Siacoin has been in the news recently with their announcement of Obelisk ASIC and what better time is there for a review?! So, I did some digging and some research and let it brew for a few days, and then did some more research. So let's dive in and explore what if found out.
What is Siacoin?
Siacoin is a cloud storage company. Siacoin is a blockchain based, decentralized storage platform. The platform offers users to rent cloud storage space or rent out their unused hard drive storage space to earn money (Siacoin). In theory it’s an attractive idea and their marketing is very strategic down to name associations (like Security Industry Association and the musician), colors, fonts, and images. Well planned. The media attention around this coin is really quite impressive!
Siacoin (SC) Basics:
- 27,170,726,970 Siacoin in circulation
- 27% Annual inflation
- Mineable currency
- $524,886,821 Total market capitalization
- August 28, 2015 Official Market launch date
Sia hit the market at the end of August, 2015. They currently are in beta testing and their road map is well documented. At this time they have a working product (more or less) and there are around 500 hosts offering services at this time. However, of the 1.9 petabytes (1945.6 terabytes, or 1.9 million gigabytes) of storage available, only 1% (27.5 terabytes, or 28,160 gigabytes) of it is actually being used! Check it out for yourself at Sia Hub.
How much can I earn renting out my spare hard drive space?
To make sure I had a full picture of what is going on with Siacoin, I downloaded their wallet and purchased a few thousand coins to test out the system. Unfortunately, once I installed the wallet it had to update, which took several days running almost nonstop! The wallet does crash on occasion and if you make the mistake I did when I tried to close it and it was still updating, it may freeze up your computer for a few minutes and still refuse to close until you manually shut it down through the task manager. Very frustrating! Once I finally got the damn thing updated (still don't understand why this took so long) I found what I was looking for.
The current average rate to rent 1 terabyte of space is around 50 Siacoin per month. Sounds great if you ask me because that only comes out to about $0.96 per month. So, that got me thinking of what the people renting space are earning. No surprise the average rate is identical at 50 Siacoin per month for renting out 1 TB of space according to the smart contracts currently listed. However, to rent out your hard drive space efficiently your computer must be on 24 hours a day, 7 days a week! Also, you must keep the wallet open and running the entire time. And on top of all that for you to make money, it all depends on a bidding system for the smart contracts. So you may not get a contract for a while and it may not even provide the average rate.
I took my research a little further and discovered SiaPulse.com and used their tools and calculators to estimate what I would earn if I was going to rent out one of my spare 1 terabyte hard drive. Sadly the current estimate (based on 100% uptime) is 16.20 Siacoin per month. That’s $0.30! Wow! Really? Unless you have free electricity from solar panels or something, you will have a solid electricity bill at the end of the month trying to do this. And there are likely many hosts running at a loss at this time.
Sia Security
On February 7th, Siacoin released a blog entry talking about security concerns with their platform. Their global redundancy strategy is actually a pretty decent idea because they break up your files between 30 different hosts and the file is recoverable as long as at least 10 of them survive. And as long as the attack doesn’t happen on the whole network entirely that redundancy can be built back up after some hosts go down almost instantly. That does make the files seem secure, but then I read their official statement on user SecOps (Security Operations):
Sia expects hosts to be performing their own SecOps in the standard case. Certainly today we don’t have any certifications or checks that we put hosts through to make sure they are protecting themselves from attack. It’s something we’re looking into but would like to avoid, as it clearly hurts decentralization (getting a certification requires having a central entity that can choose to not certify you).
So they expect their users to do a good job protecting themselves, but they are not actually going to bother to check if they even have an antivirus because they don't want there to be any central regulation unit to certify security levels (why can’t this be decentralized too?). It's kind of ironic that they share an acronym with the Security Industry Association because no such association would endorse their policies and views on security operations. In my opinion, this approach will end up biting them in the ass if they don't do something about it. You can’t just blindly trust the average user to know what the right amount of security is, let alone the industry standards. Did we all forget that the most common password in the world is still “123456”?
Obelisk ASIC
As many of you already know, Siacoin has recently announced that they will be releasing the Obelisk ASIC Siacoin miner. According to the details released on reddit.com the miner will cost $2499 and their target hash rate is 100 Gigahertz a second. If you want to know how some of the best ASIC's compare to the Obelisk, check out a recent article on Bitcoin Worldwide. To put it in perspective, the slowest miner advertised on Bitcoin Worldwide is the Antminer S5 with a hash rate of 1.16 Terahertz per second and it only costs $139.99.
What is more interesting to me is that Siacoin is more focused on improving their coin mining operations instead of trying to build some sort of client base and improve their platform. I mean 1% actual usage after two years? That's a joke! Their wallet is clunky and kind of primitive compared to modern wallets coming out these days. And yet they are developing overpriced mining equipment instead of advertisement or some sort of marketing campaign to bring in users.
Final Verdict
As a computer developer I have some insights into web development, database management, and network administration. The reason so many corporations, small businesses, and even individuals are attracted to cloud services is because of the overall savings, simplicity, and security. Many companies used to maintain their own servers before they migrated, but those servers needed constant attention, periodic and extremely expensive hardware and software upgrades, and qualified personnel to maintain it all. Now, the cloud services like Microsoft Azure and Amazon S3 do it all for you and do it better than you ever could. Say what you will about 10-30 redundancy and decentralization, but you still can't beat an army of security experts at Microsoft, Amazon, and Google and they actually guarantee their services.
My final verdict is that this is a mining coin with little future. Their product is built on hype with no customers despite generous media coverage and attention over the last couple of years. What do they have to show for such a long development period (by cryptocurrency standards)? Their wallet product is difficult to use and set up and isn’t really like a cloud service at all because there is not quick access to your files (like Dropbox). There is no customer base at all and yet they have a $524 million market capitalization?! No self-respecting business would ever leave Amazon S3, Google Cloud or Microsoft Azure just so they can decentralize their data and maybe save a few bucks. And services like Azure are already starting to offer block chain services.
I am sure Siacoin will gain more popularity and will be continually hyped for years as it has already enjoyed a lot of great media attention. However, I will not be investing a dollar into Siacoin. If you like this article, please upvote and resteem. I would love to hear what you guys have to say in the comments.
This blog is written for informational and entertainment purposes only. As the author, I can honestly say that I am in no way associated with Siacoin or any other blockchain based company. I do not own any Siacoin at all (the few I purchased for this review I have sold the same day I was testing them). My opinions are my own and are offered freely. My opinions and suggestions and are NOT INVESTMENT ADVICE! Please do your own research before considering any high risk investments.
Image credits:
Sia Logo: http://www.bitcoininsider.org/article/1460/what-siacoin
Sia promotional images 1-3: http://sia.tech/
Sia Obelisk image: http://cryptomining-blog.com/8837-siacoin-sc-to-get-a-dedicated-mining-hardware-asic-device/
Crypt0.Critic Images: CleverCat
Great post !
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https://steemit.com/tenx/@vegeto/what-is-tenx-and-how-to-participate-in-ico
Glad to see this kind of critical look at SC. Practically speaking, it doesn't seem to be moving anywhere since it's run during the summer. I just posed a new question about this coin on my Steemit Blog, come check it out.
Brother, i´m an investor in Siacoin, and i must say that you did me a great service by exposing some of it´s flaws, limits and weaknesses. I wasn´t aware of such critical weak points, like the days needed to upload the wallet, and the security question, where each node is left alone to check by itself the security measures. What is most critical though, is that there´s people losing money with it right now, because of the low value, it´s a cash burner. your views in this regard are shocking to me, to say the last, but they are very useful to make a good, mature analysis of what is this that i´m investing my money in.
Thank you so much for your great service.
Rex Georges Segundo
Great article! As a miner, I was excited with the ease of mining Sia coins. I was looking forward to the coin to get a better valuation but now I realise I won't ger rich overnight. You are painting a grim picture of the future but you are doing so using facts instead of speculation and I do appreciate that. What caught my attention the most is the 27% annual inflation. It really makes you realise how much investment is needed just to keep moving forward(I'm talking about the coin, not the actual company). I hope the company proves us wrong but all of the sudden their ASIC miner pre-pay venture started making a lot of sense.
Cheers!
I am also disapointed by Sia. I really love their ideas especially the fact that you can recover heavily damaged files and I think decentralized data server is a huge market for future, but it seems they are more targetting big firms rather than individuals. So..
Interesting article. Same thoughts here. Blockchain is here to stay, therefore we shouldn't look at what most people invest in but in the real quality projects, with great teams, management and a great product. Some people are still investing in "an idea". Is an Idea worth 100m+ USD to you? Do you know this interesting site? https://www.coincheckup.com They seem to give this complete indepth analysis of all cryptocoins. Check for example: https://www.coincheckup.com/coins/Siacoin#analysis To see the: Siacoin Report.
Good article. I bought a little bit of Siacoin because I liked the general concept and wanted to diversify my alt coins some. But it sounds like I sure shouldn't "bet the farm" on it. Won't be adding any more. Just hold for the long term and see what happens.
Well, I did add some more. Still not betting the farm on it. Just part of diversification and so on.
Really great write up! Thorough and well cited!
I own about 2k right now, Cool
upvoted check my siacoin price prediction analysis