What is Siacoin (SC)?

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What is Siacoin (SC)?“Distributed Cloud Storage…”

Sia is a cloud storage platform through which people are able to buy decentralized cloud computing capacity. In a setup somewhat similar to Steem, the system appears to be designed almost entirely around the app that is branded to its name.

The underlying idea is that people are able to offer their computer resources (HDD etc) for a share of income from others paying to rent the space.

Essentially, you’re paying to store your files on someone else’s computer system.

This model is nothing new, but the decentralized nature of the product is. Normal people are able to install a piece of software on their system which essentially stores the files from the buyers. This is all encrypted, and logs how long the user has their system online for – as this determines how much they receive in rental revenue.

The point of the system is that there should *always* be three individual systems available to download “saved” files from. This not only ensures that the buyer has access to their files, but that the central brain of the system is able to provide the fastest speeds for download & upload.

What is Siacoin?

Siacoin was introduced as the way to pay for the services you want from the Sia cloud storage system. Inasmuch a similar vein to how Steem works with Steemit, Siacoin is meant to be the underlying token of value for Sia’s system.

As with other platform coins, its price does not seem that high. This is because the coins are not meant for transactions, but purchasing units of value (in Sia’s case, the ability to store your files on other systems).

Whilst the system is not unique in its offering (there are a number of other decentralized cloud storage systems), the way that Sia has been designed to handle the core intricacies of the system are worth mentioning…

  • Smart Contracts

Hosts are paid whenever the user downloads their files, and users only pay when their server (host) is online. In a landmark development, the system is able to provide the most accurate way to host and monitor the various files on the system– in other words, only pay for what you use.

  • Strong Encryption

Using the Blake2b algorithm, the system is able to protect any of the data & transactions it manages. Not only does this ensure that the system is able to run properly, but it’s actually able to store the most data in the most secure way possible.

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Developed off the back of a 2013 MIT hackathon – where the idea was extremely well received amongst the attendees – it took several more years to fully spin out the project and get it to a stable level (especially for enterprise).

Who created it?

Nebulous labs created the platform out of a MIT hackathon.

One of the more pertinent things about this company is that it’s funded by several VC firms in the US – a sign that it not only has technological potential but also has to actually make a profit too.

Of Nebulous, Inc, there are two main people who created Sia from the ground-up:

  • David Vorick

CEO of Nebulous labs – worked with small team of developers to create initial release(s) of the software in 2014, and continues to provide support and upgrades for the system today.

  • Luke Champine

CTO – works on integrating the system with the wider blockchain infrastructure. Very diligent and effective.

Why does it exists?

The following excerpt from Sia’s Whitepaper explains:

The authors introduce Sia, a platform for decentralized storage.

Sia enables the formation of storage contracts between peers. Contracts are agreements between a storage provider and their client, defining what data will be stored and at what price. They require the storage provider to prove, at regular intervals, that they are still storing their client’s data.

Contracts are stored in a blockchain, making them publicly auditable. In this respect, Sia can be viewed as a Bitcoin derivative that includes support for such contracts. Sia will initially be implemented as an altcoin, and later financially connected to Bitcoin via a two-way peg.

The most important thing to consider is that the Sia platform has an actual commercial use-case. Its coins are simply a way to facilitate this, and as such they should not be considered a currency in their own right.

Akin to how the likes of Ripple, or even Stellar, work – the Nebulous company behind the scenes is the one to watch if you’re interested in the growth of the project. This is a funded company and as such they need to be able to demonstrate revenue / profit.

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Trajectory

In order to measure the trajectory of the various crypto systems out there, what you’re really doing is trying to determine their usage and adoption from the various metrics we have available.

One of the unique things about the crypto space is how open most of the systems are – if you’re looking to validate how many users a system has, you should be able to access that information.

Consequently, when looking at whether a system has potential, we need to look at the various ways in which it’s being used. For Sia, as with the myriad of other platform based systems, the trick is to identify usage over adoption (Bitcoin needs adoption, Sia just needs usage)…Siacoin SC Usage

To this end, it appears that whilst the system does have some uptake, the main issue that people are seeing is that Sia is in a highly competitive space with everyone from Amazon to Microsoft offering what is essentially the same product.

Therefore, in order for Sia to become a truly worthwhile investment, you have to look at whether the people using the system have actually been enamoured with it… whether they trust it enough to keep coming back.

The system works well but that doesn’t mean that Amazon cannot just release their own decentralized version of S3 overnight and wipe off the map. Furthermore, the enterprise availability & relatively low cost of S3’s guaranteed uptime make it a far more reliable proposition for businesses… imagine going to a client meeting without your presentation because “none of the cloud computers storing it were switched on”.

The success of the coin is almost entirely dependent of the success of the platform. Thus, if you’re looking to buy into the coin, you really need to get to grips with whether the platform in itself is actually worthwhile or not.

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