Data storage is a hot area right now as startups attempt to chip away at Amazon’s stranglehold on the market. As it stands today, Amazon Web Services (AWS), a cloud services platform offering computing power, database storage and content delivery, completely dominates the market with over 1 million customers. AWS’s annual sales rose by 43.2 percent to a whopping $17.49 billion in 2017.
While this revenue bonanza is certainly impressive, it has come on the back of Amazon’s customers, who are forced to pay absurdly high fees due to limited alternatives. Frustration with exorbitant AWS charges is such a well-known phenomenon that it was featured as a joke in season 4 of HBO’s Silicon Valley.
While we’re on the subject of Silicon Valley, you might remember that the fake company that the show revolves around, Pied Piper, builds a compression platform that stores data across a network of devices to ultimately eliminate the need for traditional cloud storage platforms. Even though the underlying compression technology is not based in reality, since the show’s creation, the idea of storing data across devices became very realistic with the rapid development of blockchain technology.
One project that is running with this idea is Sia, a decentralized storage platform secured by blockchain technology that leverages underutilized hard drive capacity around the world to create a data storage marketplace that is more reliable and lower cost than traditional cloud storage providers (i.e., Amazon, Dropbox, etc.).
Interested in Sia? Here’s a quick rundown of the project:
Platform & Development
Here’s how the Siacoin system works, as detailed on the Sia website:
- Files Are Divided Prior To Upload: Sia divides each file into 30 segments then distributes the segments to hosts across the world to ensure that no single host failure can disrupt user access. Given that Sia uses a technology called Reed-Solomon erasure coding to create the segments, any 10 of 30 segments can fully recover a user’s files.
- Each File Segment Is Encrypted: Before leaving a renter’s computer, each file segment is encrypted with the Twofish algorithm. It is notable that Amazon doesn’t offer encryption services by default.
- Files Are Sent To Hosts Using Smart Contracts: Using the Sia blockchain, renters form file contracts with hosts, which are automatically enforced by the network. These contracts set pricing, uptime commitments, and other aspects of the relationship between the renters and the hosts.
- Renters And Hosts Pay With Siacoin: Siacoin is the currency of the platform, which is transferred between renters and hosts via payment channels, which is similar to Bitcoin’s Lightning Network. Hosts pay a collateral for each contract, as to provide an incentive for them to keep their node functional.
- Contracts Renew Over Time: Renters prepay for storage within file contracts, setting aside a fixed amount of Siacoin to be spent on storing and transferring data. File contracts typically last 90 days and are renewed automatically. If contracts are not renewed, then any remaining Siacoin is transferred back to the renter.
- Hosts Submit Storage Proofs: Using Merkle trees, which make it possible to prove that a small segment of data is part of a larger file, hosts must prove that they are storing the renter’s data to receive final payment.
On average, Sia’s decentralized cloud storage costs 90 percent less than current cloud storage providers. According to Siacoin’s website, storing 1TB of files on Sia costs about $2 per month, compared with $23 on Amazon S3.
Sia’s roadmap is pretty straightforward. They aim to become a legitimate Amazon competitor by 2020.
Sia is a product of Nebulous Inc. and has a core 5-man team that is clearly capable of building this lofty project. Nebulous is currently conducting a Tokenized Securities Offering of Siafunds to fund Sia development.
Siacoin is a proof-of-work (PoW) coin that uses the Blake-2b hashing algorithm. It is worth noting that some community members were concerned that new Sia-specific ASIC miners could compromise the global hashrate of Siacoin if the developers aren’t proactive.
Siacoin (SC) currently has a market cap of ~$400 million with a circulating supply of 33,134,987,919 SC.
Siacoin is an ambitious project looking to become a serious competitor to Amazon’s AWS service. If Nebulous is able to properly roll out the Sia platform at scale, they could be poised to significantly disrupt the data storage industry.
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Disclaimer: The author(s) of this article may have a position in one or more of the securities mentioned above. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.