Meet Sia: the most viable non-financial application of blockchain technology

With our latest v1.4.1 release, the Sia decentralized cloud storage network is ready for the next stage of adoption.

The world is enamored by blockchain technology’s potential. When properly implemented, blockchains enable direct, trustless transactions between parties. They will ultimately allow us to make our marketplaces more efficient and competitive — saving us money, empowering individuals, and fostering innovation.

Bitcoin is the quintessential financial application of blockchain technology. Our current financial system is filled with fee-taking intermediaries like banks, credit cards, transfer agents, and lenders. We relied on these third parties because it was impossible for individuals and businesses to transact without trust; we therefore outsourced our trust to third parties.

Bitcoin allows us to transact directly, without needing to trust our counterparties. Instead we trust that the Bitcoin blockchain stores an accurate record of all transactions.

Today our intermediaries serve as gatekeepers, extracting value from our financial markets and creating significant barriers to entry. Over time, Bitcoin will eliminate most of these third parties and enable trustless transactions and exciting new global competition.

The Cloud Storage Industry

The cloud storage industry is very similar to the financial industry in that trust is a necessity; we therefore rely on trusted third parties to store our data. Amazon, Google, and Microsoft control the majority of the cloud storage market, and their prices are suspiciously similar at about $20 per TB per month. Today it is possible to purchase a refurbished 1 TB hard drive for about $20 — so buyers are essentially paying Amazon each month the entire cost of the hard drives used to store their data!

This is ludicrous, but even more ludicrous is the cost to download or stream data from these platforms. Amazon, Google, and Microsoft charge $60+ per TB of bandwidth, meaning that users pay a steep price to get their data off the cloud. (Of course, if you want to keep your data on Amazon, it is virtually free to access it from other Amazon services. This is how centralized cloud providers lock you into their ecosystems.)

This restricts how much data buyers can afford to upload, causing potentially valuable data to be thrown away or never stored at all. Social media, wearable devices, self-driving vehicles, IoT devices, and countless other innovations will produce exponentially greater amounts of data over the next decade. Amazingly, by 2025 we are expected to create 463,000 PB of data per day.

This also restricts the kind of applications and business models we can build. It is difficult to release a new video streaming product, for example, because bandwidth is so expensive. Streaming a single 4k movie can cost $1–3 dollars on Amazon S3, which is simply unaffordable for new startups and severely restricts business model innovation.

What would happen if we could eliminate the need for trust and allow anyone in the world to offer storage and bandwidth at any price they want?

We believe that Sia will usher a cloud storage renaissance, reducing storage prices by 10x and bandwidth prices by 100x, leading to significant increases in the amount of data stored by humanity and enabling previously impossible bandwidth-hungry applications. Put simply, Sia is the next step in cloud storage, and it will obsolete the existing Amazon/Google/Microsoft monopoly.

How Sia Works

Sia is a global cloud storage marketplace that uses the Sia blockchain to enable trustless, peer-to-peer transactions between users. Anyone can download the Sia software to rent storage space and anyone can offer storage capacity as a host. Today, storage prices on Sia are about $1 per TB per month and bandwidth prices are less than $1 per TB.

How is this possible? By removing intermediaries, Sia creates a “perfect” marketplace, forcing hosts to compete for business. This drives prices to their absolute lowest and makes it impossible for traditional providers like Amazon to ever compete. Hosts on Sia do not have to worry about building and maintaining enormous datacenters, employing thousands of employees, and marketing their services. They only need to worry about providing reliable storage capacity to renters on Sia.

When uploading data to Sia, the software breaks files up into redundant pieces, encrypts each piece, and then uploads the pieces to dozens of hosts across the world. Renters and hosts enter into custom smart contracts called file contracts that are stored on the Sia blockchain. These serve as cryptographic SLAs, dictating prices for storage and bandwidth, contract length, uptime requirements, and more. Because renters and hosts both pay into file contracts in advance, and files are stored redundantly, bad behavior is disincentivized and uptime is on-par with Amazon.

What Makes Sia Different

There are many “decentralized” cloud storage projects in the blockchain space, but Sia is years ahead. No existing project matches Sia’s progress or feature set, and they will likely never catch up. Below are some ways Sia stands out:

• Sia is truly decentralized, meaning that it relies on absolutely no outside infrastructure to function. No servers, no signups. If the Sia development team disappeared tomorrow, the network would continue to function uninterrupted.
• Sia builds on proven technology and is not reliant on future research breakthroughs. A proof-of-work blockchain, similar to Bitcoin, is used to facilitate payments and file contracts. Reed-Solomon erasure coding, used for decades in CDs and DVDs, ensures file redundancy. Threefish encryption, a tried-and-tested encryption scheme, is used to secure files.
• Sia uses a blockchain only when necessary: for payments, file contracts, and tiny metadata backups. Everything else occurs off-chain, meaning that Sia is highly scalable.
• Sia properly incentivizes good behavior and disincentivizes bad behavior by following game theory principles similar to Bitcoin. For example, hosts are required to pay collateral, which they lose if they violate the terms of a file contract.
• Sia is highly scalable, and was among the first to implement payment channels (years before Bitcoin’s Lightning Network). The vast majority of transactions on Sia take place off-chain, in payment channels between renters and hosts.
• Sia is customizable and robust. Renters can customize their own storage solution, choosing to whitelist or blacklist hosts based on geographic regions and other factors. Sia is a storage network + CDN.
• Sia’s team holds less than 0.1% of all Siacoin, and instead makes a small transaction fee from each file contract. This means the development team is incentivized to grow the amount of storage on the network over the long term. Competing projects typically hold large amounts of their own cryptocurrency and are not incentivized to develop their products.
• Sia’s team ships early and often, with a new release every 2–3 months. The Sia software is exponentially improving, and performance and featureset is quickly approaching Amazon S3.
• Sia’s team is highly efficient and effective. We raised only 1/100 of the capital of our largest competitor but launched a functional network 4 years ago and continue to significantly outpace all competition.

Sia Today and Tomorrow

With the new release of v1.4.1, Sia is now production-ready for cloud storage and is beginning to compete with traditional providers. Version 1.4.1 introduced seed-based file recovery, allowing users to backup and recover their files using just their 29-word seed. Sia today allows renters to upload 20+ TB per node and reaches bandwidth speeds of 300 Mbps up/down.
Next, Sia will gain blazing-fast video streaming, integrations with popular applications, and file sharing features to allow Sia to compete head-to-head with Amazon S3.

TL;DR

Sia is the most viable non-financial application of blockchain technology and will be the first to scale to tens of thousands of users and beyond. The blockchain industry deserves to see useful, scalable, and realistic applications. Sia’s team will continue to set a strong example.

Give Sia a try today! Download v1.4.1 from our website and join our community on Discord. Learn how to get started with our user guide.