Siacoin (SC) began development in 2013 as part of the earliest generation of blockchain projects which sought to create more than just a transactional currency.
Under the guidance of computer science undergraduates David Vorick and Luke Champine, Siacoin aimed to provide a decentralized file storage network; hosted on the blockchain and paid for using SC coin.
Following some aggressive funding for Vorick and Champine’s Nebulous Labs Inc, the team went to work and reappeared in 2015 bearing the first beta-version of Siacoin.
Now, five years on from the project’s conception, Siacoin file storage costs the equivalent of $0.73 per TB per month, compared to the average market fee of $10 demanded by the likes of Dropbox, OneDrive and Box.
However, it hasn’t been plain sailing for the decentralized cloud storage service, as the Sia community was recently rocked by a year-long saga which split the community in two – the tremors of which continue to be felt to this day.
How Siacoin Works
Siacoin’s storage system is operated by a series of smart contracts, encryption and reputation systems – all of which combine to create a trustless, decentralized storage marketplace.
Storage hosts are constantly vetted by the network to make sure they still hold the encrypted files they pledged to store, and that their service remains online. Those who fail who too many checks lose their staked coins and are booted from the network.
This kind of autonomous control can also be found in Siacoin’s pricing mechanism, which constantly checks the network for the lowest compatible fee set by independent storage hosts, and prioritizes the cheapest first.
Obelisk Mining Rig Saga
Siacoin is one of the few blockchains to reject Bitmain’s ASIC miners outright in favour of its own dedicated Obelisk miner. The Sia-specific mining rigs were produced by Nebulous Labs Inc – the company formed by Sia creators Vorick and Champine.
Trouble began when the release of the mining rigs was delayed, and in the intervening months several other hardware firms dropped their own Sia mining rigs onto the market. This left Siacoin miners devoid of hardware, money, and faith in a project which many had backed from the beginning.
Predictably, this split the community in two. As of October 2018, at least one class action lawsuit has been levelled against Nebulous Labs, with investors seeking compensation for mining rigs which apparently still haven’t been delivered.
Between January and June of 2017, Siacoin went on a 12,500% growth spurt as its market cap shot up from $5 million to $630 million. Of course, that was before the market surge at the turn of the year which saw Siacoin’s market cap subsequently climb to $3 billion.
However, 2018’s bear market took its toll on SC, and now, towards the end of the year, the coin represents a market cap in the range of $250 million.
It can now be picked up for less than a cent, priced at the $0.006 range. There is no total supply cap on the coins, and 37 billion are already in circulation. To address the obvious inflation issues arising from this, a systematic routine of coin burning takes place.
Overall, the Siacoin network currently hosts 224TB worth of data out of a total storage capacity of 3.8PB (one petabyte equals one thousand terabytes). The network also boasts 538 storage hosts scattered across every continent on the globe.
Siacoin represents a strange case in the crypto world. One the one hand, it stands as perhaps one of the most successful applications of decentralized technology operating in the space today.
But on the other hand, the messy inner workings of the Bitmain/Obelisk saga also stand as an example of how precarious the decentralization game can be. The hardfork to finally exclude the Bitmain tech is scheduled for Halloween night, October 31st 2018.
One expects the mining rig tremors to be felt for some time yet, however the live Siacoin product continues to outperform its big name, centralized counterparts.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.