What is Siacoin for Dummies | Siacoin Review

What is Siacoin?

Data stored in the cloud generally heads straight to one of a few big companies that put it on machines in a few big warehouses. Siacoin (SC), on the other hand, is one of several cryptocurrencies that plans to make the cloud much more cloud-like by taking your data, encrypting it, splitting it up, and storing it on lots of privately-owned hard drives. Even better, it works: The project is currently storing over 130TB of data on almost 900 individual computers as of this writing.

How does Siacoin work?

While the final product is still in development, the concept is simple. A user wants to store a file securely online. The user joins the Sia network, buys some Siacoins, and starts a contract. The contract says that the renter agrees to pay the host for as long as the renter’s files are on the host’s drive, and the contract automatically updates the payment record as long as the renter is using space. As long as the renter has enough SC to pay, their files will be stored. The host also pays SC as collateral and has to provide cryptographic proofs that they are actually storing the data; if they fail to remain online or store the data, they are penalized.

To make sure that the user’s data is always secure and accessible, the Sia network uses “erasure coding,” which automatically splits each file up into 30 pieces, any ten of which can be recombined to make up the complete file. Each segment is encrypted and sent out to a different host. In the event that half of the hosts with the user’s file go down, there is an automatic repair process that uses the remaining segments to create more pieces and redistribute them. The division, encryption, and distribution processes ensure that the user’s file will remain available and secure—even the person whose hard drive holds the file segment won’t be able to see what’s inside. This essentially makes any data stored this way unhackable.

The blockchain stores the smart contracts between renters and hosts and facilitates payment between the two. It also ensures that the terms of the smart contract, from user payments to host uptime, are met by recording each transaction and proof into the permanent ledger.

Recent developments

A massive Chinese cryptocurrency mining company, AntPool, started supporting Siacoin mining in January of 2018. This may cause Sia to increase in value, but also puts it, as a relatively small cryptocurrency, at risk of being overwhelmed by big miners with too much network power.

How to buy Siacoin

Siacoin’s coin is mostly bought and sold on Bittrex. Here is a quick guide on how to buy Siacoin starting with fiat to avoid hefty fees:

1. Buy Bitcoin or Ethereum at an exchange that uses your fiat currency on Coinbase.
2. Transfer your BTC or ETH to an exchange that supports Siacoin. Currently, Bittrex is the best choice. (Tip: if you bought BTC/ETH on Coinbase, look into using GDAX to avoid transfer fees)
3. Buy Siacoin by trading your BTC/ETH for their coin, and you’re done!

Fun fact

The company behind Sia is “Nebulous,” which nicely describes their vision for cloud storage.

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