Introduction to Sia and Siacoin Part 1

What is Sia. Sia vs centralized storage.


When it comes to blockchain, most people think about Bitcoin and other cryptocurrencies, yet cryptocurrencies are just one of the applications of blockchain technology.

The true revolution of blockchain is about enabling parties that do not trust each other to engage in transactions with each other without using a third party as a trusted authority. With Bitcoin, the Bitcoin network serves as the authority that the users on the network trust and because of that there’s no need for a bank or for any government agencies to conduct supervision of the network.

Public blockchain networks operate by using cryptography algorithms and being transparent and accessible to the users. For example, you can use the official blockchain explorer for the Bitcoin network at to find information about all the transactions that have happened between the users of the network since Satoshi Nakamoto created Bitcoin in 2009, yet blockchains do not have to be about financial records. They could be about almost anything, including university diplomas, information about cargo, taxi trips and more.

Sia is a blockchain-based project that provides users with peer-to-peer access to cloud storage. As such, Sia competes with such centralized platforms as DropBox, Apple iCloud, Box, Microsoft OneDrive and others.


Advantages of Sia versus traditional cloud storage

Compared to these platforms, Sia offers a number of advantages. The first advantage is that large centralized storage solutions are frequent hacker targets. For example, according to Guardian (source:, during a 2012 breach, hackers managed to get access to encrypted passwords of over 60% of Dropbox customers. Independent security researcher Troy Hunt verified the leak by finding details about his Dropbox account in the leaked data. The breach has occurred because a Dropbox employee used the same password to access his personal LinkedIn profile and the Dropbox corporate network. The attackers first stole the password of the employee and then using the password obtained access to the Dropbox password database.

The second advantage is that Sia does not store any data on the blockchain. It only stores information about contracts between providers of hosting and hosting clients and proof that providers are storing the information, yet does so using the same blockchain technology that the Bitcoin network uses, which means that Sia network has the same level of security as Bitcoin. In a way, Sia is for file storage what Bitcoin is for cryptocurrencies.


Sia Functionality

Using Sia, any person or organization could store encrypted files with Sia blockchain serving as a mechanism to enable and store contracts and storage proofs. Contracts between storage providers and storage users on the Sia platform define what data the providers will store for users and at what price. When entering into a contract, providers also agree to periodically provide to the blockchain proof of storage for the duration of the storage contract. Storage providers on Sia network have an incentive to provide proofs because they get compensation each time they submit a proof as requested by the contract and get a penalty each time they fail to submit a proof. These proofs on the Sia network are similar to financial Bitcoin transactions on the Bitcoin network, which means several things. First, the network can automatically enforce contracts by penalizing or rewarding storage hosts just like the Bitcoin network enforces Bitcoin transactions, meaning that when a user sends funds the funds are indeed being sent and sent only to one address on the Bitcoin network.

The second important consequence of automatic contract enforcement is that users on the Sia network do not need to manually check the proofs that the storage providers submit to the network. The network checks the proofs automatically. When looking for storage, all a user has to do is upload the files and the network does everything else similarly to existing centralized storage providers. The difference is that while storage providers are centralized businesses looking to make a profit, Sia is a true peer-to-peer blockchain network that operates according to a transparent set of rules.


Reduction of risks associated with decentralized storage

It may seem that storing files with just one other party is not a very safe way to store files and this is true. For this reasons, the creators of the Sia blockchain recommend using multiple storage providers, having several storage contracts and storing data with several hosts at the same time. A user on the network can take advantage of erasure codes to get high availability of stored files without excessive storage redundancy.

Erasure codes are not some secret codes that allow erasure of the data. Instead, they actually allow to restore the data in an efficient way. For example, if you have a hard drive, a backup drive, and storage on the Sia platform, and your backup drive gets damaged with you not being able to extract files fully from it, with erasure codes you can use Sia blockchain to extract only the chunks of files that are located on the damaged areas of your backup hard drive. Practically speaking, this means that you wouldn’t need to download an entire copy of the file from your blockchain storage but you will be able to only get the parts of the files that you need. This reduces the level of backup redundancies users need to keep their data fully secure.

Each chunk of file is encrypted and not necessarily stored with the same host, which means that the reliability of storage can be high in each single case even when the overall reliability of network is low. Practically speaking it means that if a user needs 5 chunks out of 50 to restore the files that the user has lost or damaged, all the user cares about is the condition of these very 5 chunks and not the general reliability of the network.

Just like other blockchains that enable true peer-to-peer transactions, Sia solution is cheaper than most storage competitors. For example, on average storing files on Sia costs about 10% of what it would cost with a traditional storage provider.