What is Siacoin? – A Complete Review and Guide to Decentralized Storage
At a glance
|Mineable||Yes. Proof of Work.|
With the popularity of cryptocurrencies rising, there are many new coins and tokens appearing in the market. Our goal is to educate the public on these new cryptocurrencies. This guide will cover what Siacoin is, its history, how it works and it uses.
What is Siacoin
Siacoin is a decentralized cloud storage service. They harness the power of a peer to peer network to allow anyone with a computer to rent out their unused hard drive space.
Those renting out their drive space are given Siacoin as payment. Basically, Siacoin is the fuel that keeps their storage marketplace going.
Siacoin uses blockchain technology to track proof of storage sharing, contracts and payments between parties. The use of blockchain makes Siacoin a highly secure and safe method of storing data and a reliable way to be paid for renting hard disk space.
At the time of writing this article, Siacoin’s market cap was close to $1 billion and have a circulating supply of 34,299,255,929 coins. Since being launched on trading exchanges, Siacoin’s value has risen as high as 4800%! It is listed on several large exchanges including Binance and Bittrex.
It’s popularity is growing both as a speculative asset and as an exciting new business model.
Siacoin is managed by Nebulous Inc which is headquartered in Boston, MA. According to public record, Nebulous hold less than 1% of all Siacoin.
Who created itSiacoin was created by two computer science students, David Vorick and Luke Champine, in September 2013. Part of Siacoin’s mission statement includes:
“To provide infrastructure that nobody, including ourselves, has the control over. Something with no failure points, where there is no place of leverage and no company, country, jurisdiction, person who can decide that they don’t like you or they have ulterior motives.”
Their motivation and founding principles are hallmarks of the crypto industry, which is the elimination of central control and relying on free market fundamentals
They released a beta version in March 2015. The first version was release in June 2016. The most recent release was in December 2017.
They have raised a total of $1.7 million from outside investors, including Procyon Ventures, Raptor Group and Fenbushi Capital.
While most of they raised most of their money through private sources, they did raise additional funds in the amount of $500,000 through the sale of “Siafunds”. But they did not raise money through a traditional ICO.
What does Siacoin do
Siacoin creates a marketplace by connecting those wanting to rent out their unused hard drive space and those looking for an affordable and secure method to store their data. By pricing their storage space competitively, hosts compete for a client’s business.
Client’s data is split up into fragments and each fragment is encrypted so only the client can access it. Those fragments of data are sent to several different hosts to store. Even if a majority of those hosts go down, the client’s data is still retrievable. This eliminates the single point of failure problem that occur when storing your data on a single server or hard drive.
Siacoin is the cryptocurrency used to by users (“clients”) to pay the providers (“hosts”) to store their data.
How does Siacoin work
- Using Sia’s software, clients choose the files they wish to store. Individual files or folders of files may be chosen. We recommend zipping files together before uploading.
The software then splits each file into 30 fragments using Reed-Solomon erasure coding. By using this coding, only 10 fragments of 30 are needed to recover a client’s files. More on this later.
- Each file fragment is then encrypted using the Twofish algorithm, a powerful encryption standard. This ensures that hosts cannot access the data fragment.
- The software then forms file contracts (a form of smart contract) between the client and hosts that are stored on the blockchain. These contracts set the pricing and other aspects of the relationship.The client’s files are then uploaded to the host’s hard drives through the Sia network. Each of the 30 fragments is uploaded to a different host, greatly increasing the safety of the data. So even if 20 of the hosts go down, the client can still retrieve their files.If any hosts go offline permanently, Sia automatically moves that data to a new host.
- Clients prepay for storage once the file contract has been made. The default life of a file contract is 90 days. Contracts are automatically renewed unless the client cancels.
- At the end of the file contract, the host submits a storage proof to the blockchain to prove they are storing the agreed upon data and they collect their payment. These storage proofs are stored permanently on the blockchain.
From a technical standpoint, the features that make Siacoin differ from other competitors are:
- A fully distributed model with no single point of failure
- Offers a storage marketplace to connect hosts and clients
- High security dues to blockchain consensus
- Low vulnerability risks
Who uses Siacoin
Sia is initially targeting enterprises and developers of both decentralized and centralized apps.
Due to the fact that files are encrypted and stored in a decentralized way, Sia believes they’re service is more secure and more reliable than today’s centralized cloud storage services like Amazon S3 or Dropbox.
Sia’s network and marketplace is actively being used. Anyone can download Sia’s software and begin using their service. Siacoins are also a highly speculative asset on exchanges, due to their price volatility and high rate of growth.
Usage vs Speculation
Sia’s pricing will be free-market driven, meaning hosts can charge whatever they like for storage. This will lead to highly competitive pricing. Sia believes their storage pricing will be significantly lower (around 10x lower) than any traditional cloud storage service.
Sia’s main competitors in the decentralized storage space are Filecoin, Storj and Maidsafe.
Sia’s largest traditional competitors are Dropbox, Amazon S3, Box, Onedrive and Google Cloud. Sia’s advantages include:
- High reliability of data – There is a high level of redundancy due to the fact that files are stored on a decentralized network
- Highly secure and private – Several security measures are taken including spitting the data up, encrypting it and uploading it to multiple hosts. So even if someone was able to hack the network, they’d have to hack into 10 hosts to retrieve your file which is also encrypted
- Affordable – Hosts compete for your business so pricing is very low
- Built on blockchain – Contracts between clients and hosts are permanently stored on the blockchain, ensuring the client will always get what they pay for and hosts will always be paid.
- Is my data safe on other people’s hard drives? Your data is split up and encrypted using a key that only you possess. Hosts are not able to read the data they store. And only fragments of your file are stored on each hosts hard drive, adding a second layer of security. So even if the hosts hard drive was compromised, your file is safe and secure.
- What if the host decides to leave? Again, this is not a problem. Pieces of your files are stored on 30 different host hard drives. Only 10 hosts are required to retrieve your files. And if a host does leaves permanently, your data is uploaded to another host.
- How do I start using Sia? You start by downloading their software from here.
The future of Siacoin (Roadmap)
Sia’s future plans are:
- 2018 – Sia becomes production ready for cold storage, begins to be used by companies and introduces file sharing.
- 2019 – Sia starts to approach Amazon S3 speeds, moves to warmer storage and introduces content distribution features.
- 2020 – Sia becomes a true competitor to Amazon S3 and companies start to switch over to them.
How to get Siacoin
How to earn Siacoin
Siacoin can be earned by anyone who rents out their spare unused hard drive space.
How to buy Siacoin
The only way to buy Siacoin is to exchange it with another cryptocurrency like bitcoin. You cannot directly buy Siacoin with traditional fiat currency like US dollars. Below are several exchanges that trade Siacoin:
No exchanges found
How to mine Siacoin
Siacoin can also be mined and there are a few mining pools available.
How to store Siacoin
There is currently only one way to store Siacoin:
- Software wallet – Anyone can create a wallet using Sia’s software to store their Siacoins.
Sia puts the power of the blockchain and peer-to-peer technology on display with their innovative methods of storage and encryption. Unlike many blockchain startups, Sia business model truly embraces the blockchain.
While their goals are lofty and they are competing against some of the largest companies on the planet, we believe their future looks bright.