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Introduction to Sia#

Sia has been around for several years, slowly yet constantly growing. You maybe heard about it being decentralized cloud storage and started watching it. You maybe traded or mined Siacoin, or maybe heard about some forks and controversies. And maybe you just discovered it.

Whatever brough you here, you are looking for resources to understand what Sia really is and how it works. You want to know how this technology empowers users and how it turned a decentralized internet into reality through Skynet. This entire site is dedicated to guiding you through this exciting journey.

Decentralized cloud storage platform#

Sia is a decentralized cloud storage platform.

Decentralized means it has no central server or authority that could control the network on its own.

Every single node (computer running the Sia software, for example your Sia-UI wallet) is equal and has its own verified copy of the Sia blockchain. Imagine a blockchain like this: you have some set of information (transactions) being sent around, and every 10 minutes that info gets grouped together into something called a block. Then another 10 minutes pass, a new block is made, and is automatically connected (chained) to the one before it.

This forms a chain of blocks that is chronologically sorted and cryptographically secured in a way that makes it immutable (cannot be changed).

As I explained earlier, blockchain is a transaction history. That means every single transaction ever made is final, you cannot change or refund it and so you need to be always careful. A good practice is to double or triple check wallet addresses after copy/pasting and check the first and last few characters just to be sure it wasn’t tampered by potentially present malware.

Cloud storage platform means that Sia is a platform allowing you to rent and pay for storage space elsewhere in the world for the purpose of having your own private, secure and ever-accessible backups.

The platform is using a consensus mechanism (way of reaching an agreement on a state of the blockchain) based on Proof of Work (PoW). This protocol was first introduced by Bitcoin in 2009 and brought us a process known as mining.

Proof of Work means that miners need to spend significant resources on electricity and specialized (often single-purpose) hardware equipment in order to participate in search for a solution to a mathematical problem. This search involves a lot of “luck” as miners compete with each other who finds the answer first. Once they do, it is used to sign the new block which is then broadcasted to the network. If the network accepts it, the finder receives a block reward in form of Siacoin (SC), the cryptocurrency used on the Sia network. This is how new coins are introduced to the network and further distributed by the miners, usually through the numerous exchanges.

As many miners don’t want to depend heavily on luck, they are often working together by being connected to a pool. When a solution is found by a member of the pool, the reward is fairly shared between all who participated in finding that answer based on amount of work done by each of them.

What this means is that miners are providing service to the network. They are important for it but can be replaced if their intentions become malicious and threaten the network. But this combined with the block reward is a very good incentive for them to act in best interest of the network. To be honest and provide security because they are rewarded for doing so. Doing otherwise would be way more expensive than any potential gain from doing so.

Check our Mining Guide if you want to learn more.

If you are interested what would happen if vast majority of miners demanded some changes, make sure to check out the story of Bitcoin’s failed “SegWit2x” fork. Long story short, it was a very important demonstration that the nodes are making and enforcing the rules, not the miners even if backed by some of the biggest companies of the crypto world.

What are the advantages of using Sia?#

Sia lets you backup any data in a way that only allows you to get to it. No government, no authority, not even the hosts who keep encrypted fragments of your data can access it and know what the data is or who it belongs to. They simply can’t. If you are not familiar with encryption, it is a method that uses a digital key (you can imagine it as a password) to change (encode) any data into something unreadable and only way to read (decode) it is to have the key and know the method used.

Since 2020, Sia software allows uploading to Skynet, which is a publishing layer utilizing Sia as a storage layer. It allows users to host apps and share content without need for any server or other infrastructure while focusing on censorship resistance. This means that if you want to make your data public and let others pin them, you can do so and in such case a host can tell what data you share (since you made it public). Check our Introduction to Skynet to learn more.

This feature is already interesting enough, but there is another factor other than security or privacy. Sia has open marketplace where anyone can become a host or renter and set their own conditions and pricing. This ensures that even if demand for Siacoin increases and the price surges, natural competition will normalize the prices so at any given time, you will pay more or less the price that represents the same or similar value in fiat currencies (USD, EUR, etc.).

You don’t even need any permissions. Sia is open-source and permission-less. Anyone can start a node and start hosting, renting, and building products and services on top of Sia network. You can find many guides in other sections of this site.

The fact that anyone can become a host and offer his or her unused space to others means that there will not only be data centers with higher pricing for better service quality, but also individual users who will provide other quality service (for example with slower access speed), but for cheap. Since October 2020, hosts also support SkyDB, which is mutable decentralized database that any application can use.

You might now be asking, what guarantees that you won’t lose your data if such a host disappears? Well, hosts are incentivized to protect your data by providing collateral that is locked for a duration of your file contracts. If they lose your data, they will lose the collateral that is roughly three times higher than the expected reward. Also, by default Sia is using 3x redundancy which means that when your file is split into 30 fragments, you need only any 10 of them to retrieve the file. These fragments are stored at different hosts so if a host is down, the redundancy indicator temporarily decreases and fragments are automatically replicated at other hosts to ensure the 3x redundancy.

In practice it means you are paying for three times the size of your files, but it is still way cheaper and more secure than any other solution (most importantly, you need to remember that main feature is the decentralization).

You can also set your own conditions –  for example to have (even more secure) 16 out of 40 fragments with 2.5x redundancy, but the default setting is already pretty decent. Over time, as the network gets bigger and quality of hosts increases, it is expected that Sia will move towards 1.5x redundancy, which is sufficient and will make it even more affordable.

Did you ever wonder why there is minimum block reward set to 30,000 SC per block and are you worried about inflation caused by endless supply? It is so by design as the majority of coins in the future is expected to be locked in contracts. Minimum block reward will guarantee that there is always enough new coins entering circulation so the network can continue working properly and users will be able to acquire coins to pay for storage.

Why is Sia important for me?#

It’s important because you care about your data and privacy. You don’t want to lose your family photos or important data due to the end of some service (remember Megaupload?) or get it compromised by leaks, or even inaccessible at times when you need it most during some blackouts. You don’t want to get de-platformed.

With Sia this won’t happen and if 3x redundancy is not letting you sleep at night because of your super important data, set it higher and even whitelist specific hosts in specific regions (so you can always access your data even if entire countries turn dark). Even then it’s way cheaper than traditional solutions, but more secure than any and all of them.

Important: There is issue with backup snapshots in version 1.5.3. It is planned to be fixed in 1.5.4. If you are not sure, feel free to ask on Sia Discord server.

You might also have unused space on your home server running nonstop. Now you can start hosting and reduce your running costs or even profit from it. If it sounds interesting for you, we recommend to start small and get familiar with it. You can always plug in additional storage capacity when you’re getting near your limit. Check out our Hosting Guide to learn more.

Maybe you are a developer with some ideas or just an enthusiast who wants to learn. Sia is opening a world of new possibilities and kinds of apps that were impossible until today, especially with the Skynet letting developers create applications without need for hosting by using simple API. You can find more details in our guides: Building with Skynet and Built with Sia.

It’s clear that developers are going to be the first who spot the opportunity and create products that will attract customers. You can check some of these products already built by the community in Examples. This is very exciting since users today can enjoy products built on top of decentralized network without even knowing how it works, or requiring cryptocurrencies. Services can manage storage contracts in crypto for users who pay them with fiat. This opens adoption possibilities that the crypto world has been waiting for.

Who is behind Sia and how can I know it will always work?#

Until 2020, Sia was developed by Nebulous, Inc., a VC funded company that made this all a reality with less than $10 million raised since 2014. Sia was always technically superior and leader in the space while remaining in shadow of less advanced projects that used an opportunity and raised enormous amounts of money during the ICO times.

Sia never had an ICO or pre-mine. It is not even trusted setup. All coins were mined by anyone who was interested in doing so. In 2020, the core team was holding less than 0.1% of all SC. The developers are motivated by possession of network’s supplementary token, Siafund (more about it in Tokenomics) which pays out part of successful storage contract fees on Sia network to its holders. Where majority of other projects raised a lot of money at beginning, focus on hype and buzz words and have no real incentive to ever introduce a working product while they fake it until they make it, Sia is complete opposite of it. In order for Siafunds to create meaningful source of income, the network has to grow immensely.

Common concern was that price has stagnated and project must be dead, but price says nothing about the actual progress that was made. Also there are no shortcuts for such tech and for first few years it wasn’t simply production ready.

Sia could go the same way as others and focus on price and marketing, but there would be no working product as a result. For working product, user experience is important and until 2019 it wasn’t possible. Bringing it to masses could cause irreversible damaged becase they tech wasn’t ready. Today it is. There are still things to fix and improve but it is fairly stable and with great things on the horizon.

You can be sure Sia will work because it doesn’t depend on the devs. The network is permission-less and open-source, anyone can run it. If the dev team disappeared, it would continue running and very likely someone would take over its development. At least this was the case until now. Starting early in 2021, Sia development moves under the newly established non profit organization named Sia Foundation.

Covalent here: I do want to comment that "doesn't depend on the devs" is a tad misleading. Sure, if the devs up and left, the network itself wouldn't blow up. But like every other ecosystem of software, the system needs dedicated developers for both the front and back end or it will fizzle out.

Sia Foundation is be funded (fork happened in February 2021) by addition of 30,000 SC (that is thirty thousand for those europeans out there) to block reward (you can find more details in the Proposal that was very warmly accepted by the community). While the inflation increased slightly (especially compared to majority of other projects), it allows Sia Foundation to focus on parts of the Sia core tech that were previously difficult to justify for a VC funded company.

People often forget that this all was done by a team with very small funding and they have never seen anything for it. And still won’t. Sia Foundation is non-profit organization and needs to report spendings in transparent way. It is led by Sia co-founder Luke Champine who is expected to be joined by more representatives over time.

Foundation will use the funds to help the Sia core tech to be more stable, efficient and user friendly. Most requested features are host stability fixes and improvements, small file support and Utreexo which is feature dramatically reducing blockchain requirements so lite nodes become a reality. That will open entire new world of possibilities on all kinds of devices. Foundation also plans to provide legal support to nodes participating on Sia network and burn any coins that it is unable to use for overall good and growth of the ecosystem.

Official place to come and communicate with Sia Foundation is its forum.

Skynet Labs is re-branded Nebulous, Inc., the company that created Sia with its founder and CEO, David Vorick. Since it is just re-branding of company, the entire team is the same with exception of Luke who continues to focus on Sia core.

For majority of 2020, Skynet Labs were already focusing on task that community was asking several years for. Getting Sia adoption grow. Skynet is biggest product built with Sia and it is directly integrated in it. Where Sia is trying to compete in decentralized cloud storage space, Skynet competes with entire centralized internet and offers an alternative. How this fight will look, that remains to be seen but it’s clear it opens attractive space for developers, content creators and their followers. It introduces users to completely new way of using internet. In a way where they control own data and decide which (client-side) application can access them.

There were also several more recent hires by end of 2020 with one interesting fact – number of marketing employees went from 0 straight to 4 just in last two months of 2020 and according to the stats of devs, Skynet is picking up rapidly, growing by about 40% every month.

But what does this all mean? It means that this split is good for anyone interested in Sia. It doesn’t mean the project is abandoned and devs are leaving it. For first time in Sia’s history, it is going to maintain presence on two battlefields. Sia Foundation will do everything in best interest of Sia, its technology, ecosystem and participants. And Skynet will be main force driving the adoption.

Since Skynet uses Sia, it uses Siacoin (SC). It creates awareness and demand for the token to be used. By users who want to store data, by hosts as collateral and reward and by Skynet Portals who pay for activity of their users. This all is kind of usage that is on top of the only kind of usage that majority of projects has – the always present speculation. Also the bigger the network and amount of stored and accessed data, the more it will be rewarding for the Siafund holders. It’s win for everyone involved. The incentives feel to be just right and entire collective behind this site awaits the future with excitement and passion.

Where to continue from here? Try Introduction to Skynet.

You can find more details of Sia’s early days in the History section.

Written by: Danger & Covalent, Last Edit: April 14, 2021