SIA COIN EXPLAINED

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Sia is an actively developed decentralized storage platform. Users all over the world contribute disk storage from their
computers to form a decentralized network. Anybody with siacoins can rent storage from this network, and hosts are
paid for their contributions. A combination of smart contracts, erasure coding, and encryption ensure secure, private,
and reliable decentralized storage. You can download and use Sia today! sia.tech

A smart contract on the blockchain ensures through the use of cryptographic proofs of storage that hosts are only paid
if they keep the file for the entire duration of the contract. Employment of erasure codes such as Reed Solomon codes
guarantees high file uptime even if most of the hosts on the network are unreliable or have frequent outages. All data is
encrypted client-side and padded, preventing hosts from snooping the contents of the files and even from guessing what
the file might be based on the filesize.

The distrubuted nature of the Sia network enables many optimizations in latency, throughput, reliability, and security.
The decentralized nature of the Sia network enables anyone with storage to get paid, lowering the barrier to entry and
reducing the overall price of cloud storage.

The Technology

The foundation of Sia is a proof of work blockchain. Storage contracts are a new type of transaction that get enforced
by the blockchain. Sia's hashing algorithm is blake2b. p2pool and multisig wallets are both supported on Sia.

When a file is uploaded to Sia, a storage contract is created containing the Merkle root of the file, a reward for the
host, and a penalty for the host (both in siacoins). After an agreed-upon duration, the host is required to prove that
the file is still available by providing a random Merkle proof. If the proof is valid, the host is rewarded; otherwise,
the host is penalized. Random numbers are generated deterministically using the most recent block as a seed.

Sia has support for two way payment channels, and two way contract diffs. Among other things, this provides massive
scalability, and eliminates the need for untrustworthy 0-confirmation transactions. Once you join a payment channel
network, all transactions within that network will be instant and final, with no risk of a double spend.

Reliability is achieved by using erasure coding in a massively distributed environment. Erasure coding allows a file to
be split into many pieces, such that the original file can be recovered using only a few of them. For example, you can
take a 50 MB file, break it into 200 pieces that are 1 MB each, and then you can recover the original file from any 50
of the pieces. This method has the same overhead as creating 4 complete copies of the file, yet is much more reliable
because it's much less likely that 151 out of 200 hosts will go offline than it is that 4 out of 4 hosts will go
offline.

As the network grows, we will apply statistical analysis to determine the redundancy required to provide 99.9999%
reliability on files. It is likely that 3x overhead is absurd overkill, and statistical analysis will give an accurate
picture of how much overhead is required.

Using 200 hosts to store a file means that downloads can be massively parallel. Even if the average Sia host does not
have quick upload speeds, the massive parallelism enabled by Sia means that downloads will be blazing fast anyway. In
addition, you can choose to connect only to the datacenters that are the closest and the fastest. This optimization
(known as a CDN) is a hugely expensive project for a traditional cloud storage service, but for Sia it is a natural
consequence of the decentralized network.

As security is a top priority of Sia, all encryption is performed locally; the people storing your files will have no
ability to see what you have uploaded. Not only is every file encrypted separately, every piece of every file is
encrypted separately, and hosts are not told which pieces are part of the same file.

The Cryptocurrency

Sia uses a new cryptocurrency, called the siacoin. The developers will mine the first 100 blocks or so before releasing
the code + miner to the public. Other than these first blocks, there is no premine for siacoins. The first block
reward will be 300,000 siacoins. Each block reward after that will be one siacoin smaller than the previous block reward
(299,999, then 299,998, and so on). When the block reward reaches 30,000, all remaining blocks will give a 30,000
siacoin reward. The block time is 10 minutes. Each siacoin is composed of 10^24 indivisible units.

The most important features of Sia can only be accessed by using siacoins. All storage contracts and all Sia payment
channels require owning siacoins. This requirement means that as Sia grows in usage, so too will demand for siacoins.
As demand grows, the price will increase. If Sia is being used for billions of dollars of storage, billions of dollars
of siacoins will be required. The value of the siacoin is inextricably tied to the amount of storage in use on the Sia
network.

Sia has a second cryptocurrency, called the Siafund. 3.9% of all successful storage contract payouts go to the holders
of the siafunds. There are 10,000 siafunds total, and all 10,000 are completely premined. Sia's parent company, Nebulous
Inc., holds approximately 8750 of these siafunds. The remaining siafunds were sold in a crowdfund which helped to
finance Sia's early development. The primary goal of siafunding is to provide a way to finance the development of Sia
without relying on donations or a premine. More people using Sia means more funding available to hire more developers.

Standard transactions are not subject to the fee, and neither are failed storage contracts (where the host was offline
or lost the file).

The Business Plan

The long term goal of Sia is to be the backbone storage layer of the Internet. All long term storage will be performed
on Sia. All movies and music will be streamed from Sia. All images will be embedded from Sia. All businesses will use
Sia as a backend for cloud storage. Sia intends to replace Bittorrent, Amazon S3, Amazon Glacier, Microsoft OneDrive,
and all backend cloud storage services. We intend to fully disrupt a many billion dollar industry.

Sia is meant to be a Platform that other applications can build off of. The beta has a first draft API for developers to
use, found here.

Over the next few months, we are focusing on building out the api and creating an example application that replaces
Bittorrent. If you have ideas for things that you want to build which will use Sia, please get in touch with us. Sia is
completely open source, and you can use the API without getting explicit permission or paying any royalties or licensing
fees.

The Future

The promise of Sia is a decentralized network of small datacenters that, taken together, comprise the world's fastest,
cheapest, and most secure cloud storage platform. Today, being a major cloud storage player requires having datacenters,
building trust within the market, reaching customers, and competing with giants such as Amazon, Google, and Microsoft.
Breaking into this market is a multi-billion dollar endeavor.

Sia changes that, by enabling small, efficient datacenters to sell their storage without market trust and without a
marketing budget. Sia lowers the barrier to entry, and in doing so creates a wealth of cheap storage for its users.
Anyone with an Internet connection and a cheap source of storage can make money.

The long term goal of Sia is to become a serious competitor to existing cloud storage platforms, including Dropbox,
Google Drive, and OneDrive. We envision a future where even massive services such as Netflix and YouTube will use Sia to
deliver the best user experience to their customers.

We are looking forward to the data storage revolution. Help us make it happen.