8 Things Every Crypto Investor Should Know About SIACOIN

WHAT IS SIA

Sia, a platform for decentralized storage. Sia enables the formation of storage contracts  between  peers.  Contracts  are  agreements  between  a  storage  provider  and  their  client,  defining what  data  will  be  stored  and  at  what  price.  They require the storage provider to prove, at regular intervals, that they are still storing their client’s data. Contracts are stored in a blockchain, making them publicly auditable. 

Sia uses a cryptocurrency, Siacoin, to enable decentralized payments via file contracts. All payments on the network happen in Siacoin, which is a critical component of our cryptographic SLAs. Siacoin allows us to do things that would not be possible with Bitcoin or traditional online payments.

IDEA BEHIND FILE CONTRACTS- THE SIA HEART

A  file  contract  is  an  agreement  between  a  storage provider and their client. At the core of a file contract is the file’s Merkle root hash. To construct this hash, the  file  is  split  into  segments  of  constant  size  and hashed into a Merkle tree. The root hash, along with the total size of the file, can be used to verify storage proofs.

CLEAR INTENTIONS FROM FOUNDERS

Sia is a product of Nebulous Incorporated. Nebulous is  a  for-profit  company,  and  Sia  is  intended  to  be- come  a  primary  source  of  income  for  the  company. Nebulous intends to generate revenue from Sia in a manner proportional to the value added by Sia, as determined by the value of the contracts set up  between  clients  and  hosts.  This  is  accomplished by imposing a fee on all contracts. When a contract is created, 3.9% of the contract fund is removed and distributed to the holders of siafunds . Nebulous Inc. will initially hold approx. 88% of the siafunds, and rest 12% is held by the early crowd-fund backers.

SIACOIN GENERATION

The  primary  currency  of  Sia  is  the  siacoin.  The initial supply of coins were given  to  miners  as  a  block subsidy.  The  first  block  had 300,000  coins minted.  This  number  decreases  by  1  coin  per block, until a minimum of 30,000 coins per block is reached.   The  primary  goal  of  Sia  is  to  provide  a blockchain that enforces storage contracts. The mining reward, however, is only indirectly linked to the total value of contracts being created. 

 HOW SIA DIFFERS FROM BITCOIN TECHNICALLY

Sia’s primary departure from Bitcoin lies in its transactions. Bitcoin uses a scripting system to enable arange of transaction types, such as pay-to-public-key- hash and pay-to-scripthash. Sia opts instead to use an M –of– N multi-signature  scheme  for  all  transactions,  eschewing  the  scripting  system  entirely.  This reduces complexity and attack surface. Sia also extends transactions to enable the creation and  enforcement  of  storage  contracts.  

Three  extensions are used to accomplish this: contracts, proofs, and  contract  updates.  Contracts  declare  the  intention of a host to store a file with a certain size and hash.  They  define  the  regularity  with  which  a  host must  submit  storage  proofs.  Once  established,  contracts  can  be  modified  later  via  contract  updates.

Sia is currently implemented as a blockchain- based  altcoin.  Future  support  for  a  two-way  peg with  Bitcoin  is  planned. A 2-way peg (2WP) allows the transfer of bitcoins from the Bitcoin blockchain to a Secondary blockchain and vice-versa. 

The “transfer” is a technical illusion: bitcoins are not actually transferred, but temporarily locked on the Bitcoin blockchain while the same amount of equivalent tokens(here, siacoins) are unlocked in a secondary blockchain. The original bitcoins can be unlocked when the equivalent amount of tokens on the second blockchain are locked again (in the secondary blockchain). This is essentially the 2WP promise.

SIA JUNE RELEASE-EXPECTATIONS

This month SIA is planning for a big release with many changes planned. Below are few of them.
  • Ability to repire file without having it locally
  • Simple file sharing with other sia users
  • Initial blockchain synchronization time to be reduced
  • Support for partial downloads
  • Ability to recover files from outdated backup files

SIACOIN WITHDRAWAL & DEPOSIT ISSUES

Sia team made the decision two years ago to cap the transaction pool at 2 MB, due to significant performance issues above that size, and postponed the engineering work that would allow for a larger pool. SIA admitted that they planned for growth, but were not expecting so much growth, so fast, without warning.
Siacoin entered May 2017 with a market cap of  nearly $30M, and quickly increased to over $350M by June 2017. As users transferred their coins out of exchanges, and became hosts and renters on the Sia network, the number of transactions significantly grew. This created deposit and withdrawal issues, mainly in exchanges like poloniex and Bittrex.

The issues were hot fixed and now they are planning to increase transaction pool size to 5MB  with the ability to automatically grow further if there are large quantities of high-fee transactions. We will also be creating a fee market, similar to Bitcoin, so that miners can prioritize transactions based on fees. With the upgrades implemented, the Sia network should be able to safely scale by an order of magnitude.


LONG TERM-CAN DISRUPT AMAZON S3 AND DROPBOX

The storage space industry is mostly dominated by Amazon S3 and Dropbox. The long term vision of SIA is to compete with market leaders. It is not simple but not impossible. Recently SIA announced their integration with Nextcloud, the popular open-source alternative to Dropbox and Google Drive. Nextcloud users now have the ability to expand their storage capacity with private, decentralized cloud storage by integrating with Sia. This is considered as the right step for sia's long term vision. 
Even if SIA is able to take away 20% of AMAZON/DROPBOX market share, it would be disruptive in nature and siacoin holders have reasons to rejoice. Decentralization is the mantra in today's world and sia powers with a simple but most powerful use-case of decentralized blockchain technology.

CONCLUSION

I personally believe that SIA is not a coin for trading purpose. Buy a small quantity which you are ready to lose and hold it till 2020. Lets see how disruptive it was or destructive it was to our crypto portfolio!!!

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