Updated: Dec 20, 2019
Sia is a digital decentralized online cloud storage space, which is powered by blockchain technology. It creates a secure storage space for users with additional or unused digital space. These users can profit by renting out space for a certain fee, which would be paid in the Siacoin cryptocurrency or the SC token.
This guide will talk about what Siacoin is designed for.
What Is Siacoin Designed For?
Blockchain technology allows great applications to be created. One of these applications is cloud storage. Before Siacoin, the cloud market was dominated by providers like Google Drive, Dropbox, and others. However, Siacoin intends to change this by allowing blockchain technology to foray into this space, revolutionizing it.
Sia is designed to bring down storage costs, and make it more affordable to the average person. Siacoin cryptocurrency offers a cheaper option since the SC token is used by many in the process. Traditional cloud storage companies are centralized and vulnerable to hacker attacks. Not to mention, the companies controlling the storage systems also control the files. Siacoin was designed in response to these limitations.
Who Is the Team Behind Siacoin?
The concept was developed in 2013 by Luke Champine and David Void, as a part of a hackathon organized by the Massachusetts Institute of Technology. However, the first version was only released in June 2016.
Sia raised money in the initial stages through crowdfunding, where “Sianotes” were first sold on the NXT platform, and then later exchanged for Siacoins. The platform has since then been able to successfully raise $1.65 million through venture capitalist funding and grants.
Few notable venture capitalists include Procyon Ventures, Fenbushi Capital, and angel investor Xiaolai Li. James Pallotta's investment company, Raptor Group has also invested in the project.
How Does Siacoin Work?
Siacoin works on a decentralized cooperative cloud storage model. The network allows users to rent out their spare hard drive storage space. The platform is dubbed the “Airbnb of hard drives”. The network is completely private and works by splitting and decoding data stored by users on the blockchain, onto multiple host devices.
Since the original user holds all keys, only that person can control the files. It is impossible to reassemble any file that is stored on Sia’s network without having access to the private keys. Siacoin will not be able to read any documents, as the private keys to decrypt the encoded files are not stored with them.
The renting rates are determined by the market itself. Hosts can determine their prices in a model similar to Airbnb, for renting out their hard drives. This ensures that all prices on the network remain competitive as time passes by.
There is no limit on the total supply of Siacoins, as the entire system works on mining. The rewards for mining each block will dive gradually until the value reaches 30,000 SC per block. This means that Siacoin is inflationary as opposed to Bitcoin.
While this may sound unappetizing to investors (because the whole point of cryptocurrencies is for them to be deflationary), the approach works in establishing SC as a storage coin and not an asset for speculation, which requires hoarding.
What are Current and Future Applications of Siacoin?
The primary use of SC coin is as a mode of payment on the Sia network. Users who want to store their files on Sia’s platform have to pay for the services. Also, hosts will only be paid in Siacoins for renting out their hard drives.
Siacoin is not without its fair share of competition. Low price and decentralization come at a cost. Other big-ticket players in the industry, such as Amazon and Dropbox are extremely fast. This has made it very difficult for Siacoin to gain traction, with the average user who requires data to be accessed regularly and quickly.
However, Sia can still be used for many commonly-stored things that are not time-sensitive. For instance, old videos and photos are rarely, if ever, accessed, but hold emotional value and need to be stored somewhere safe. Plus, these videos and photos can be extremely personal, and one may want to store it away from prying eyes.
In addition to competing with some large companies, Sia is also in direct competition with other cryptocurrencies, attempting to disrupt the cloud storage market, such as Maidsafe and Storj. However, the fact that Sia is inexpensive, ensures the platform’s success in the coming years.