Siacoin has been appearing in the news a lot recently.
But what is it exactly?
Siacoin is a blockchain service for storing personal data files on a distributed network. The main selling point of the program is that buyers looking for storage space can store their files in a secure manner for a much lower price than centralized competitors like Dropbox, Google, or Apple iCloud.
Read on as we take a look into some of the details behind this interesting platform that has recently seen a large jump in price.
Siacoin went live with an early beta version in March of 2015, with version 1.00 coming out in June of 2016. Since then, it has grown in popularity and usage.
Siacoin is an Blake2-B secured, proof-of-work powered, custom blockchain. The token for the Sia platform is called a Siacoin. Over the last month, the prices increased from $0.003 to $0.02 each.
How does it work?
Siacoin has two sides of the network. One side represents buyers looking to store files. The other side is the storage space suppliers. That being, those that provide storage space in exchange for payment in Siacoin.
Prices on the network are determined by those who supply storage space. It is a competitive network that was designed for ideal pricing for buyers.
When someone wants to store files on the Siacoin network, their files are first encrypted, and then split up into many small blocks. These blocks are then stored redundantly across the network. The files are encrypted so that privacy is assured.
Files are split up into many pieces so that no one person owns a significant piece of the file.
Finally, the pieces are stored redundantly so that if someone storing the data decides to exit the network or otherwise goes offline, files and data will not be lost permanently.
Files are also stored in a distributed manner in order to increase speed. Similar to how BitTorrent networks operate, the more nodes that are storing or hosting the file, the faster download speeds can be.
Those looking to store files on the network pay a monthly rate for their storage, and also another amount when they attempt to re-download the files.
Siacoins, in addition to earning them from providing storage space, can also be mined. An ASIC machine came out recently called Obelisk. This device is the first of its kind and allows for mining of both Siacoin and Decred, which both use the same algorithm.
The device sells for a price of $2,499. According to the manufacturer’s site, if someone were to use the device to mine Siacoin they would get approximately 150,000 units per month. At today’s prices of $0.02, that would be approximately $3,000. According to this calculator, earnings would be 120,860 Siacoin per month.
What is a Siacoin worth?
We know that the tokens are trading for $0.02 each, but in terms of data storage what will that buy you? According to this site that calculates the storage rates, 45 Siacoins will buy 1TB of storage for one month. That means current rates are just $0.90 per TB per month.
Compare that to providers like Dropbox for business, which charges around $15 per month for 2TB.
The Future of Siacoin – Is It a Good Investment?
As more and more people live out their lives on the Internet and become aware of potential data loss due to hard drive crashes, services like Siacoin that can offer a competitive price may become more and more compelling over time.
At this point, however, the amount of people using the network to store files is unknown. Based only on the incredibly low price of network storage, it would seem that current network utilization is low.
It is possible that people may still have doubts about the service and its ability to store files permanently. Given the fact that someone who supplies storage space could just as easily decide to stop offering storage space tomorrow and the files could disappear from that node.
The amount of redundancy on the network has been listed as being between 10x and 30x. The developer says that the redundancy is sufficient to provide protection from data loss.
Additionally, the method by which storage spaces provided on the network it is done so to encourage the behavior that is productive for the network. For example, if someone offers space on their network and then suddenly takes their device offline, they could be punished with the loss of tokens which are used in a process similar to staking.
According to the Siacoin wiki:
…hosts promise not to leave by putting up some of their own money as collateral which is forfeit if the host leaves before the contract is completed.
How much can you earn by offering storage space?
It would appear that at todays rates, hosting data for the Siacoin network is not particularly lucrative. According to the SiaPulse calculator, hosting 16 TB of data, or 4 x 4 TB hard disks, would net you 720 Siacoins per month.
That is of course, assuming that you are able to sell at least 80% of your space. If your space is unused, you do not get paid. At today’s rates, that’s just $14 a month, and with a required minimum up-time of 95%.
In conclusion, Siacoin is offering something that could be quite compelling and already has a strong use case today. As well, the platform is already in operation and available to use now.
What we don’t know is if the public at large will be willing to go through the ordeal of acquiring the tokens in order to use the service. Currently Siacoin tokens are only available for purchase through cryptocurrency exchanges.
It is conceivable that the average layman who only wants a simple solution to data backup may not be willing to jump through the hoops necessary to acquire the tokens and understand how the software works.
As more and more people become understand how blockchain technology works, however, and the process of purchasing and exchanging tokens becomes easier over time, this may become a non-issue. At this point, it is not clear though and it should be taken into consideration before an investment in the platform is made.
Disclosure: The author does not hold any investments in Siacoin or Siacoin tokens. Featured Image via Fotolia.