What is Sia?

Sia is a blockchain-based trustless cloud storage marketplace that aims to offer a decentralised storage solution. Sia has a two-token system: Its native token Siacoin (SC), and Siafunds (SF). SC is the primary utility token exchanged between storage renters and hosts, and is used as a payment method in the Sia ecosystem. Siafunds, on the other hand, are tokenised securities designed to grow the network by incentivising more users to participate. Sia’s overarching ambition is to become the Internet's backbone storage layer, with the largest storage superserver possible.

A brief history of Sia

The Sia blockchain was originally developed as an undergraduate project in 2013 by David Vorick and Luke Champine. In May 2014, they created Nebulous, Inc., with a seed round of US$750,000 from investors. In 2020, the company underwent a reorganisation and rebranding, and Nebulous was split into two organisations: the non-profit Sia Foundation and the for-profit Skynet Labs. Nebulous has essentially been rebranded as Skynet, which is now larger than Sia.

The Sia Foundation is dedicated to the advancement of the Sia blockchain and ecosystem. The foundation is supported by a perpetual Siacoin subsidy, which was introduced to the Sia blockchain in February 2021 as a result of a successful hard fork (e.g., software upgrade) approved by a majority of the network's users. All of the foundation's code, research, educational resources, and other offerings are free to the public and distributed under open-source licences.

The SC utility token was launched in the same way as Bitcoin mining was. It is a Proof of Work (PoW) token that is mined through a distributed computer network that employs Graphics Processing Units (GPUs) and application-specific integrated circuit (ASIC) devices. According to the Sia core team, it elected to possess less than 1% of the total SC supply in order to support decentralised distribution of the native token. It was launched as a private sale, with a 10,000 initial coin offering (ICO).

How Sia works

The Sia blockchain is used to establish a decentralised storage marketplace in which storage providers compete for business, resulting in the lowest possible costs. To construct file contracts between renters and hosts, Sia uses smart contracts. These smart contracts are installed on the Sia blockchain and feature price, uptime agreements, and other elements of the renter-host relationship. Users may utilise these contracts to build cryptographic service-level agreements (SLAs), which are then recorded on the Sia blockchain.

Renters prepay for storage, putting up a specific amount of payment (the SC token) to be spent on storing and moving data. These file contracts are usually valid for 90 days. Sia automatically renews contracts that are nearing the end of their term.

Prior to upload, the user files are split by the Sia software, which separates the them into 30 segments, each of which is intended for distribution to hosts all around the world. To protect file segments, Sia employs the Threefish algorithm, an open-source, safe, high-performance encryption standard. Before leaving a renter's computer, each file segment is encrypted. This guarantees that hosts only keep encrypted user data segments.

What is Siacoin (SC) used for?

SC is a cryptocurrency that is used to exchange payments between hosts and renters. It is a one-of-a-kind cryptocurrency based on the Sia blockchain. Renters use SC to purchase storage capacity from hosts, while hosts deposit SC as security in each file contract. Renters of storage space pay in SC, which may also be mined and traded easily.

Hosts must demonstrate that they are storing the renter's data at the conclusion of a file contract. This is known as storage proof. The host is rewarded if the storage proof arrives on the blockchain within a defined duration; otherwise, the host is fined.

The Sia platform encrypts and distributes user files via a decentralised network. Users have access to their private encryption keys, and they are the only ones who own their data. Unlike traditional cloud storage providers, no outside company or third party has access to or control over their files.

The open-source software distributes and stores redundant file segments on Sia nodes all over the globe, removing any single point of failure and ensuring better uptime than traditional cloud storage providers can deliver. Sia's software is developed by leading software engineers and a thriving community of developers creating creative applications using the Sia API.