term goal of Sia is to be the backbone storage layer of the Internet.
Sia uses a cryptocurrency, Siacoin (SC). Siacoin is the designated cryptocurrency used on the Sia decentralized data storage platform which is essentially a peer-to-peer network of hard disk drives individually connected to the network allowing the disk space on those hard drives to be used or recovered for data storage by people all over the world.
All payments on the network happen in Siacoin, which is a critical component of the cryptographic Service Level Agreement (SLA). Siacoin allows them to do things that would not be possible with Bitcoin or traditional online payments.
Should I Buy Siacoin (SC)? Is It a Good Investment?
The Siacoin (SC) is the token used in the smart contracts to pay the hosts. When a smart contract is created, the renter and the host both put Ssiacoins into the contract. The host gets the Siacoins only if they still have the data when the contract expires.
Siacoin is subject to speculation and there have historically been large price movements. Because the host adds collateral to file contracts, the host assumes most of the risk of a volatile price. Price increases can only benefit the network, but price drops can impact the host’s revenue.
Severe price drops, where the price cuts in half or worse, can put files at risk of being dropped by hosts, but even large price drops such as 25% do not put data at risk.
If you take account all the hard drive waste we have that lies useless all over the world, the price of Sia cloud memory being fraction of the today’s standard and income that can be easy enough to be generated by anyone just by connecting computers to the network.
The developers of Sia have a clear vision of next few coming years of the technology. Taking into consideration that world’s 90% of the data is produced in last 2 years, we can imagine the amount of data to be produced in next few coming years.
Buying Siacoin means that you buy a future on a peer-to-peer storage network called Sia. If Bitcoin replaces gold bars, Siacoin replaces hard-drives. Siacoin is a storage currency that can be considered as crypto-commodity with strong fundamentals and P-o-W mineable.
I personally believe that the Sia project has a bright future. Therefore, I acquired Siacoins and added them to my long-term cryptocurrency investment portfolio.
Where to Buy Siacoin?
There are several major exchanges you can buy Siacoin.
Based and fully regulated in the USA, Bittrex is the go-to spot for traders who demand lightning fast trade execution, stable wallets, and industry-best security practices.
Poloniex is a US-based cryptocurrency exchange offering maximum security and advanced trading features. Start trading in minutes. All it takes is a few simple steps.
YUNBI is a future-oriented exchange for blockchain assets. Founded in Beijing, 2020, and built with the code released by Peatio Open Source Project, YUNBI adheres to the principles of integrity, transparency and being open-sourced, offering customers a safe and easy trading platform.
Note: It is fairly easy to buy Siacoin on Bittrex, Poloniex, and Yunbi. Simply follow their instructions for setting up an account and depositing funds. As these cryptocurrency exchanges offer a different environment for acquiring Siacoin in that you must buy it by fulfilling other traders’ sell orders. This means that prices may vary, sometimes widely.
How to Buy Siacoin?
There are very few direct fiat gateways into Siacoin, for those who reside in countries that don’t have direct access to Siacoin. That means the vast majority of people who buy Siacoin did it with Bitcoin. Bitcoin is the first coin that most people buy so it’s hard for a different crypto to overtake the value.
STEP 1: BUY BITCOIN
There are many ways to buy Bitcoin. Perhaps the easiest way is through Coinbase or Coinhako. Once you have purchased some bitcoin, you are ready to buy some Siacoin! Buying Bitcoin is straightforward.
Registration is pretty straightforward, requiring things like your name, email, and a verification of your identity (eg: pictures of your driver’s license, etc). Once your account is created and verified, you’ll need to add a funding source like a bank account and/or a debit card. Once this is set up, you can buy some Bitcoin.
The reason I encourage my readers to buy BTC from Coinbase because you will get $10 free BTC once you trade your first $100 through Coinbase.
You can read the full article on Coinbase and Coinhako.
Those in Europe will use a euro exchange like Kraken, while those in Japan will use a yen exchange like Coincheck, etc.
STEP 2: Set Up the Trade on Shapeshift
Exchanges of Bitcoin and Siacoin can be done through Shapeshift. Their service is super simple; you don’t even need to register on their website. You just send them some Bitcoin and they send you back some Siacoin. Unfortunately Shapeshift charges really high fees, which is fine for something like a $5 purchase, since losing 7% to fees isn’t a big deal when it means losing 40 cents.
To do this, you will first need an SC address, so that Shapeshift can send the Siacoin back to you. You can open an account on Poloniex. Then go to Poloniex “Balances, Deposits & Withdrawals” from the “Account” button on the top right menu. Then click “Deposit” from SC. Then you will see a string of characters will pop up and that’s your Siacoin Deposit Address. It looks like this:
Next, you’ll want your Bitcoin address from Coinbase, which can be found on your main account screen. In the upper right click on the link “Wallet address”. A string of characters will pop up like this.
That is the address you’ll need for Shapeshift. In case your trade has a problem, they will send the Bitcoin back to that address.
Next, you’ll go to ShapeShift.io and set it up for Bitcoin-to-Siacoin trades by clicking on the two big currency logos, and then click “Continue”.
Now Shapeshift will ask you for your Siacoin and Bitcoin addresses. Paste both of these into the boxes (ignore Payment Id) and click “I agree to the Terms”. When everything is ready, click “Start Transaction”.
STEP 3: Send Bitcoin to Shapeshift
With Shapeshift awaiting a deposit, go back to Coinbase. On the “Send Funds” page, paste the Shapeshift address into the “Recipient” box and type the amount of Bitcoin to send into the “Amount” box. Type the BTC amount into the box and click the blue “Send Funds” button. Click “Confirm” on the box that pops up, and your Bitcoin is officially sent to Shapeshift.
Finally, go back to your Shapeshift trade. Hopefully, everything went smoothly, and the white “Deposit Received” has turned green with a checkmark, meaning Shapeshift got your funds. Eventually both “Exchange Complete” and “All Done!” should receive checkmarks too, which means Shapeshift has exchanged your Bitcoin and sent Siacoin to your wallet.
STEP 3 (Alternative): Send Bitcoin from Coinbase to Poloniex Exchange
There are some weaknesses with the Shapeshift process outlined above, specifically that their exchange rate is pretty bad. Therefore, you can choose to send Bitcoin from Coinbase to Poloniex (one of the biggest exchange for Siacoin) directly.
Go to Poloniex “Balances, Deposits & Withdrawals” from the “Account” button on the top right menu. Then click “Deposit” from BTC to get your BTC address
Now paste the Bitcoin deposit address you got from Poloniex into the “Destination” box and type in the amount of Bitcoin you want to send.
Just one click and your funds should be on their way to Poloniex. It will take a bit of time, perhaps 15 minutes or more, for your Bitcoin transfer to complete.
Step 4: Trade Bitcoin for Siacoin on Poloniex
Now that your Poloniex account is set up and you’ve transferred some Bitcoin over, it’s time to actually get some Siacoin! To do this, go to Poloniex’s SC/BTC exchange. Here you’ll be greeted with a historical graph of Siacoin’s changing price.
To trade your Bitcoin (BTC) for Siacoin (SC):
- Click the underlined number next to “You have”. This will set your trade to include your entire Bitcoin balance.
- Click the underlined number next to “Lowest ask”. This will set your trade price to the lowest current seller.
- Click “Buy”.
You just exchanged Bitcoin for Siacoin. Be aware that there often isn’t much Siacoin for sale at the very lowest price, so you may need to repeat steps 1-3 a few times until all your Bitcoin is exchanged.
What is Siacoin? Complete Expert Guide – Blockgeeks
Sia is a blockchain-based, cloud platform that aims to provide a solution for decentralized storage. Peers on Sia’s network can rent hard drive space from one another, for storage purposes instead of renting it from a centralized provider. Not only does this decentralized approach make Sia more secure, but it drastically reduces the overall cost as well. Simply put, if you have unused space on your hard drive, then you will be able to rent it in Sia and earn money from it, in the form of Siacoins (SC).
What is Siacoin?
History of Sia: Siacoin and Siafunds
The two tokens – Siacoin and Siafund
Sia uses a dual token system – Siacoin and Siafunds. Siacoin is the main utility token. The following is the current snapshot of Siacoins:
There is no limit to the total supply of Siacoins and they all must be mined. The reward for the first block mined was 300,000 Siacoins, which will decrease with time till it reaches 30,000 SC per block.
The second token in the ecosystem is Siafunds (SF). There are 10,000 SF in existence and they have all been premined. Those coins have been distributed as such:
- Sia’s parent company, Nebulous Inc., holds 8835 of these Siafunds.
- The remaining Siafunds were sold in a crowdfund which helped finance Sia’s early development. During their crowdfunding campaign, Sia raised money by selling “Sianotes” on NXT’s platform, which was later exchanged for Siafunds. After the crowdfunding, Sia raised a further $1.65 million through venture capitalist funding and grants. Noted VCs who have invested are – Procyon Ventures, Fenbushi Capital, angel investor Xiaolai Li, and James Pallota’s investment company, Raptor Group.
The main goal of Siafunds is to provide a way to finance Sia’s development, without having to depend on external donations or a premine.
When a storage contract is officially complete between a renter and a host in Sia, the transaction gets finalized. The Sia nodes will now calculate how much of the money in the contract belongs to the host and how much of it belongs to the renter. 3.9% of the total money in the contract will be divided over all the 10,000 Siafunds in the blockchain.
Eg. if a contract has 500 SC from the renter and 500 SC from the host, then 3.9% of the total (39 SC) will be allocated to all the Siafunds. So in this case, for 1 SF held, 0.0039 SC will be rewarded.
The creative forces behind Sia are David Vorick and Luke Champine of Nebulous Inc, a VC-funded startup in Boston. The seeds of the original idea of Sia were planted at HackMIT 2020. The idea was simple – what would happen if you could liberate the unused storage spaces in hard drives around the world, and unite it into a global decentralized cloud storage platform? The concept received a lot of positive feedback and Vorick and Champine opted to pursue the project full time.
Before we look into how such a platform actually works, let’s look into the problems of traditional and centralized cloud storage.
The problems of centralized cloud storage
Let’s get the obvious out of the way first. Companies like Dropbox, Apple, and Google have revolutionized company operations thanks to their cloud storage service. Not only has third-party cloud storage met the ever-increasing demand for more storage, but they have managed to save businesses thousands of dollars in IT investments. Unfortunately, despite their obvious utilities, they do suffer from a lot of issues.
#1 Giving over control of data
The biggest problem of third-party cloud storage services is that the company hands over their data to a third-party for storing services. Since the data is outside the company’s control, the data privacy settings are beyond their control as well. Since users usually back up their data in real-time, they may accidentally give up control of data that they didn’t mean to share in the first place.
#2 Hacking risks
Since all the data is stored inside a third-party, centralized server, they are susceptible to hack attacks. This not just some random assumption, third-party servers have been repeatedly hacked to obtain sensitive and private information. Let’s look at two of the most infamous cases of data hacks.
- In September 2020, more than 145 million Americans had their personal data, including social security and driver license numbers, stolen because of a hack. The target was the Equifax credit reporting company. The sheer scale of Americans affected was staggering. Many of the people affected had not even signed up with the credit-monitoring service.
- Apple’s iCloud was hacked on August 21, 2020, which has been infamously termed “The Fappening.” During the hack, several celebrities, mostly women, had their private pictures hacked. Most of those pictures contained nudity and were posted on 4Chan, Imgur, and Reddit. Investigators found out later that access to the photos was gained via spear-phishing attacks.
While it will be wrong to accuse centralization of these attacks, the fact of the matter is that these attacks only happened because all the data was stored in one central location. This one location invariable became a single point of failure (SPOF). When the SPOF is breached, it creates a ripple-like effect that compromises the entire system.
#3 Data Mismanagement
Facebook’s Cambridge Analytica debacle is the best example of a third-party mismanaging their client’s data. Aleksandr Kogan, a data scientist at Cambridge University, developed an app called “This is Your Digital Life” and then provided it to Cambridge Analytica. They, in turn, used it to survey Facebook users for academic research purposes. However, Facebook’s design allowed the app to not only collect the personal information of the users but all their connections as well. Because of this, Cambridge Analytica was able to get their hands on the personal data of a staggering 87 million Facebook users, of which 70.6 million were from the United States.
According to Facebook, the information stolen included one’s “public profile, page likes, birthday, and the current city.” Some of the users even gave them permission to access their News Feed, timeline, and messages. The data they ultimately obtained was so detailed that they were able to:
- Create psychographic profiles of the subjects of the data.
- The profiles created were detailed enough to suggest what kind of advertisement would be most useful to persuade a particular person in a specific location for some political event.
Politicians paid Cambridge Analytica handsomely to use the information from the data breach to influence various political events.
In another infamous case, media analytics company “Deep Roots Analytics,” used the Amazon cloud server to store information about as much as 61% of the US population without password protection for almost two weeks. This information included names, email and home addresses, telephone numbers, voter ID, etc.
#4 Bring Your Own Device
Another genuine problem with cloud storage is the BYOD issue aka Bring Your Own Device. Many companies have now encouraged employees to get their own devices to work. The reason why they are allowing this is that:
- Employees prefer to use a device that they are more used to.
- The employee laptop specs are usually better than the ones given by the company.
- It saves the employees lots of money that they would have had to spend to buy IT equipment.
As you may have already guessed, BYOD has significant security risks. The employers can lose or misuse their devices which will once again compromise the client’s privacy. Also, if a data breach does occur, then it is quite difficult to track down all the employee devices and discover the point of failure.
Sia aims to bring in decentralization into the cloud storage space by leveraging the blockchain technology. Sia’s vision is to create a storage server that will not be run by a centralized authority and, as a result, won’t have a single point of failure. Along with the decentralization of control, Sia also plans on creating a platform where it will be impossible misuse the data inside the cloud.
Before we go any more in-depth, let’s look into what the blockchain is.
What is a Blockchain?
Image Credit: Lisk
A blockchain is, in the simplest of terms, a time-stamped series of an immutable record of data that is managed by a cluster of computers not owned by any single entity. Each of these blocks of data (i.e. block) are secured and bound to each other using cryptographic principles (i.e. chain). The following are the three main properties of the blockchain:
- Immutability: Immutability means non-tamperable. Any data that you put inside the blockchain cannot be tampered with. This happens because of the implementation of cryptographic hash functions.
- Transparency: Any data that you put inside the blockchain will be visible to everyone who is part of its network.
- Decentralization: The idea of decentralization is at the very core of blockchain technology. What it means is that any data that is stored inside the blockchain is not owned by one centralized entity but shared by everyone who is part of that blockchain’s network. The blockchain is hosted by a peer-to-peer network where each node has the same power and importance as the other. These nodes keep a copy of the blockchain, which is continuously updated. This ensures that all the nodes are in control of the data inside the blockchain, making it decentralized.
How the Sia Blockchain leverages decentralization
The Sia platform will break apart the users’ files and distribute them across multiple nodes on their network. Since the data is encrypted and accessible only by the private key in the user’s possession, a random node will note be able to access any of it. Still, if the node somehow manages to figure out the private key, they will have access to only a portion of the file, which won’t be useful.
As has been stated before, the distribution of the files among multiple nodes will also reduce vulnerability since there will no longer be a single point of failure.
#2 Faster Processing
Another problem with having a centralized server or a centralized source of information is that the geographical location of a client greatly affects its processing speed. When you, as a user, want to send a query to the server, your information packets will ricochet and transmit through these various ISPs before it reaches the server, and vice-versa.
As you can imagine, the information packet that you are sending won’t really be taking the most optimal of routes. Not only is this extremely time-consuming, but if one of the ISPs are out of service, for whatever reason, it could lead to a misplacement of your data packet as well.
However, if you have a decentralized system is geographically spread throughout the world, then content delivery and query clarification will be much faster.
#3 Cheaper Alternative
Another issue that plagues centrlaized storage system is the costs. These facilities need high-grade maintenance and full-time staff, which tends to spike the price. In a decentralized system, none of that is needed since the nodes take care of themselves. This, alone, makes them a cheaper alternative.
How does the Sia P2P storage work?
There are two main components in Sia’s ecosystem – the renters and the hosts. The renters can pay hosts in Siacoin to lease storage capacities. They are also free to determine the storage fees directly from the hosts.
Since the hosts play such a vital role in the network, they have the freedom to:
- Promote their storage resources and the quality of service that they provide.
- Have the right to refuse rent storage to a particular client if they feel that the data is too sensitive, ethnically unacceptable, or illegal.
The renters, for their part, have the right to:
- Protect the flies by splitting them up and having them copied between various hosts. This will help ensure the safety of the file.
- Pay the hosts more than the asked fees to ensure preferential treatment, such as faster upload speeds and granting storage requests.
Alright, so now let’s look into how the storage procedure actually works, by understanding File contracts.
What are File Contracts?
At the core of Sia’s functionality, lies File Contracts, which are Sia’s version of smart contracts. These contracts allow renters and hosts to engage directly with each other, within the confines of some pre-determined and well-defined set of rules. All smart contracts work using the IF-THEN logic, meaning, that a statement can only be executed, if the statement prior to it was executed to its completion.
Formation of File Contracts
- The renter establishes an allowance, which is a pre-paid amount of Siacoins which will finance storage and bandwidth demands during the duration of the contract. The default length of the contract is 13 weeks.
- The allowance will then get locked up within the wallet and the client software will promptly pick up 50 optimal hosts for the renter according to their scoring.
- The host locks up some Siacoins in collateral as a gesture of good faith. The size of the collateral is set up by the host manually. Higher collateral ensures a higher scoring during the host’s selection process.
- The file contract is signed by the renter and 50 hosts and is submitted to the blockchain.
- As explained earlier, 3.9% of the total money locked up in the contract is paid as fees to the holders of Siafunds.
Uploading and Downloading Files
As long as funds remain in the allowance, renters can upload and download their files as many times as they want. The current contracts will not be affected if the host decides to change their pricing mid-operation. Regarding data transfer:
- Done by direct connection between the renter and the hosts.
- Data is encrypted by the Twofish algorithm and stored with the redundancy algorithm Reed-Solomon among the hosts.
Proof of Storage
To protect the renters from malicious hosts, Sia uses proof of storage. To receive their payment, the host must present a number of proofs to the network, within certain pre-determined time frames. If the host fails to provide this proof within a given time frame, the proper payment is sent to a missed proof address until proof is submitted. The hosts must keep sending the proofs to demonstrate that:
- They are online.
- They are properly preserving all the data.
The host receives a penalty if they are negligent and the contract may get terminated entirely if they miss too many timeframes. On the other hand, if the host successfully provides proof of storage, then the contract awards the payment to a valid proof address.
Termination of File Contracts
The file contract may get terminated due to multiple reasons:
- The renter failed to upload their file: In this case, the renter gets their allowance back but pays the fees for both allowance and collateral. The host gets back the full collateral.
- The files were uploaded and the host achieved the required target uptime: The renter will receive the unused part of his allowance and pays the fees corresponding to both the allowance and collateral. The host will receive payment for their services, their full collateral back and won’t need to pay any fees.
- Renter uploaded the files but the host didn’t achieve the target uptime: The host will lose the collateral and won’t receive any payments for their services. They will also need to pay the fees corresponding to their collateral.
- Renter fails to auto-renew: If the renter has enabled auto-renewal of the contracts, it will be renewed some time before it expires. However, the renter needs to online in advance to renew the contracts.
Siacoin uses the proof-of-work consensus mechanism, meaning they have miners using ASICs to mine the coins. In mid-2020, co-founder and lead developer David Vorick announced that the company behind Sia, Nebulous, will launch subsidiary called Obelisk to manufacture ASICs specifically for Sia. Community members pre-ordered the miners and contributed millions of dollars to fund the effort.
However, around the same time, ASIC manufacturing giants Bitmain and Innosilicon had also begun to develop Sia ASICs. This did not sit well with the Sia community with many demanding a hard fork to prevent mining monopolization by Bitmain. While many opposed the hard fork, the Sia core developers ultimately decided to go ahead with the hard fork.
The hard fork was planned for October 31, 2020, with the intention of bricking Innosilicon and Bitmain miners. Only Obelisk equipment will be allowed to run on the protocol, granting them ASIC monopoly. As per Vorick, the main reasons behind the hard fork were:
- The pessimism in the community against Bitmain
- Dominance of Innosilicon, which controlled 37.5% of Sia’s mining hash rate.
While many in the community were happy with the result, there were some dissenting voices, especially those who had heavily invested in Innosilicon. They decided to continue using the old Sia chain, calling it SiaClassic. Regarding this, Vorick said:
“[SiaClassic] has very low community support. They say they believe in the vision though, and that they wish to have a collaborative relationship with the main chain. If SiaClassic does get support, then we are happy to engage them collaboratively. But so far we’ve seen little evidence of actual support outside of SiaClassic employees.”
The SiaClassic Foundation told CoinDesk:
“We greatly respect Siacoin’s founding principles, and the people who have supported them since the very beginning. We are focused on the future. We are excited about the team we’ve built, and we look forward to working with the SiaClassic community to take this project to the next level.”
Overall, Vorick feels that the fork was a success, estimating that 87% of the network’s computing power is accounted for by community members, “The hashrate is much much more decentralized than before the fork.”
Sia solves a very real problem that was in urgent need of a decentralized solution. Now, with all the drama of the hard fork behind them, the Sia team can focus completely on innovating and fine-tuning their product. The project is built on solid tokenomics and principles and has a bright future ahead of it.
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