- 4 Virtues and 4 Hurdles for Sia
In the jungle of cryptocurrency, Sia is a rare breed: A project that takes its proclaimed goal actually seriously. While reading up for my extensive look at the Sia project, I noticed some characteristics I really loved about Sia and some that worry me, crypto or not.
Here’s my list of four virtues and four hurdles. What do you think about Sia?
Stop! Don’t answer that! Come on, you haven’t put any disclaimers up front— such as this one for you to be aware of: I’m not a professional investor, I can’t and don’t give investment advice, but I do recommend that you do your own research and thinking, because it’s your money. Disclosure-wise, I am looking at the Sia project, because I might be investing small-time in the near future, or might not.
The following things I like about Sia as a crypto project and startup:
1. The goal
Sia wants to revolutionize cloud-storage by decentralizing it and making it trust-free.
We need cloud storage, and it needs to be cheap. This is not about crypto kittens, owls or lizards. Storage is the basis for the Internet as we know it, including, yes, Facebook and Slack and whatnot. And at the moment, cloud storage is heavily centralized, and we need to trust people. We notice this when a S3 outage cripples many services we use. In general, I believe more decentralization is good for the Internet. I love Sia’s goal because it solves a real-world problem.
And because so much hinges on storage, the demand is huge. This is not about a token for a sharing economy in a village in Germany. We’re talking about a world-wide market with billions of US Dollars involved. You gotta love that. (Yes, USD is still used in some corners of the world.)
Finally, it’s sort of narrow and well-defined. Sia is not about changing everything, transforming the way computation works, or whatnot. It’s about a better way to store stuff. I love Sia’s goal because it’s ambitious but not airy. They might just pull it off.
2. The blockchain has a point
Ever seen this dialogue play out?
“I heard you guys do a new crypto project called P3?
That’s great! How did you figure you need a block chain?”
“Well, you know. We don’t really use a block chain.
But we’ve got our own token — and it’s called P3R, for ‘P3 Rocks‘!”
“Hahaha, sounds like you figured it out.
Why’s the token necessary for your business?”
“You know, to be honest, it’s more like we need the cash to start producing.
But it’s no problem, you can always use the token later to buy Pink Plush Puppies!”
That kind of project is painful. Sia is not like that: Crypto is central to their goal.
Sia’s blockchain exists to establish a trust-free storage market. That means you don’t have to trust the other party to store or pay. As long as do your part, the network ensures you won’t get screwed. For that, the blockchain securely publishes storage contracts and storage proofs. It also automates secure payouts, using the native cryptocurrency Siacoin (SC).
Having your own blockchain and cryptocurrency as basis for your business is also a hurdle, as you’ll see below. To get anywhere, you’ve got to take those mechanisms seriously, and Sia does.
Sia is not like Pink Plush Puppies, and I love them for it.
3. Track record: It’s a marathon
I’m excited about Sia’s way of making steady progress over the months and years. The project grows and grows up, with regular releases and improvements abound. They are actually running a marathon, and not a sprint. Which is what a startup is: An uphill marathon.
Also, they have a working network that’s in use. Let me repeat that because in crypto that’s so not obvious: Sia has users and they are using their cloud storage network. It’s been up and running for more than 1.5 years, since June 2015.
An edge worth mentioning: With Siafunds, the Sia devteam found a way to align their incentives with Sia’s long-term success. That means, if Sia is a success, they win out to, and the other way around. Other dev team often just claim a huge chunk of the initially generated tokens, and then either dump-and-run or promise not to do so. For me, crypto is about not having to trust people, so that doesn’t work for me. For Sia to choose the trust-free path is courageous and indicates seriousness. Interestingly, they just decided to offer more Siafunds, which follows the same path, but dilutes future earnings for owners of existing Siafunds.
4. Sia Ethos: Parameters for a business
Pink Plush Puppies is about money, and only about money. Sia is about decentralizing cloud storage, and you notice this everywhere. It’s most obvious in the blog post titled “The Sia Ethos“, it features regularly in other publications posts and it’s also visible in Github discussions. Citing the Ethos blog post:
As developers, we have been adamant: no centralization is ever permitted in any of the core software.
Valuing something other than “more money” is not exactly common in today’s crypto projects and I believe that such values are necessary as decision guides for everyone in the company. For me, it’s a sign of organizational maturity. (Luv it.)
I believe there are a couple of major hurdles in Sia’s way to long-term success.
I also believe all of them can be solved.
1. Lure the world
Sia is not the splashiest of crypto projects. No grand over-the-top announcements, no absurd egos, little drama. Wow! A serious crypto project for a change?! That’s a relief, right? Can be.
In the end, Sia needs to lure the world into believing that it can pull of its vision. There is no middle ground here. It’s about believing that Sia will be a hundreds of million dollar company in a few years time.
Indicators that worry me: Sia is understaffed in Marketing. It’s also seriously understaffed in sales and particular enterprise sales. Pricing is intransparent; it will scare enterprise-customers. Exchanges struggled last year, and — regardless of whether it was — it didn’t seem like this was a major problem for the team.
Indicators for hope: They just refreshened the website design (the old one felt inadequate to me). With regular community updates, PR efforts have visibly changed last quarter of 2017. And, Sia just announce hiring more Marketing staff.
Enterprises (show me the money!)
I believe Sia’s future in cloud storage rests with enterprises. That has three implications:
Enterprises have specific requirements when it comes to their data. First, there are issues with the private key solution that is currently used to keep data private while storing it with anonymous hosts. It’s insufficient, because companies are required to give different groups of employees different levels of access to data. Also, if the encryption keys are compromised or lost, there needs to be some recovery solution. Finally, due to new regulations, companies need to know and be able to control where data of their customers is stored geographically. This adds an additional criteria on how hosts can be chosen to store data. These problems are just technical in nature, but make Sia unusable for enterprise for now.
In sales, enterprises are slow moving. Sales need research up front, nurturing and then caretaking after. Connections matter, too. Overall, it’s a long-term and full-term job. Whereas open-source cooperations get a liason staff, I don’t see indications of enterprise sales being taken seriously. Don’t see plans, either.
Customer support. Enterprises love to have a number to call, and service level agreements. Absolutely doable to setup this infrastructure, but also quite far out.
Having your own purpose-full blockchain is great…until it isn’t.
You’ve got to maintain the network, stabilize the price, worry about hashing power and hard forks. Microtransactions, we want those to pay for file access. But somebody has to build that. And in the meantime all you really want to do is create a network for storing stuff.
It’s not just the effort put in, it’s also time lost that you can’t spend on other things. This is part of the reason why Storj did not go down the path of it’s own blockchain, choosing a “managed” ERC20 token instead.
Time will tell, if a blockchain is really the best technology for decentralizing storage, but in the meantime Sia’s competitors are moving. This becomes a resource problem (developer resources), which is in parts why Sia is raising fresh money.
“It’s the access, stupid”
(For people like me who are not too familiar with US politics: The heading is not an insult, but a reference to the famous Bill Clinton campaign slogan It’s the economy, stupid.)
Digital content by and large shares one characteristic, no matter if it’s an ebook, a video on Youtube, a Shareholder Powerpoint presentation or an entry in a financial ledger: It’s written once but accessed way more often. (Same with software: Programmers should write readable code.)
Yes, Sia can be the dusty shelves of a business (hello Sharepoint) or keep your vacation pictures safe, which you want to go through when you have time and then forget about completely. But that’s not the challenge, that’s not where the money is.
This is on Sia’s mind, of course, with CDN, HTTP access and video streaming
being discussed. I’m not sure it’s as central to the project yet, as it needs to be,
because ultimately Sia’s business is not storage, but delivering content.
Overall, I’m quite hopeful for Sia in the mid-term. I’m still undecided however, if Sia has a shot long-term. Centralized providers might keep an edge in terms of pricing (paying for it with centralization) that Sia can’t beat. Currently it’s ahead, but it’s starting premise of renting out unused storage will dry up long before it reaches scale.
If you want to read more about that or more about the project in general, have a look at my detailed 5-part blog series on Sia.
- Date of publication:
- Sun, 02/25/2018 - 16:40
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