Siacoin or SC is a multi billion dollar venture offering a cheap, reliable and highly redundant cloud storage which may prove to be worthy of competing with the exorbitant storage providers at both individual and enterprise level. Its primary objective is to introduce storage into the sharing economy.
The computing world is moving towards cloud storage. With the amazon AWS taking over the market, resulting making Jeff Bezos the richest man in the world, makes it evident that our data is no more just a matter of disks and chips, but a matter of sharable bytes that could be accessed from anywhere and everywhere. Advancements, henceforth competition, are set to prevail in this locale.
What’s astonishing? Somehow, the crypto-world has something revolutionary to offer!
Among the variety of cryptocurrencies present out there, here is one decentralised coin that provides a decentralised storage, governed by auditable contracts. We are talking about Siacoins.
Siacoin or SC is a multi billion dollar venture offering a cheap, reliable and highly redundant cloud storage which may prove to be worthy of competing with the exorbitant storage providers at both individual and enterprise level. Its primary objective is to introduce storage into the sharing economy. They believe that it is possible to free the unused storage and unite it into a free market. This configuration uses data that is spread across a network in a highly dispensable manner.
They split apart, encrypt and distribute your files across a decentralised network. This data is encrypted and stores across various storage devices or hosts across the network. You hold the keys of encryption to your own data, hence, no outside company can access or control your files. The platform charges for its service as well pays its hosts in Siacoins- a cryptocurrency.
Let us have a look at how Siacoins was developed.
A history of Siacoins
The idea for Sia was developed back in 2013 at the HackMIT which is a hackathon hosted by the Massachusetts Institute of Technology. The idea was simple – allow anyone to rent out their spared storage and in return reward them for their contributions. Basically creating decentralised data-centres all across the globe that altogether could form the world’s largest and fastest cloud storage platform.
It was started by David Vorick and Luke Champine when both of them were undergraduate students at Rensselaer Polytechnic Institute in Troy, New York. Both of them wanted a system that would create intrinsic value for their holders by using their token as payment for file storage. They created Nebulous Inc. in May 2014. Nebulous was initially funded by a seed round of $750,000 from investors such as Procyon Ventures, Raptor Group, Fenbushi Capital, etc. The company also raised an additional estimated $500,000 from Siafunds sale in May 2014 and $400,000 via grant INBlockchain in July 2017 for total of $1.7 million. A beta version of the platform was released in March 2015 with the initial version being released in June 2016. The most recent version is 1.3.1 which was launched in December 2017.
In the current state of affairs, the cloud storage platforms are more centralised than not, and services depend on the owner of the platform rather than the members in it. But Sia was formed to provide the power to the clients who could exist in two forms – renters or hosts.
Sia launched Siacoin as a cryptocurrency on 7 June 2015 and it started trading at $0.000046 per token. Yet, from the very beginning, the founder of Siacoins David Vorick was confident that “there will be an explosive growth in the first 4 years” and that there is a lot of opportunity to jump on the coin early. And the explosion that Siacoin experienced between November-December 2017 which lead to its price increasing to $0.09 per token, might just be the start of what David Vorick wanted to convey.
Between January and June 2017 the market capitalisation of Siacoin increased almost 100-fold from $5.3 million to $527.8 million. In June 2017, Siacoin was the 16th largest cryptocurrency by market cap. In July 2017, Forbes named Siacoin in their top 25 cyrpto assets, describing it as decentralised file storage that’s a tenth of the cost, faster and more reliable. On January 7 2018, Siacoin’s market cap reached an all-time high of $3.08 Billion. It currently trades at around $0.03 and is ranked 22nd on Coinmarketcap.com. Even the supply has increased to be around 34.12 Billion coins with an overall market capitalisation of $951.70 Million.
It is a very good start for the platform which is apparently set to face a lot of competition from giants like Microsoft, Amazon and Google who have come up with their own respective cloud storage companies.
How does Sia work?
Sia reduces the cost of cloud storage by allowing users to host or ‘rent out’ their unused hard drive space. It uses a blockchain as an intermediate ledger as well as for facilitation of payments. On this platform, you can rent storage or get paid to rent your storage, that too in cryptocurrency. Additionally, you may also mine Siacoin or contribute to the project in any manner feasible. Basically the platform can be divided into three components for a better understanding :
#1 Proof of Storage
The file storage system used by Sia involves dividing a file into segments of constant size and then hashing them into Merkle trees. These are stored in a blockchain ledger. The system then splits, decodes and stores this data onto numerous host devices. No one device has an entire file and all the files are copied on numerous devices so that, in case a hard drive fails, your data won’t be lost. The original Merkle tree along with the size of the file is used to verify storage proofs.
A host depicts their possession of the file by reporting hashes from its Merkle tree along with a randomly selected segment of the file itself. The previous block header and a hashed concatenation of the contract ID decide which segment to send as the proof.
The platform is designed for decentralised cloud storage by the formation of contracts with peers. These Contracts define the terms under which a storage provider keeps user data and require a periodic submit of proof-of-storage so that client can be reassured that their data is safe.
Contracts are formed between the hosts and clients. A contract defines the terms of data storage with special emphasis on ‘the proof’ that the host is supposed to provide regularly. These proofs must be continuously supplied until and unless the contract expires. A contract is facilitated through a blockchain, which is a public ledger.
Hosts are compensated for providing valid proofs whereas penalised for incorrect or missing proofs. These proofs are publicly verifiable and are present on the public ledger. Hence, network consensus automatically enforces these contracts. This means, the client does not need to verify their own proofs, the network does it for them.
(Caption : Why spare the memory when you can earn with it)
Moreover, the renter and the host must supply a particular amount of money. A host supplies it as a security deposit, which they must forfeit on the unsuccessful abidance of the contract. Whereas, the renter supplies it to help fund the host for storing their files.
Alongside specifying the proof of submission, the file contracts also contain a definite time duration of the respective contract, valid proof reward, invalid proof penalty statements, as well as the maximum number of proofs that can be skipped or missed until the termination of the contract.
If a host provides valid proofs in the alloted time, an automatic payment is triggered. Otherwise, the payment is directed to an unspendable address where the coins cannot be recovered. This prevents the Denial-of-Service attacks on Sia nodes.
Siacoin – the settlement currency for the system. The supply of Siacoins is set to increase permanently. The users are bound by a proof-of work scheme. Newly minted Siacoins are awarded to miners as an incentive to keep the network secure. A new block generation takes around 10 minutes. The first block or the genesis block reward was set at 300,000 Siacoins. The network is configured such that this reward reaches its absolute minimum of 30,000 per block which might happen somewhere around 2023.
Sia might implement a host proof of burn mechanism wherein hosts have to burn certain Siacoins to show that they are real and sincere for business. According to Sia, the inflation rate is set to decline in the long run, and at one point it could be lower than the growth rate of the network. When Sia grows bigger the average burned coins could mount to 0.1 to 0.5 percent of the total supply. This could balance the inflation which could result to a deflation of coins.
Siacoins have mentioned the scalability of attacks over the system in their whitepaper. There could be two attack vectors, namely “block withholding attack” and “closed window attacks”.
- The block withholding attack exploits the deterministic nature of random numbers on the blockchain. As the execution of contracts has to be deterministic, miners need to be able to reproduce random numbers with same seed. Mostly, previous block headers are used as this seed. An attacker mostly withholds blocks until they find a block whose hash produces a favourable random number, allowing a cheating node to produce valid proofs without actually storing the file.But this attack is made unlikely due to the fact that over 50 percent of the network need to withhold blocks to manipulate 50 percent of the challenges.
- The more formidable between the both of these is the closed window attack. This is where malicious miners hinder with or close the window where clients are required to submit a proof of storage. This attack has been remedied by a large window size, giving hosts a larger time to have their proofs acknowledged. Hosts are also free to reject any storage contracts as they see fit, or if they believe a contracts makes them vulnerable to closed window attacks.
Therefore, Sia does appear a lot transparent in their functioning with all the contracts and vulnerabilities in the system made clear to the clients straightaway.
Sia for Investors
As we know, the settlement currency in the system is Siacoins. The authors of the Siacoin whitepaper, had clearly mentioned about the volatility of the system. This might result in more expensive contracts being formed, where hosts try to mitigate their losses by increasing their pricing in response to price fluctuations.
There are two ways in which one can contribute to the network or earn coins.
- First, like all other cryptocurrencies, Siacoin can be mined. Mining makes the network secure by validating the transactions.
- Second, they can become hosts. Why not rent your spared storage rather than keeping it good for nothing! Rent and get subsidised in cryptocurrency – Siacoin.
Besides, there is another distinction in the system known as Siafunds. Siafunds refers to a different premined coin than Siacoin. This coin represents a stake in the platform as a business firm rather than an internal currency owned by the network. Siafunds are used to generate gains proportional to the value of the platform. This is done by generating a contact creation fee of 4.9 percent which is distributed among the Siafund holders. About 88% of these funds are held by the native Nebulous Corporation whereas the remaining 12% is held by early crowdfunders. These are a transferable asset but cannot be used to store a currency value or miner fees.
Sia is available on various trading exchanges like Bittrex, Crytopia, HitBTC and Yunbi by the ticker SC.
Siacoin vs Competitors
Populous, though much unknown, but shows a lot of growth when it comes to market capitalisation of cryptocurrencies. Even though the price of PPT token is much higher than the that of SC but the market cap is still comparable.
A cryptocoin with loads of motivation and innovating put in its driving system which involves the users input to a large extent, analogical to SC. Even though these inputs are way different in their ulterior submissions, STEEM does stand out to be a competition as it functions around the same market cap range.
The inferior version of the giant Ethereum chain could at least be set as an incentive for growth by the cryptocurrency as it rolls around an achievable limit. Who knows if they surpass ETC, they could one day kill the giant (ETH) too.