The OG of Decentralized Storage

110: Siacoin Storage OG

By LukeWaiks | Page 2 Crypto | 11 Oct 2021


Siacoin checks in at #110 with market cap hovering around a billion dollars. Their mission: “Sia secures storage transactions with smart contracts… Our long term goal is for Sia to become the backbone storage layer of the Internet”. They rank #6 behind the other storage tokens like Filecoin and Arweave. When I dug into this humble utility token, I found it to be a succinct, happy history of the whole regulation-and-disruption crypto-thing we are in now.

How do you store your funny cat videos on a decentralized cloud without everyone getting into your business and stealing the lolz? Reed-Solomon Erasure Coding means 20 file segments can be lost/deleted with the remaining 10 segments able to faithfully reassemble the file. The file segments are encoded with a neat Threefish algo that chops the plaintext into even more segments, scrambles the values, then puts them all together again in an algorithmic order (repeated 4x). This is pretty hard to crack, but not impossible. Admins can tweak the algo any time there is a known exploit, so I suppose it’s pretty good encryption for your funny cat videos. BitcoinTalk.com forum post from 2015 says they used a blake2b algo, which was ASIC exploitable. This is an old school problem for the Original Gangsters of cryptography (said in my nerdy white guy voice).

via GIPHY

The Sia token is how renters pay the host of their data. It’s a utility token with no set cap as the potential amount of data generated trends towards infinity. The negotiation, terms of use, uptime requirements and collateral (think: security deposit) executes on smart contracts. The hosts are incentivized to remain online (keeping the stored files accessible) because of the collateral involved. It’s like your landlord refunding your entire security deposit because you couldn’t get into your apartment for a few hours. The host must prove the files are accessible and that is the on-chain proof that is mined via Proof-of-Work [sinister music rises]. Yes, this boogey man has an important function of requiring a lot of electricity and mining if you wanted to maliciously corrupt the blockchain. As we have had the SHA256 algo cracked, the Threefish algo is demonstrably vulnerable, none of that matters- the blockchain, secured by Proof-of-Work and even with vulnerable algos, it is economically impossible to make a meaningful impact on PoWs like Bitcoin and Sia.

So, Sia is an established utility OG of cloud storage. As you would expect, the traditional socials are well-followed, but nothing on the alt channels like Discord. Sadface. The price pumps and dumps with the markets, which isn’t a good thing for a utility token, but it does reward Sia holders when they make a smart top-sell. This retail arbitrage, I’m told by my mentors, is a good thing for the token itself, but annoying for those that are expecting a fixed cost for storage. At the peaks of speculative bull markets, Sia has reached 10 cents and 5 cents during the 2018 and 2020 pumps respectively. When the mania is over, Sia does (and should) return to a sane pricing of about a penny. If I were a manager of a decentralized storage firm, I’d devote a new-hire to buying dips and selling tops, just for kicks. Or I could just buy into Siafund. Siafunds is a mechanism to do this in big chunks. If you scrape together 15k Sia tokens (worth $300), you can trade a Saifund.

Does this sound like a security? Yep, the SEC said Siafund is, and the supply is fixed and redeemable for regular Sia. It’s a way to fund and incentivize the network while earning you money. See, cryptocapitalism can be done well!

 

 

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LukeWaiks
LukeWaiks

Freelance journalist aping into the cryptospace


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