Sia: Track record & Operations, a Mid-term Perspective (Part 3)
Sia wants to be the hard drive of the Internet. Underneath the hood, Sia is a cloud storage project, like Dropbox, but it is decentralized and powered by both a blockchain and its own cryptocurrency.
In this blog series I look at the Sia project from various angles. I provide pointers and share some thoughts. None of this is investment advice, though: research yourself and use your own head.
Parts of this series: (1) Intro — (2) Long-term — (3) Mid-term — (4) Competitors — (5) Investing — or Read more about Sia
If Sia is a road trip, then investing mid-term is not about reaching the final destination, nor is it about being dropped off at work: The journey itself is the goal. Will this be a pleasant trip, all things considered?
With maybe a year or less to go for an investment, what matters here is not the final perfect goal, nor day-to-day fluctuations in the coin, but solid execution and a decent outlook to make some money. With those goggles on, I look at the track record: What has been achieved so far? And, I take a glance at operations: How does Nebulous do things? Jump to the Knowns & Unknowns for my personal conclusions.
Started in 2013, announced in May 2015, how far did Nebulous get with Sia?
For a decentralized storage project, the state of the network is arguably most important. Most importantly, in contrast to many crypto projects, there actually is a network. Here some quick facts (state Jan-28, 2018):
- In operation since: June 6, 2015
- Active Hosts: 710
- Storage available: 3400 TB
- Storage in use: 118 TB
- File contracts: ~79k
- Mining pools: 6
Have a look at siastats.info for details and up to date statistics.
As you can see, there's plenty storage available on the Sia network. Currently, the usage rate is about 3%. With storage currently in low demand, the earnings for hosters are minimal, even if you have plenty contracts. Have a look at `how much this hoster earned in November: two hosts store 980 and 615GB and earned 9 SC (.24 USD) and 4 SC (.11 USD) per day, respectively. Good for renters!
An important recent development is the advent of a new Sia hardware miner, the Antminer A3 by Bitmain, which may influence the mid-term stability of the network and may prove to be a distraction to the Nebulous team. See the mining section in Part 5 for details.
On the coin side, Siacoin now has a market cap of roughly $1.4B and is ranked as #28 on coinmarketcap. (We're in a big pump, though: Market cap was $200M beginning of December 2017.) That's pretty big, even for crypto standards, and reflects the fact, that this project is actually serious in terms of execution and possible market size.
One thing to know, which is obvious from the 2017 graph, is that there has been a huge pump and dump in mid 2017, from less than a hundred Satoshi to over 800, and back down. This means a bunch of people felt like they lost 90% of their investment, and are correspondingly displeased.
Siacoin has been traded on a bunch of other exchanges since its inception, too, but has been subsequently delisted: Bitsquare, Bisq, Cryptopia and Yunbi. Removal happened due to the Chinese government, but also due to “ongoing transaction issues” in case of Cryptopia).
As for the software, the following quote from the GitHub README sums up the current state of things nicely:
Sia is ready for use with small sums of money and non-critical files, but until the network has a more proven track record, we advise against using it as a sole means of storing important data.
Using Sia is hard. There's a guide for this, but roughly, you have to…
- Get Siacoin. That involves getting Bitcoin, which is a hurdle all by itself, and then signing up and verifying at an exchange that handles Siacoin, or see this Reddit thread for possibly more up to date info..
- Install the client. Download, sync the blockchain.
- Send Siacoin to the wallet.
- Figure out allowances. As explained in Part 2, you have to set an upper spending limit to form file contracts.
- Upload files.
After all this, there's two rough edges still: your wallet has to be unlocked and online every few weeks for your contracts to be renewed. Otherwise, your data may just be lost. You also loose your data, if you loose the Sia data dir on your disk. That directory contains information which file is stored where—so if you forget to backup that, then bye bye files.
I find this overall process quite demanding. It may be a fun challenge for early adopters, but nothing to conquer the mass market with. Sure, rough edges can be straightened out, but not everything is just a missing feature.
Possibly the biggest hurdle in this whole process is to obtain Siacoin (and then figuring out what they're worth, so you know how much you're actually paying). To address this, a new project has been announced: Sia Exchange, so you can get Siacoin directly with dollars or other fiat currency.
Sia is a newcomer to a fat, established market. One way to get into such a market, is through reselling, for example integrating with products of other companies that need storage. That way, customers of those products indirectly or directly become Sia's users.
Nextcloud is an “open source file sync and share software“, an alternative to the Dropbox frontend. It is available as a self-hosted component for private use as well as a subscription-based cloud version for enterprises. In August, Nextcloud added an app to include Sia as an external storage provider. A detailed step by step guide explains how to set this integration up. And there is a blog post from Sia about the Nextcloud integration.
Minio is a “distributed object storage server”. While it brings its own storage capabilities, it does support other backends, such as S3. In August, a Sia bounty was claimed for a Minio integration and Minio agreed to include the Sia backend into its standard offering, as announced in a Sia blog post.
Duplicati is a free, open-source backup software. It's built as a frontend to be used with different storage backend, such as AWS S3 or OneDrive. In September, their version 184.108.40.206 added support for Sia as backend.
A fun, little project, is the Sia Cloud Storage Extension for GNOME. It allows GNOME users to sync a directory with your Sia storage, though it seems unmaintained by now.
This year, the Sia team definitely has done steps in the right direction to encourage integrations. A closer cooperation with Nextcloud and Minio could definitely be beneficial to attract more users. Currently, I'd be surprised if those integrations are in large use.
Size and activity of the community is in my opinion also a fairly strong indicator for the future success of a project: An enthusiastic crowd is the best marketing, spreading the word far and for free. So, how's the community doing?
Generally, Sia is now engaging the community considerably more than in even half a year ago, with regular Community updates, and now also a Facebook page and group. Furthermore, Sia announced bounties, see open and finished bounties, to encourage development of integrations and other projects on the periphery. Furthermore, as a recent Community Update mentions, there have been a bunch of contributions to the code base and documentation.
I've been in the Discord channels a while now, and my impression is somewhat mixed. It's definitely active and alive, there's always people talking and discussing, and new users get help, which is great. I however also get a sense of frustration at the rather quiet approach of Nebulous; in comparison to other more “hyperbole” projects, Sia is somewhat unenthusiastic. This makes sense in that the leadership team until recently consisted exclusively of developers, but does not bode well for a project that, in the end, intends to make a big splash. Addressing this, Sia stated in the last Triannual Update that “we intentionally keep a low profile”. Giving them the benefit of the doubt, this past silence is not a problem; or as the stock-traders say: past performance is not indicative of future results.
All in all, Sia got off the ground in terms of its product, if not sales: A working product is in use, by a small if enthusiastic community.
Apart from what has been achieved, how does Nebulous operate? Any red flags?
How far Sia can get depends also on their ability to produce good-enough software quality fast enough. I think Sia is generally doing okay here. Code is being reviewed and discussed. There are automated tests, though some fail and are not exactly prioritized, maybe they're not that important?
The project seems consistently active, looking at some Github statistics. While all those numbers can be inflated, I don't believe Sia has an interest in doing that or that the general trend is incorrect. On Github, development started around October. Since then there's been constant activity by the core devs, and a steady if not excessive stream of releases. There's a healthy amount of forks, a contributors guide and actually contributors, with issues and pull requests.
No red flags, neither in terms of slowness or sloppiness. A question mark are those tests (but can't be bothered to look into the details there), if they're a sign of weariness.
PR & communication
How a company handles PR gives in my opinion an indication on how it prioritizes marketing.
There's been one major hickup this year worth mentioning, namely with the infamous Boston Globe article. Criticism followed this article, focusing on two things. First, Sia allegedly propagated the image of an unprofessional frat-house startup by using a picture of someone's living room as a work place, with warts and all. Second, because the article allegedly made it sound as if the team did not care about the price of Siacoin as a currency. Sia addressed this concern in a Community Update later.
These, now regular Community Updates (latest from November) signal for me also an important, positive change in Sia's attitude towards PR. This trend includes hiring Steve Funk as Community Manager, who shoots out weekly “Development updates“ in the announcement channel on Discord This is reinforced by the statements in the above Triannual Update.
Funding / Spending
To quote the wiki:
To date, Nebulous has raised $1.65M in total funding in a combination of angel investments, venture capital, and grants. Investors include Procyon Ventures, Raptor Group, Fenbushi Capital, and angel investor Xiaolai Li.
With that money, others would go on a spending spree. But as previously seen, Nebulous is quite conservative in terms of hiring. The only big investment they've made is towards the Obelisk project, see Part 5.
What Sia prioritizes
Startups are extremely limited in time & money. Even if you get lucky, and your product idea actually fits the market at the time, you need to execute well, and that has a lot to do with prioritizing: What to build, and what not to build. So, I looked at what Sia chose to develop in 2017.
Sia's Roadmap is publicly available as a Trello board.
For me, exciting short-term features include faster contract formation and an overhauled UI. Mid-term there is video-streaming, automatic host pricing and proof-of-burn (see Part 2). Especially of course video streaming has the capability to generate a big splash in the crypto community, and should make Siacoin quite more valuable.
Knowns & Unknowns for Sia as a journey
- Network: Operational for a while now, with 3% usage rate. Storage is cheap; earnings for hosts are minimal.
- Coin: Siacoin is #33 on coinmarketcap, with one PnD in mid 2017, and one currently ongoing.
- Product: After 3 years of development, Sia is still only for early adaptors.
- Integrations: Sia is starting to integrate with other projects, which is great. The integrations are very early stage / low-key though.
- Community: Not tiny, not huge, but active. Like Nebulous, the community is not splashy, which is not common for a crypto startup. Sia also started encouraging the community with bounties.
- Development: The development team is active, and releases consistently.
- PR & Communications: Culture comes from the top. The Sia community is not full of eccentric dream-talkers, because Nebulous is not. So far, the team has been extremely quiet. With a Community Manager now on board, communication finally becomes a regular thing in the Sia universe.
- Funding / Spending: They got a good chunk of funding, and spend it conservatively.
- Future roadmap: There is some exciting features ahead, most importantly video streaming.
- Enterprise-sales: Will they be able to engage and close some enterprise customers, to get a foot hold in the market and learn?
- Product: With competition closing in, will they be able to get the product ready for prime-time fast enough? In my opinion, an easier user experience, including plain-stupid cost overview, and a simple way to acquire Siacoin (Sia exchange?) are necessary to get there.
- Marketing: Will they be able to professionalize their marketing, and engage the community to spread the word? The ingredients (product, community) are there.
- Spending: Will they ramp up their spending towards marketing & sales, as soon as the network is reliable?
- Network: Bitmain's A3 new Siacoin miner may become a major distraction and hurt the project in the mid- and even long-term.
My personal mid-term view
Sia has gotten far enough to land some visible successes this year, which will create some noise and increase the value of the network. I don't see the pivot towards serious sales coming though, and given how slow sales cycles can be, that worries me for the long run.