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What is Siacoin, and how does it provide a better storage solution?

When suddenly, most office workers had to work from home last year, it put a huge strain on existing cloud infrastructure. Unfortunately, companies relying increasingly on a limited number of cloud providers, namely AWS, Google Cloud, or Microsoft Azure, make these a preferential target for hackers. Therefore, attacks like the Solarwinds incidents shouldn’t be surprising. Since, regardless of how much money and resources centralized services dedicated to increasing their security, they still have a single point of failure. Often, that isn’t even on the technology side but involves Social engineering.

Social engineering is a manipulation technique that involves exploiting human error and misjudgment to gain information or access to a service. Despite training employees to be wary of social engineering, it isn’t easy to mitigate it altogether.

Siacoin proposes a solution to centralized cloud storage security risks with their Sia server and hosting network. The functionality of Siacoin is similar to that of cloud providers we know, but with the crucial difference that the whole network runs on Blockchain technology, making it decentralized.

Clients can rent space on the network's hard drive on the Sia platform, and they pay in the native currency SIA for these services. A central entity does not provide resources, but anyone with spare storage space can rent it out in return for Sia. Therefore, some have compared Sia to the “Airbnb” of hard drives since it’s bringing the sharing economy to cloud storage.

File Contracts

However, on Siacoin, transactions aren’t overseen by a third party but governed through so-called file contracts. Whenever someone wants to start storing files on Sia, they draft up a lie contract that defines the terms of their storage, such as the duration, security, pay-out, and how many times a provider must provide proof of storage.

Users on Siacoin govern their own choice of provider; it’s up to them who they want to trust based on the reputation and reviews of a provider; it’s also completely up to them to define the terms of an agreement. If they want to pay extra for higher uptime, they can do so. This will incentivize the provider to be more accessible for their requests and ensure high-quality storage.

Whenever a file contract is created, the client will deposit Siacoin into it for future use. Throughout the agreement, the token will automatically be transferred to the provider according to specified pay-out terms. If at the end of the contract coins are still in the contract, they will be returned to the client.

Proof of Storage

Proof of storage is essential in protecting clients from malicious or fraudulent providers who would take the payment but not store their data. Providers must prove that they have stored what the client wanted to have stored in specified regular intervals to prevent this from happening. If a provider fails to prove that they stored the data, they will not receive any payments and might even be hit with a penalty.

Benefits of Siacoin

Unlike centralized providers, Siacoin doesn’t have one single point of failure. Running with a Proof-of-Work algorithm, a 51% attack is unlikely as it doesn’t make economic sense. Other benefits include:

  • Privacy: all data on Sia is encrypted. Unless the provider has the data’s private key, they won’t be able to see what is stored in their space. Therefore, the client has ownership and control over their data at all times.
  • Affordability: Sia can be a lot cheaper than alternative cloud storage like Dropbox or AWS. Prices are mostly market-driven without one-size-fits-all pricing. Storing one terra byte of data on Sia might just cost $2 while you pay 10 times that price for storing it on AWS.
  • Security: since everything is encrypted, no one other than the rightful owner of data can access it. Additionally, all files are decomposed into 30 parts before storing them. This maintains the stability of the network, ensures that data processing doesn’t fail.

Sia is a project by Nebulous inc and was first proposed in 2014, and after revision launched in 2015 by the computer scientists David Vorvick and Luke Champine. The name is a reference to the Egyptian God of Perception.

Unlike many other projects in the earlier crypto days, Siacoin didn’t raise funds through an ICO but sold tokens in a private sale to investors like First Star Ventures and Fenbushi capital.

Considering that the importance of cloud storage is probably going to increase, there is a good chance that Siacoin’s network will gain further traction as a more secure and cost-efficient alternative to storing data. Considering that all data remains encrypted, it is even an attractive option for businesses having to stay compliant with data protection laws.

Siacoin (SC) is now trading on Bitcoin.com Exchange with BTC pair.

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