As Bitcoin technology evolves and grows past the “early adopter” stage, more and more businesses are entering the space looking to provide the market with innovations based on Bitcoin’s block chain technology. Today, there are many businesses that are in perpetual pre-launch, like the vaunted Open Bazaar, who seems to have been on the brink of release ever since Bitcoin was just a whitepaper. The cloud storage industry within the Bitcoin community is still an open door to entrepreneurs, and Sia has stepped forward to fill this market niche.
In the mainstream, you have companies like Amazon and Dropbox already providing cloud storage, but neither is ready to use the revolutionary block chain technology Sia is employing. They do not use Bitcoin’s block chain but their own proof-of-word block chain, so I spoke to Sia’s David Vorick about what innovations and value they bring to the market through block chain technology.
Why are Bitcoin block chain technology and cloud storage a good match for the market going forward?
One of the major advantages using a block chain for storage is that you can make contracts with people you don’t trust. In traditional cloud storage, when you provide files to a data center you need to trust that they will still be around tomorrow, adding a lot of overhead. I trust Amazon and Dropbox to keep my files safe, but the result is that they get a monopoly over my data and can charge very steep prices.”“In using a block chain, I can split my data over many untrusted and unknown services, and be confident that they will be penalized for misplacing my file. Even if a majority of them *do* misplace my file, I can still recover all of my data. A single service no longer has a monopoly, and, very similar to bitcoin mining, the cost of cloud storage is brought very close to the raw cost of hosting data.
Aren’t there security issues with putting information into “The Cloud”? Why should I trust a “cloud” with my information? What guarantees can you provide consumers with regards to their information?
Security is not just a foremost concern of Sia; it is a mandatory foundation. All data is encrypted by the clients before being uploaded, and cannot be seen by the hosts. As for getting the data back, we use erasure coding algorithms to make sure that even if many of the hosts disappear, the data is still recoverable.
Algorithms such as Reed-Solomon encoding means that data can be split up into 30 pieces. It can be given to 30 different hosts, and of those 30 hosts, only 10 need to remain online for the data to be recovered in full. The overhead is only 3x, which is the same overhead that is used by traditional cloud storage. Statistically, however, 10-out-of-30 is much, much safer than 1-out-of-3, and you have significant warning time hosts start disappearing (you can repair the file back to its original redundancy at any time).
How does bitcoin’s price volatility affect your pricing and business? If BTC prices drop $100, how will that affect you long-term and your customers “in the cloud?
Just like with bitcoin mining, price volatility has an impact on our hosts. Because contracts must be made using crypto-currency, the value of the contract is subject to price swings. This will not be a risk for consumers, who commit to the value of the contract within minutes and do not need to hold on to crypto-currency throughout the duration of the contract.
Sia does have an advantage in stability, however: hosts must keep crypto-currency locked up throughout the duration of their contracts. This can provide a dampening effect because hosts cannot respond immediately to news, and people will need to buy crypto-currency to use storage on the network. It is not yet clear how strong the dampening effect will be – though I guess that it will be moderate at best.
I predict that Siacoin will be more stable than most crypto-currencies, though not so significantly that it could be considered ‘stable’ compared to things like bonds or the dollar.
What is the history of bitcoin and cloud storage?
We have two popular competitors: Storj and MaidSAFE. Though these two products have held the public spotlight for the majority of our existence, they have yet to release a product. We will be releasing on June 7th, and to the extent of my knowledge that makes us the first decentralized storage platform to launch. There is a third popular alternative, IPFS, which has somewhat similar goals but is not decentralized in the same way.
For more information, including their whitepaper, contact them on their website @ siacoin.com
Do you trust cloud storage? Do you think block chain technology is a ready for this application? Share above and comment below.