What is Siacoin? Complete Expert Guide – Blockgeeks
What is Siacoin?
Sia is a blockchain-based, cloud platform that aims to provide a solution for decentralized storage. Peers on Sia’s network can rent hard drive space from one another, for storage purposes instead of renting it from a centralized provider. Not only does this decentralized approach make Sia more secure, but it drastically reduces the overall cost as well. Simply put, if you have unused space on your hard drive, then you will be able to rent it in Sia and earn money from it, in the form of Siacoins (SC).
History of Sia: Siacoin and Siafunds
The two tokens – Siacoin and Siafund
Sia uses a dual token system – Siacoin and Siafunds. Siacoin is the main utility token. The following is the current snapshot of Siacoins:
There is no limit to the total supply of Siacoins and they all must be mined. The reward for the first block mined was 300,000 Siacoins, which will decrease with time till it reaches 30,000 SC per block.
The second token in the ecosystem is Siafunds (SF). There are 10,000 SF in existence and they have all been premined. Those coins have been distributed as such:
- Sia’s parent company, Nebulous Inc., holds 8835 of these Siafunds.
- The remaining Siafunds were sold in a crowdfund which helped finance Sia’s early development. During their crowdfunding campaign, Sia raised money by selling “Sianotes” on NXT’s platform, which was later exchanged for Siafunds. After the crowdfunding, Sia raised a further $1.65 million through venture capitalist funding and grants. Noted VCs who have invested are – Procyon Ventures, Fenbushi Capital, angel investor Xiaolai Li, and James Pallota’s investment company, Raptor Group.
The main goal of Siafunds is to provide a way to finance Sia’s development, without having to depend on external donations or a premine.
When a storage contract is officially complete between a renter and a host in Sia, the transaction gets finalized. The Sia nodes will now calculate how much of the money in the contract belongs to the host and how much of it belongs to the renter. 3.9% of the total money in the contract will be divided over all the 10,000 Siafunds in the blockchain.
Eg. if a contract has 500 SC from the renter and 500 SC from the host, then 3.9% of the total (39 SC) will be allocated to all the Siafunds. So in this case, for 1 SF held, 0.0039 SC will be rewarded.
The creative forces behind Sia are David Vorick and Luke Champine of Nebulous Inc, a VC-funded startup in Boston. The seeds of the original idea of Sia were planted at HackMIT 2013. The idea was simple – what would happen if you could liberate the unused storage spaces in hard drives around the world, and unite it into a global decentralized cloud storage platform? The concept received a lot of positive feedback and Vorick and Champine opted to pursue the project full time.
Before we look into how such a platform actually works, let’s look into the problems of traditional and centralized cloud storage.
The problems of centralized cloud storage
Let’s get the obvious out of the way first. Companies like Dropbox, Apple, and Google have revolutionized company operations thanks to their cloud storage service. Not only has third-party cloud storage met the ever-increasing demand for more storage, but they have managed to save businesses thousands of dollars in IT investments. Unfortunately, despite their obvious utilities, they do suffer from a lot of issues.
#1 Giving over control of data
The biggest problem of third-party cloud storage services is that the company hands over their data to a third-party for storing services. Since the data is outside the company’s control, the data privacy settings are beyond their control as well. Since users usually back up their data in real-time, they may accidentally give up control of data that they didn’t mean to share in the first place.
#2 Hacking risks
Since all the data is stored inside a third-party, centralized server, they are susceptible to hack attacks. This not just some random assumption, third-party servers have been repeatedly hacked to obtain sensitive and private information. Let’s look at two of the most infamous cases of data hacks.
- In September 2017, more than 145 million Americans had their personal data, including social security and driver license numbers, stolen because of a hack. The target was the Equifax credit reporting company. The sheer scale of Americans affected was staggering. Many of the people affected had not even signed up with the credit-monitoring service.
- Apple’s iCloud was hacked on August 21, 2014, which has been infamously termed “The Fappening.” During the hack, several celebrities, mostly women, had their private pictures hacked. Most of those pictures contained nudity and were posted on 4Chan, Imgur, and Reddit. Investigators found out later that access to the photos was gained via spear-phishing attacks.
While it will be wrong to accuse centralization of these attacks, the fact of the matter is that these attacks only happened because all the data was stored in one central location. This one location invariable became a single point of failure (SPOF). When the SPOF is breached, it creates a ripple-like effect that compromises the entire system.
#3 Data Mismanagement
Facebook’s Cambridge Analytica debacle is the best example of a third-party mismanaging their client’s data. Aleksandr Kogan, a data scientist at Cambridge University, developed an app called “This is Your Digital Life” and then provided it to Cambridge Analytica. They, in turn, used it to survey Facebook users for academic research purposes. However, Facebook’s design allowed the app to not only collect the personal information of the users but all their connections as well. Because of this, Cambridge Analytica was able to get their hands on the personal data of a staggering 87 million Facebook users, of which 70.6 million were from the United States.
According to Facebook, the information stolen included one’s “public profile, page likes, birthday, and the current city.” Some of the users even gave them permission to access their News Feed, timeline, and messages. The data they ultimately obtained was so detailed that they were able to:
- Create psychographic profiles of the subjects of the data.
- The profiles created were detailed enough to suggest what kind of advertisement would be most useful to persuade a particular person in a specific location for some political event.
Politicians paid Cambridge Analytica handsomely to use the information from the data breach to influence various political events.
In another infamous case, media analytics company “Deep Roots Analytics,” used the Amazon cloud server to store information about as much as 61% of the US population without password protection for almost two weeks. This information included names, email and home addresses, telephone numbers, voter ID, etc.
#4 Bring Your Own Device
Another genuine problem with cloud storage is the BYOD issue aka Bring Your Own Device. Many companies have now encouraged employees to get their own devices to work. The reason why they are allowing this is that:
- Employees prefer to use a device that they are more used to.
- The employee laptop specs are usually better than the ones given by the company.
- It saves the employees lots of money that they would have had to spend to buy IT equipment.
As you may have already guessed, BYOD has significant security risks. The employers can lose or misuse their devices which will once again compromise the client’s privacy. Also, if a data breach does occur, then it is quite difficult to track down all the employee devices and discover the point of failure.
Sia aims to bring in decentralization into the cloud storage space by leveraging the blockchain technology. Sia’s vision is to create a storage server that will not be run by a centralized authority and, as a result, won’t have a single point of failure. Along with the decentralization of control, Sia also plans on creating a platform where it will be impossible misuse the data inside the cloud.
Before we go any more in-depth, let’s look into what the blockchain is.
What is a Blockchain?