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What Is Siacoin (SC)?

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by Oluwapelumi Adejumo · 7 min read
What Is Siacoin (SC)?
Photo: Depositphotos

The guide gives you a clear understanding of the functioning of Siacoin (SC) – one of the biggest P2P cloud storage platforms with a marketplace for cloud services.

Siacoin (SC) is a peer-to-peer (P2P) blockchain-based network that functions as decentralized cloud storage. It depends on network participants to provide storage services and rent excess bandwidth for Siacoin users as well as consumers. Siacoin users and network participants have the opportunity to rent storage space from one another in the Siacoin community. This option provides a more cheaper and efficient option when compared with centralized cloud storage providers.

Sia has a network capacity of over 2 petabytes (which is approximately 2,256 terabytes), as of 2020. It also has roughly 333 node operators actively securing the network. As of July of 2021, Siacoin hosts about 766 terabytes of files.

Siacoin Team and Development

David Vodrick and Luke Champine founded Siacoin back in 2013. At that time, both the developers were students of computer science at the Rensselaer Polytechnic Institute in New York. The duo first conceived the idea for a decentralized file storage network at a hackathon that took place at MIT in 2013.

The following year, David and Luke established Nebulous Inc., backed by $750,000 in funding from financiers such as Xiaolai Li and Procyon Ventures. Before working on Sia, David Vorick had previously worked on projects like the Bitcoin Core, which is the major software used by nodes on the Bitcoin network.

Asides from David Vorick and Luke Champine, who are still actively participating in this project, several other developers and executives have joined their team.

Sia’s public beta first launched in March 2015, and the launching of its live network came in June that same year. Since that launch, Sia’s team has been successful in raising approximately $6.4 million. Raptors Group, First Star Ventures, Fenbushi Capital, and INBlockchain back Nebulous financially.

The Sia Blockchain

The Sia blockchain shares the same similarity in function with Bitcoin’s (BTC) blockchain. However, unlike Bitcoin, it has a minor tweak that enables it to efficiently store as well as exchange files. No single node is able to access the files because they are scattered around different nodes. In situations where a renter’s private key is gotten, all they would have access to would be a fraction of the file stored.

This entails that Sia has the ability to provide a high uptime like the Bitcoin network (since it is not reliant on Internet Service Providers (ISPs) that could go down without a prior warning) on a consistent basis. Sia also guarantees that users don’t have to trust each other to store files and use the network.

Inclusively, renters are also safe against potential malicious hosts by making proof of storage a requirement. This requirement compels hosts to prove they are online and properly preserve all of the renter’s data.

Siafunds

Siacoin (SC) is that cryptocurrency that is exchanged between renters and hosts, and also utilized to fulfill Sia’s smart contracts. However, the other type of tokens the network possesses is Siafunds.

Siafunds are critical in facilitating the Sia network’s growth simply by providing more incentives so that more users may participate. Each token holder is entitled to a 3.9 percent share of each funding source upon completion of a contract, including renters fees, bandwidth costs, and host collaterals.

This means that the number of Siacoin that can exist is limitless. Also, there would be over 10,000 Siafunds tokens, all of which came in 2015 when Sia’s software first launched.

At the onset, Nebulous owned all of the 10,000 Siafunds. However, the company has held several token sales in order to help finance the development of its network. Records show that Nebulous retains ownership of about 8,750 Siafunds as of 2020, while the remaining are in the ownership of Sia users. The value of Siafunds is dependent on the size, value, and quantity of contracts on Sia.

Participants of Siacoin Network

Upon installation of the Sia software, each new computer becomes part of the nodes of the Sia network. This enables collaboration with the services that the network requires. What these nodes do is receiving on behalf of the providers or hosts. For purpose of clarity, providers control the cost of storage, presentation of offers for storage packages, and the level of reliability of their services.

The hosts are those who have storage resources that clients can rent. The maintenance of the data, as well as its integrity, is dependent on the suppliers.

The renters and customers on the other end of the spectrum are those who spend on Sia’s storage services. They have to pay to obtain retain storage on the network using the Siacoin token to access Sia’s storage services.

Upon gaining access to the service, the renters can upload the data they want onto the Sia cloud until they reach the storage limit. The best part of this is that the client controls their data time. It is worth noting that every bit of data uploaded to Sia is encrypted using a private key that can be handled by the client.

Smart Contracts on Siacoin

Smart contracts on Sia serve as an agreement between the customer and the storage service provider. These smart contracts are created automatically after the allocation is fixed, and its renewability is guaranteed. The terms of storage and payment for the particular service are reflected in them.

Archive contracts terminate with the advance payment of the storage service by the client. However, the particular payment is not released until the end of the contract term, and the trust demonstration that the agreement has been respected.

Inclusively, the smart contract impedes a variable amount of coins from the host, depending on the cost of storage, which would disappear if they do not adhere to the terms of the contract, with the objective of dissuading a person from offering space for X time but doesn’t respect their permanence. This is where Nash equilibrium comes in as it guarantees the permanence of the hosts.

Siacoin (SC) Token

Although smart contracts have their benefits, keeping computer equipment running, storage hardware, backup systems, maintenance, and bandwidth are expensive. This prompted the Sia platform to create a means to create economic dynamics within its system. A dynamic that would be safe for both suppliers and customers. Siacoin (SC) token has become the solution.

Through the Siacoin token, users are able to pay for everything on the Sia platform. One of the worries the Sia developers had was that the vendors would deliver quality services and that customers might not get away with it. That necessitated the creation of two security mechanisms that are connected to Siacoin and its blockchain. These mechanisms are called the File Contracts and Proof of Storage.

Mining in Siacoin

For mining purposes, the Sia platform utilizes a consensus protocol of Work test (PoW), which incorporates BLAKE2b like its hash function. The mining process, therefore, serves to create the token, in a similar fashion to that of the Bitcoin network. The Sia platform uses a generation time of 10 minutes in order to protect the network and safeguard against attacks. As a result of this mining, Sia is able to reach a consensus safely.

The objective of the consensus is to divide the files into small bits that are stored on different hosts using encryption known as Reed-Solomon that Irving S. Reed and Gustave Solomon invented in 1960.

Uses of Siacoin

Siacoin allows its holders to rent available storage space as well as receive payments for it on Sia. Many companies worldwide have already shown interest in Siacoin. Some of them include Filebase and Goobox. The former is a data storage service that provides compatibility with the Amazon S3 data storage service and it uses Sia as means of storing data. Meanwhile, Goobox is a free file sharing service that allows users the liberty to share files that are up to 4 GB in size safely.

Others that employ that Siacoin includes NextCloud, Pixeldrain, and Skynet.

Conclusion

Siacoin (SC) is one of the biggest P2P cloud storage platforms with a marketplace for cloud services. Siacoin is still among the most famous service networks of its kind, although it has a fair number of blockchain competitors with similar functions. It provides a decentralized environment for its P2P marketplace as well as a cheap storage place for rental.

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FAQ

What is Siacoin?

Siacoin is a peer-to-peer (P2P) blockchain-based network that functions as decentralized cloud storage.

Who are the founders of Siacoin?

The founders of Siacoin are David Vodrick and Luke Champine.

How does Siacoin function?

Sia has designed software that has the ability to create a P2P storage network that allows anyone to be part of the network. This makes the Sia blockchain accessible from anywhere in the world and also resistant to change.

What are Siafunds?

Siafunds are income-generating tokens created to provide a stream of income to their holders in the form of Siacoin. 

How to use Siacoin?

Siacoin is the only currency of the Sia storage network and the only currency valuable enough to be used to pay for storage services on the Sia blockchain. Siacoin can also be traded on the market or a profit based on the differences between the buying and selling prices.

How is the Siacoin secured?

The Siacoin is secured via the fragmentation of the uploaded data and via the use of PoW consensus mechanism. 

How many Siacoins are there in circulation?

There are around 47.8 billion Siacoin tokens in circulation out of an unlimited maximum supply as of May 2021. 

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