sia sia blockchain sia crypto sia skynet sia storage platform siacoin siafunds

What is Siacoin and the Sia Blockchain?

Written By Ivan on Tech

Apr 03, 2021

Sia is a decentralized blockchain-based cloud storage network. Using underutilized hard drive storage space, the Sia Storage Platform has created a marketplace for data storage. This provides higher levels of reliability than centralized alternatives. Furthermore, this comes at a much lower cost and is more reliable than centralized cloud storage platforms. As Sia users hold their own private keys, no outside entity can access user data held on the Sia blockchain. Moreover, Sia helps to prevent hacking and censorship by providing a tamper-proof system for data storage. The Sia blockchain is powered by the native Siacoin, which is used for renting out hard hard drive space. Also, Sia has recently introduced the Skynet content delivery network (CDN). This enables developers to build decentralized applications (dApps) that integrate seamlessly with the Sia blockchain.

In this article, we’ll dive deep into the Sia network ecosystem and discover how the blockchain works on a fundamental level. We’ll also take a look at the different tokens generated from the Sia blockchain; Siacoins and Siafunds.

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Sia Storage Platform Background

Originally conceptualized in 2013, Sia was one of the first projects to develop blockchain-based decentralized data storage services. In 2014, Nebulous Inc. was founded before launching the Sia Storage Platform in 2015. Nebulous specializes in providing hardware and software blockchain solutions gearing toward a fully decentralized internet. Also, Nebulous is responsible for producing Sia’s layer 2 solution, Skynet, alongside SiaStream, a platform for storing and streaming media files. 

Based in Boston, Massachusetts, Nebulous has received funding from major investment firms such as First Star Ventures, INBlockchain, and Raptor Group. Also, In 2019, Nebulous received $3.25 million in a seed funding round from Dragonfly Capital Partners, Hack VC, and SV Angel among other investors. The team has stated that they plan on using the funds to “scale and accelerate the development and adoption of the tech platform.”

What is Sia?

Sia is a platform that allows users to rent out unused hard drive space and facilitates cloud-based exchange networks. The native Siacoin is the base asset of the Sia network and is used by renters to pay hosts for hard drive storage space. Furthermore, users can designate specific unused hard drive storage to be used as nodes across the Sia blockchain.

How Does Sia Data Storage Work?

Rather than one single centralized database, all data gathered from rented devices is divided into 30 pieces. Each of these pieces is encrypted and distributed across the Sia network. Decentralized data storage has many advantages over centralized systems. For example, with the Sia decentralized cloud storage platform, data is securely distributed, meaning that if a hard drive goes down, the data remains safe and secure. Moreover, holders of the Siacoin hold their own private keys, giving them full control and ownership of their data on the blockchain. 

Hosting Your Hard Drive Space on Sia

Hosts are the heart of the Sia ecosystem, contributing to the core of the network’s operations. By providing any excess hard drive space on your computer to Sia, you can become a host. Being a host means you provide storage space for other users (renters) to store their files in a decentralized and secure way.

Hosts can decide the rates they charge for renting out hard drive space. Moreover, Sia network hosts are rewarded for their services in Siacoin. Siacoin can be used to either purchase storage space on the Sia blockchain, or be converted for alternative cryptocurrency or fiat currency on various crypto exchanges.

Renting Cloud Storage on Sia

By uploading data of any kind to the Sia blockchain, you automatically become a renter. Once uploaded, the data simultaneously becomes encrypted and distributed across the storage network of Sia nodes. 

Renters can create customizable contracts with hosts to benefit particular needs. For example, renters can specify data storage of a certain capacity for a set period, at an agreed price. Moreover, access to data can be securely shared with any additional parties required. The current network statistics and costs for storage are available through https://siastats.info/ and displayed on Sia’s website.

Siacoin (SC)

Siacoin (SC) is the native utility token powering the Sia network. The sole function of Siacoin is to facilitate network operations. 

If you rent space on the storage network, you pay the fee in Siacoins. Or, if you’re hosting hard drive space to rent out data storage, you will also receive payment in Siacoins. Additionally, investors of Siafunds (mentioned later) will have their share of the revenue from Sia network growth paid out to them in Siacoins too.

Siacoins are introduced into circulation through mining rewards from the Sia blockchain. Sia blockchain uses the Proof-of-Work consensus algorithm. There is currently no maximum supply of Siacoins, as Sia plans to become the decentralized data storage layer of the internet. In turn, this requires continuous growth and storage space needed to store new petabytes and exabytes of data on Sia in the future.

As of March 23, 2021, about 47.3 billion Siacoin (SC) have been mined. The rate of introduction of new Siacoins is slowing down, to an approximate 50 billion Siacoins in circulation by 2022. However, Sia has stated plans to introduce a ‘Proof-of-Burn’ mechanism in the future. This will mean hosts providing storage on the network can burn their Siacoins to prove they are real. Plus, this proves a network actor's good intentions within the Sia network. 

Siafunds (SF)

When Sia launched in 2015, 10,000 Siafund tokens were generated - the other token on the Sia network. However, Siacoins and Siafunds have stark differences. Beyond the difference in the maximum supply of tokens, the Sia utility token (SC) value is derived from the use of the blockchain platform. Siafunds (SF), however, were designated as securities by the SEC in 2018. As such, Siafunds are valued on the present and future potential value of the Sia network. 

Moreover, Siafunds were created to help maintain the sustainable development of the Sia network. Most of the Siafunds are held by the Sia core team (approximately 85%). 

Siacoin (SC) is used to fulfill smart contracts in the Sia network. When contracts for renter bandwidth or storage fees are fulfilled, a 3.9% fee from storage-related transactions is automatically distributed to Siafund holders. In the case of hosts providing collateral, when the contract ends, the amount reserved is also distributed equally to Siafund holders.  

Siafunds are stored using the Sia software wallet, and appear next to Siacoin funds on the platform. Plus, Siafund addresses are the same as Siacoin addresses and can be accessed at any time with the Sia seed.

By capturing a share of the revenue from the growth of the ecosystem, Sia is incentivizing the team and investors alike to continue the development and expansions of the Sia network. 

Skynet

The layer 2 scaling solution for the Sia blockchain is referred to as Skynet. Skynet is a decentralized content delivery network and file-sharing platform. This means users can be sure that the data storage layer is just as decentralized as the applications built on the blockchain. 

Skynet can allow any type of data to be uploaded. Once the data is uploaded, a “Skylink” is generated. This 46-byte link can be shared with anyone, anywhere, for them to access the data from Skynet. This includes both Sia users and non-Sia users. Data can be retrieved by inputting the Skylink into the Skynet Web portal. Also, the data contributor doesn’t have to be online during the retrieval, as the Skynet nodes maintain the storage and privacy of the data, running 24/7.

The cost of storing data with Skynet is extremely competitive. Sia boasts storage costs up to 10x lower than traditional cloud storage competitors, with bandwidth costs up to 100x lower! Moreover, this is achieved whilst maintaining high security and performance, with minimal downtime.

Skynet also offers several SDK (software development kit) packages in various programming languages and preset APIs (application programming interfaces). This can allow developers to either build applications on Skynet or integrate Skynet into their current applications.

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SiaStream 

The media-centered arm of the Sia ecosystem is known as SiaStream. SiaStream is a decentralized application (dApp) designed to store and stream media files. The service offered is at a fraction of the cost compared to traditional cloud storage providers. SiaStream aims to provide the perfect storage space for media, optimized for Plex and other media software. The media file-focused platform uses the Sia network to encrypt and secure all media data.

As the first blockchain-based cloud streaming service, SiaStream is completely under the control of its users, removing the fear of ever being de-platformed. Furthermore, the cost for using the SiaStream service is less than a quarter of the price of competing centralized cloud storage providers such as Google and Amazon. 

Sia Foundation & Skynet Labs

In February 2021, at block height 298,000, a hard fork was introduced as part of Sia v1.5.4. This update introduced the Sia Foundation, essentially taking on the roles and responsibilities for running the Sia Storage Platform brand. This includes promotions, social media presence, website updates, in addition to balancing technical developments. Approximately 1.3 million Siacoins (SC) have been set aside to fund the Sia Foundation, introduced through the hard fork. 

However, the hard fork also signifies the division of the Nebulous team, parting into either the Sia Foundation or Skynet Labs. Nebulous will now be referred to as Skynet Labs, an additional development team working alongside the Sia Foundation. However, their focus is more on the technical and development side of projects. 

The Sia team regularly publishes Medium articles to keep users up-to-date with the activities and developments of the project. In January 2021, they published an article advising that the hard fork requires time for the team to split their roles accordingly. The Sia team anticipates the year to be a “transition period, during which the Foundation and Skynet Labs carefully disentangle from each other”.

Why Use Sia & Siacoin?

Many centralized cloud-storage platforms are susceptible to hacks and attacks. A single point of failure can put millions of user’s data at risk, causing major security issues. Sia aims to prevent data loss by using a decentralized model that keeps user data secure.

Moreover, the tokenomic structure of Siacoin (SC) and Siafunds (SF) means the network can operate independently alongside the security of future development funds is intact. Sia hopes to become the first choice decentralized storage network that can facilitate global data storage needs. Additionally, by offering a media-based platform designed specifically to cater to more weighted data, and implementing the layer 2 solution Skynet, Sia is positioning itself comfortably to expand with an influx of new users. Furthermore, holders of Siafunds will earn Siacoins as the value of the Sia network increases.

Sia Blockchain & Siacoin Summary

Sia is currently one of the top decentralized data storage platforms. The Sia blockchain offers simple and easy-to-use cloud storage in addition to content sharing facilities. Plus, Sia allows anyone with spare hard drive space to earn a passive income with crypto using the Sia platform. Decentralized storage is only just beginning to become mainstream, with arguably infinite amounts of data yet to be stored. Furthermore, the introduction of Skynet means the Sia blockchain has scaling solutions in place to cater to mass adoption. Moreover, SiaStream has tremendous potential offering incredibly competitive streaming services facilitating all media data types.

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