Sia has created a blockchain infrastructure for an open, decentralized marketplace for cloud storage. Instead of building centralized server farms, Sia is building a network of entities that lend out their free disk space to others. With Sia, anybody can rent storage space, host files, or participate in the network so long as you hold a balance of Siacoin, the native ecosystem currency.

The Current Situation of Storage

Centralized storage services are prone to single points of failure and fraud, especially when dealing with valuable data. Blockchain technology allows for a peer-to-peer storage ecosystem to exist. Data is turned into pieces that are stored in multiple host hard drives across the network so that if an entity storing the data decides to exit the network or otherwise go offline, files and data will not be lost permanently. While all data is on hard drives, the infrastructure between peers in the form of storage arrangements are done transparently and securely on the blockchain as filing contracts and storage proofs.

The Sia Ecosystem

The system consists of two different parties, users and hosts. Leveraging the platform, users acquire data storage space from the hosts, and in return the hosts are compensated in Siacoin. An exchange of storage space for Siacoins is done on the users’ and hosts’ own terms. An ecosystem of flexible storage options is created out of this free-market. Hosts can set their own prices, market their reliability and set penalties should problems arise, such as a lost file, even denying a user outright because of the type of data they wish to store. There is flexibility on the other side of the equation with users actively working in their own self interest. Options exist to divide data between multiple hosts, even the ability to reward hosts for uptime with incentives on top of the usual storage fees, which can help increase upload speeds.

File Contracts

When a user and a host come together on the Sia network, a file contract is used for the agreement. A smart storage file contract is stored in the Sia blockchain. While all data is stored on a provider’s hard drives, the contracts for these arrangements are stored on Sia’s blockchain for complete transparency and security throughout the process. The host has to agree to keep the file contract for a mutually agreed period of time, prior to payment, or they can lose the fee.

File contracts define the terms of the storage agreement and protects both parties by making sure that each side is held accountable. By being built on the blockchain, this contract can be verified by everyone and is unchangeable by either party. Users then send an agreed upon amount of Siacoin to the file contract. These funds are automatically transferred to the host in proportion to the amount of data the users upload to the host’s hard drives. If the user doesn’t require all of the storage space, some of the funds will be transferred back at the end of the contract terms.

Proof of Storage

With the terms of the contract set, the host must continually provide proof of storage to the Sia network. Within the file contract, stipulations can be made on how often this proof needs to be shown to reduce fraudulent hosts. A host needs to present this number of proofs to receive the funds sent by the user. If a host doesn’t provide proof, the contract can be canceled. Even if it is made just shy of the time window, the host could penalized. The proof of storage itself is shown by providing a random Merkle proof of the files and a small segment of the original data. Everytime a file is sent to the host to store, a Merkle root of the file is created. The Sia network requests the proof and validates it. Random numbers are generated using the most recent block as a seed, meaning anyone can verify the validity or invalidity of the data segment. If the user chooses to split up their data more thoroughly, the host only needs to verify an amount of data that is proportional to the amount stored on their hard drive.


Sia aims to be a decentralized network of small servers that, taken together, comprise the fastest, cheapest, and most secure cloud storage platform. Competing with giants such as Amazon, Google, and Microsoft, being a major cloud storage player today requires building trust in the technology. Breaking into this market is a multi-billion dollar endeavor. As Sia and the blockchain space as a whole continue to mature, it will be interesting to watch as more and more middlemen are cut out of traditionally centralized services.


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