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Siacoin (SC) is the native utility token of Sia, a blockchain-based distributed, decentralized cloud storage platform. Sia acts as a secure, trustless marketplace for cloud storage in which users can lease access to their unused storage space. Agreements and transactions are enforced with smart contracts, and Siacoin is the medium of exchange for paying for storage on the network. The main goal of the project is to become the "backbone storage layer of the internet."
Sia was originally announced in May 2014 before being revised and re-announced a year later in May 2015. It officially launched in June 2015.
Sia was first conceived in mid-2013 by David Vorick while studying computer science at Rensselaer Polytechnic Institute. He discussed the idea over email with Luke Champine, a college friend, who joined the project's development shortly after Vorick presented the concept at a HackMIT hackathon in September 2013. The project was officially named Sia in early 2014, a reference to the Egyptian god of perception.
Vorick and Champine were introduced through their college's entrepreneurial center to Jim Pallotta, a billionaire investor and founder of Raptor Group, who invested in the project. Shortly before graduating from college, the two incorporated the company Nebulous Inc. — which has since been rebranded to Skynet — to formally handle the development of Sia.
According to its whitepaper, the long-term goal of Sia is to compete with existing storage solutions. It sees itself as being in direct competition with major cloud storage providers such as Amazon, Google and Microsoft. Because of its decentralized nature, Sia is able to offer competitive storage rates.
Files stored on the Sia network are divided into 30 encrypted segments, with each segment uploaded to a unique host for redundancy. The agreements between uploaders and hosts are recorded on Sia's blockchain and enforced using smart contracts. Siacoin acts as the method of payment on the network, with renters paying hosts using SC, and hosts locking SC in smart contracts as collateral.
Skynet, the company behind Sia and Siacoin, has announced several products built on top of the Sia network, including SiaStream — a cloud-based media streaming application — and the Skynet network — its flagship content delivery and file sharing network.
The company has received several rounds of funding and grants, including from Bain Capital Ventures, Paradigm and INBlockchain. In addition, each storage-related transaction on the Sia network is subject to a 3.9% fee, which is distributed to holders of the company's second cryptocurrency, Siafund — with Skynet holding approximately 85% of all Siafund.
Siacoin has no maximum supply. Because it is a utility token designed to be used to power transactions via smart contracts, the project has stated that there must be a limitless supply in order to match the effectively limitless amount of data that can be created and stored.
New Siacoin is introduced as mining rewards through the Sia blockchain's proof-of-work mining algorithm. The mining reward started at 300,000 SC and decreased at a rate of 1 SC with each block mined until it reached 30,000 SC in July 2020. The block reward will now forever remain 30,000 SC. Siacoin is removed from the ecosystem when hosts lose tokens or their collateral is left unrefunded due to bad actions. In the future, the development team intends to introduce a proof-of-burn mechanism by which hosts will be required to burn a small percentage of their revenue to prove that they are real and have good intentions.
The Sia development team mined approximately 100 blocks (around 30 million SC) before publicly releasing the mining algorithm. The platform's team and investors reportedly hold less than 0.1% of the total Siacoin supply.
The Sia blockchain is secured using a proof-of-work consensus algorithm, meaning that miners compete among each other to add new blocks to the blockchain and a majority must confirm a record for it to be posted. Sia co-founder Vorick argued in June 2017 that proof-of-work is the best way to secure the network because it tethers a malicious actor's ability to attack the network to massive energy requirements and hardware expenses.
According to Sia's development team, the fact that hosts have to put up collateral in order to participate in the network's operations decreases any incentive for bad actors. In addition, it has pointed to the fact that it splits uploaded data into 30 segments, which are then distributed across the globe, as reassurance that its network cannot be taken down except in the event of a massive natural disaster or geopolitical event. And as long as 10 out of 30 hosts survive an attack on its network, files can still be retrieved.