What is Siacoin?
Siacoin (SIA) is the native token on the Sia platform--a decentralized, PoW, cloud storage platform powered by the Blockchain. However, instead of simply renting storage from centralized database providers, the Sia network connects peers seeking storage with those who have underutilized data storage.
Siacoin operates on a dual token system--Siacoin and Siafunds (SF). On the Sia network, Siacoin is the primary utility token, with no limit to the total supply of Siacoins. In short, Siacoins are used to buy and sell storage on the Sia network.
The second token, Siafunds (SF), has a total supply of 10,000 coins, and they have all been premined. In short, it is a security token that shares a piece of all storage revenue on the network.
How It Works
Once a user is on Sia and they upload a file, the platform then segments that file into many pieces, which are then encrypted and shipped to different hosts using smart contracts.
Sia’s main file hosting service was intended for private cloud storage--that was until SkyNet service department came into effect as a public web hosting platform. The company claims that Siacoin is 90% cheaper than other traditional cloud based storage platforms.
The peer-to-peer (P2P) in Sia consists of renters and the hosts. The hosts offer their storage to the networks and the renters are those individuals who pay the host in Siacoins for the storage they use. Literally of it as a storage locker. The relationship as between a renter and a host is defined and outlined by the file contract, or smart contract--which each storage relationship requires.
For every new storage opportunity, a renter has to trigger a file contract with a pre-paid amount of Siacoins. Customary renter requirements match the 50 top hosts and lock some of the Siacoins as collateral. Once there is confirmation of engagement, a file contract is signed, executed, and submitted to the blockchain. As long as the renter maintains the funds in the allowance, they are free to upload and download the files.
Meet Sia’s Parent Company: SkyNet (formerly Nebulous Inc)
Launched in 2014, Sia’s parent company, Nebulous Inc was a Boston-based startup with just 11-people.
Skynet Labs: A $3 Million Rebrand
In September 2020, Nebulous raised a $3 million funding round led by Paradigm, which ultimately led to Nebulous rebranding to the name Skynet Labs. Other participants to the funding round included, but was not limited to Bain Capital Ventures, Bessemer Venture Partners, A.Capital, Collaborative Fund, Dragonfly Capital Partners, Hack VC, INBlockchain, First Star Ventures, and others.
The reasoning behind the rebrand, according to the company, was to focus on promoting the namesake application hosting platform, Skynet, which uses the Sia network.
The 2019 SEC Settlement
The rebrand came nearly one year following the $225,000 settlement the startup reached with the U.S. Securities and Exchange Commission (SEC) for an unregistered token sale in 2014.
According to the SEC's order, in mid-2014, Nebulous publicly announced its plan to offer and sell "Siastock." Nebulous said it planned to use the proceeds from the offering to develop a decentralized cloud storage network called Sia. Holders of Siastock would be entitled to receive a percentage of future revenue generated from transactions on the Sia network. Days after its announcement, Nebulous began offering "SiaNotes," which it described as instruments that would be convertible to Siastock upon the future launch of the Sia network. Nebulous sold 1,250 SiaNotes at an average price of $96, thereby raising $120,000.
In late 2014, Nebulous changed the name of its Siastock to "Siafunds," and in early 2015 Nebulous announced that it would exchange Siafunds for SiaNotes. By mid-2015, Nebulous had exchanged Siafunds for 1,189 SiaNotes. Nebulous did not file registration statements with the Commission prior to offering Siastock, Siafunds, or SiaNotes, and no exemption from registration applied to their offers or sales.
The SEC's order finds that Nebulous violated the registration provisions of Sections 5(a) and (c) of the Securities Act of 1933. Without admitting or denying the SEC's findings, Nebulous consented to a cease-and-desist order and agreed to pay disgorgement of $120,000, prejudgment interest of $24,601, and an $80,000 civil money penalty.
What is Skynet Network?
So what is SkyNet? It is a public web hosting platform where anyone is able to upload a file to what is referred to as a “Content Delivery Network”, or CDN.
It holds itself out as the “free internet”, where users don’t play by the rules that Facebook, Google, Apple, and the like implement when it comes to data handling and regulation. In short, you own your data and your content by publishing files globally through a “pinning” option. Unlike Sia, files on Skynet network are by default, unencrypted by default, but encryption can be employed.