Siacoin (SC): will a decentralized file-sharing network replace Dropbox and BitTorrent?

Many centralized services, such as YouTube, Netflix, Amazon, and Dropbox, already have decentralized counterparts. However, they are still significantly inferior regarding the number of users, as they involve specific cryptocurrencies.

So far, the cryptosphere has not reached the stage of mass adoption, so decentralized services are significantly behind in the number of users to those to which everyone is already accustomed. However, perhaps everything will change shortly.

What is Siacoin?

Siacoin (SC) is a native cryptocurrency of the Sia Network blockchain network, which is a decentralized cloud storage. In other words, Sia Network is a kind of decentralized counterpart to Dropbox, iCloud, and Google Drive.

SC acts as a utility token on the Sia Network, which pays for rented storage hosts, i.e., rewarding their providers. In addition, the SC token provides access to all features and services on its decentralized platform.

How does Sia Network work?

Instead of storing user data in centralized data centers, as Apple, Google, Amazon, and Microsoft do, Sia Network uses a distributed network of providers (hosts). Anyone can rent out free space on their hard disk to store data for other users, receiving rewards in SC tokens.

Users (clients) pay providers the rent in SC tokens, which the host owners set; the price is formed according to the free market principle. In addition, they can additionally reward providers for uptime to incentivize them to provide better service.

Providers, in turn, determine what data they agree to store on their hosts and can declare their reliability rating and standards for penalties for improper storage of customer information.

To improve its data security, Sia Network shares copies of data to be stored on multiple hosts at once. It encrypts them, minimizing the risks of data leakage in the event of an attack on any providers.

Sia Network's blockchain is powered by a Proof-of-Storage consensus algorithm that protects customers from malicious providers. Within a certain period, the host owner must provide other network participants with the proof of storage specified in the terms of the file contract.

If this is not done, the payment intended for the provider will be redirected to a particular address where it will be stored until the provider provides the necessary proof.

Siacoin ecosystem

Skynet is at the heart of the Sia Network ecosystem, a decentralized platform for file sharing and content delivery regardless of format. Users can upload their data to Sia Network's decentralized storage via Skynet's node or web portal.

The way Skynet works is very similar to the BitTorrent distributed file system. However, unlike BitTorrent, Skynet users do not need to be on the network for files to be available for others to download. Once a file is uploaded to the Sia Network network, all responsibility for storing the files falls on the nodes (hosts).

The rate and dynamics of the SC token

Despite the large capitalization by the crypto market standards, the SC token's price as of January 2024 was only $0.009. Such a low cryptocurrency rate is due to the large number of SC tokens circulating on the market, which exceeds 56.2 billion.

In addition, SC is an inflationary token that has a no-issuance ceiling. Locally, the SC token demonstrates positive dynamics: its price has increased by 300% over the past year from $0.003 to $0.009. The capitalization of the SC token has grown from $172 million to $498 million over the same period — by about the same percentage as the rate. Moreover, the token demonstrated growth even when the rates of many other cryptocurrencies were falling.

Despite the positive price momentum, the SC token is trading more than 92 percent below its all-time high (ATH) of $0.11 in January 2018. This is a negative sign, as even during the crypto market bullrun in 2021, the SC exchange rate couldn't even get halfway to its ATH. In addition, the SC token was ranked 21st in the CMC ranking back then, but now it has given up its position significantly, as many other new blockchain projects have displaced it. At the peak, the capitalization exceeded $2.8 billion, a 577% increase relative to the current value.

Regarding capitalization, the SC token is now in the 106th position on CoinMarketCap, but in terms of daily trading volumes — it is in the 39th place, indicating high activity among traders.

Is Siacoin promising?

Even though the leading indicators of the Siacoin cryptocurrency have been positive over the last year, the dynamics do not look particularly encouraging globally.

However, if we consider the popularity of distributed file storage systems such as BitTorrent, the prospects for Siacoin and Sia Network look good, especially considering that the project is one of the leading solutions in the crypto market in its category.

BusinessWire's 2023 data shows monthly active BitTorrent users exceeded 170 million worldwide. BitTorrent's share is so large that almost 3% of all internet traffic comes from this P2P network.

It is too early to say whether Sia Network will be able to achieve the same result and compete with BitTorrent. After all, it should be considered that BitTorrent allows you to share files for free, while in Sia Network, users pay providers with SC tokens.

In this regard, for competitive advantage, Sia Network should provide unique features to users, which still need to be added. The main advantage of Sia Network over protocols like BitTorrent is the high security of stored files: they are fragmented into encrypted "chunks" and distributed across multiple hosts.