Introduction to Sia and Siacoin Part 5

Examples of Sia incentives and freedom of blockchain.

 

The Sia network encourages users to store their files in multiple locations and not just get storage from one provider.

Secondly, storage providers on the Sia network can advertise their services are minimally reliable or as highly reliable. It may seem that everybody would want to advertise their services as highly reliable, but on a blockchain network such as Sia it is possible to track histories of users and to use a cryptocurrency as a financial incentive.

All of this occurs because of the immutability property of blockchain technology, which means that a blockchain network can accurately track the events that occur on the network and it is impossible for malicious users to edit or erase the events that have occurred in the past.

In case storage providers advertise themselves as minimally reliable, they will incur very small penalties if they lose the file of the clients. Storage providers can also advertise themselves as very highly reliable and in this case they will be able to charge users higher fees, yet the risks in this scenario for the providers is that they will have to pay higher fees in case something happens to the files they agreed to store.

The introduction of financial incentive to provide accurate advertising to the users means that it is in the interest of storage providers to advertise what they can do and not exaggerate the extend of the service.

When a user and a provider enter into a contract on the Sia network, both of them have to place money in escrow on the Sia blockchain. Users put money as payment for the services and storage providers place a deposit to ensure the validity of their promises in regards to storage and good behavior.

 

Freedom and blockchain networks

Because the Sia network is based on the software code of the Bitcoin network, Sia, just like Bitcoin, offers complete freedom to its users.

Freedom is yet another accomplishment of blockchain technology. The technology was able to make work peer-to-peer transactions in a number of industries in a way that incentivizes good behavior and makes malicious intent almost impossible to execute.

For example, on the Bitcoin blockchain miners are free to pick any transactions they choose and include them into the blocks of the blockchain that they mine. It may seem that miners would not be interested in including the transactions where users do not include any fees because 100% of the fees go to miners, yet miners have an incentive to include the transactions with no fees because even when they don’t get paid by users, they get rewards from the Bitcoin network for creating blocks of the Bitcoin blockchain.

Rewards to miners are how the Bitcoin blockchain adds coins to circulation. In total, there can be 21 million coins on the Bitcoin network. The network has been adding them to the circulation since its inception in 2009. The reward for the creation of the blocks of the Bitcoin blockchain has been 50 Bitcoins per block for the first 210,000 blocks. Then, the reward split in half and became 25 Bitcoins per block for the next 210,000 blocks. After that, it split again to 12.5 bitcoins and it will continue splitting in the future. To see how many Bitcoins the Bitcoin network has in circulation as you are reading this article, how many Bitcoins it will mine in the future, what the current reward per block is and many other interesting stats, you can visit http://www.bitcoinblockhalf.com/

Users on the Bitcoin network are also free to include or not include the fees with their transactions. As the chart for the fees on the Bitcoin network shows, the fees do increase when the network gets a lot of transactions, but do go down when the activity slow down, so everything works according to the laws of supply and demand. You can see the historical chart for the fees on the Bitcoin network here: https://bitinfocharts.com/comparison/bitcoin-transactionfees.html