Siacoin (SC) Technical Analysis
Analysis on Sia (the network and coin) after doing a bit of research:
1- Sia really is not for your average person who has a bit of disk space and wants to make a little money on the side. A lot of this has to do with the way news spreads around community, not from the developers. Average person who glosses over the abstract or a summary article hears about it and goes "great I have a 500 gb hdd and I dont use about 200 gb, why not make a little money off it?" That is wrong, you are essentially running a mini cloud server. The reason cloud storage companies charge 20 dollars for 1 TB space is because of the challenges of running a system 24/7 and always accessible. While im not saying this validates their pricing, I am letting you know this is what Sia is essentially competing against.
2 - Everyone should read the Host scoring system https://siawiki.tech/host/scoring_system
That page is incredibly important to understand if you want to get involved as either a host or customer or investor. As a host, the higher score you have, the higher the price you can charge as well as get assigned disk space to be used (essentially the system is more likely to pick you to host files, which is your income in this case). Key takeaways I thought were important.
2.1 - 4 TB minimum: this goes back to the point about the average user not being able to use their little disk space to make money. You will be penalized if you host space less than 4 TB.
2.2 - If you dont plan on keeping your computer running > 90% of the time, dont even bother considering hosting(right now atleast, will address this later). You will get a 50% penalty to your score, your uptime goes even lower and your penalty is incredibly steep you will make absolutely no money.
2.3 - Initial investment cost as first 30 days to prove that you are a trust worthy host. There is a score penalty till 41 days of being a host.
3 - Price volatility and fixed contract length
Right now you have to get into a 3 month contract at minimum.(correct me if im wrong). This means during this you are rolling the dice when it comes to cost and profits. This level of instability will always be a crutch of the system when compared to traditional storage solutions who use more stable regular fiat. For example, if you got in a contract in April or May of this year, the average price you were locked in at was 4500 siacoin per TB for 3 months. During this time, you made the most profit you would ever make as a host, but after that your profits fell dramatically (in proportion to before, not total profit which was very less to begin with)when your contract ended as the market rate at the end of your contract was probably between 700 - 200 Siacoin per TB. You could argue that the buyer of the space missed out as well, but I think this is a common misconception as people think they are also the investors which is not always the case. It doesn't matter to a space buyer if the price shoots up because they had already bought the coin at that low price and locked it into a contract. Now if they were also a big user of the system who was constantly buying space everyday, yes this would affect them. The link below is very important and it is where i got the pricing info from.
4 - Currently there just is not that much demand for the space, its not a host market (not necessarily a bad thing right now)
If you look at the network storage graph on siahub link from above, on average in the month of august, there was on average 3300 TB worth of storage space on the network and on average 70 TB demand for space. Thats only around 2 percent of the space being used. This means the system is currently running smooth as butter, but it has not been tested when there is a big demand surge and I really want to see how it can handle even 10- 15% and what problems arise. Reason I think its not a bad thing is because it dramatically cuts cost to buy space for adopters.
5 - It has the same growing pains as a lot of other blockchain based projects
This is a problem most coins and projects have right now such as ease of use, wallet problems, file upload/download problems, file loss.
6 - There is no cap to how much siacoin there will be
This is one of the reasons I look at this less like bitcoin as a currency or investment, but as just a tool in a closed ecosystem required to secure data thats not centrally located.
Three major upcoming improvements to keep your eyes on https://trello.com/b/Io1dDyuI/sia-public-roadmap
This is the sia roadmap for future changes and while there are a lot, 3 main things should spike your interest.
6.1 - Next 6 months: proper support for small files by reducing minimum file size from 40 MB to 100 KB. This is absolutely huge imo. While a casual user might not be able to be a host, they can be a buyer. Most files people use are just not that big. Pictures and songs are a few MB. Small work files such as word,excel, powerpoint will be able to be backed up easily.
6.2 - Ability to recover your files only using recovery seed. Now you can carry your wealth in your head wherever you go by just memorizing your BTC wallet seed, in the next 18 months you will be able to do the same with all your files, doesn't matter where you are in the world. This is huge for journalists, protesters, human rights advocates, people who just generally live in more heavily censored parts of the world.
6.3 - Increased customization/parameters for choosing host in next 6 months. (price vs performance) I like this because it helps with lowering cost with long term storage as well as helps lower the barrier to entry for being a host. Maybe I access files once a year, uptime doesnt matter to me in this case. I could potentially go for an ultra low cost host who has low uptime then.
The decentralization/privacy aspect of this is unmatched regardless
This is the major aspect of why I wouldnt write Sia off immediately, even with all their problems. Their adoption rate is really low right now, but long term it is going to be interesting to see how it does 10 years from now as more and more people are starting to realize how important privacy is and how intrusive these companies are with their data in order to track everything you do.
Would love to hear your thoughts people.
Discuss on Reddit (https://www.reddit.com/r/CryptoCurrency/comments/6wsxpp/analysis_on_sia_the_network_and_coin_after_doing/)