Sia's Competitors: S3, Storj, Filecoin, Maidsafe (Part 4)
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
The best road trip in the world is spoiled, if you get to the edge of the cliff by early sunrise … and someone else is already there, doing selfies. Same goes for the Sia journey: Sia's execution does not matter if a competitor is there first. So let's have a look at who's eating into the same market pie.
Sia's competitors come in two forms: Established centralized companies like AWS with S3 or Dropbox, and decentralized competitors, and I look at both. Jump to the end, if you just care about my conclusions.
Innovation: Sia vs. centralized market leaders
Storage is a big market, with big companies raking in big profits. Who are those companies? Why does Sia have a shot at this market?
At the core, Sia is about decentralization and that's big and we'll look at this in a second. But to get a foot into the door, they want to start from the consumer-side, as the About page explains:
What if you could liberate the unused storage space of the world and unite it into a worldwide free market for data?
So, to start with, Sia will focus on offering individuals and companies a way to rent out their unused disk space. Eventually, as this becomes more profitable, companies will buy storage capacity and manage it, so they can rent it out. (You can already do this, see for example Minebox.)
At that point, Sia will directly compete with existing cloud storage providers such as Amazon's AWS S3, Dropbox, Google Cloud and Rackspace.
There are two main selling points for blockchain-based, open-source solutions like Sia in comparison to existing providers: Decentralization and trust, or rather the way they establish trust.
Amazon S3's storage is distributed over many, many servers. Taking down one of those storage servers does nothing to impede its service. It's awesome for technical reliability.
Technical distribution does not distribute power though: Amazon has full control. It is free in how it handles your data. It can decide that your data is important or not, and therefore should be distributed over more nodes, have lower latency … or not. It can take risks on your behalf, whether you know it or not. It can decide to terminate the service, and then S3 is gone. It can allow a single person to mess things up big time, which Sia noted gleefully. This power centralization goes into political areas as well: Being a US company, courts can order Amazon to handover all data, restrict service to you, and so on. It all boils down to: You must trust and rely on Amazon. You've no choice, if you want to use S3.
Decentralization says: You don't have to trust any single person or organization. You must trust the system though, and you can trust it, because you can inspect how it's built and meant to work. Well, in reality, you have to trust experts to tell you that it's built with good intentions and that it's built well, and you have to trust the development team to keep building it so. At least, if built well, a decentralized system cannot fail because a single party stops working, or screws up.
Cost is an interesting differentiator: Some argue that decentralized services should be cheaper. Currently, both Sia and Storj are significantly cheaper than Amazon S3, with $10 and $15 versus S3's $115 for 1 TB storage. Competition betweeen hosts surely will keep prices to a minimum, so it makes sense that Sia's hosts will never get S3's profit margins. But at the same time data center operators like S3 can command units of scale that no one can compete with, in the long run and at scale. Of course, the ideal scenario is S3 becoming a Sia hoster, storing the primary copy of all data, but that's unlikely to happen, precisely because it undercuts S3's profit. Overall, I'm not convinced decentralized storage will win on price.
Execution: Sia vs crypto competitors
Apart from the centralized and established companies, there's of course all the other decentralized storage providers having roughly the same goal as Sia, or at least eating from the same market pie. I looked at some of those projects. Of course, I did not spend nearly the same amount of time looking at them, so I'll just give some pointers and point out things that caught my attention. If I got something wrong, do reach out to me.
Storj is part of the first-wave of storage providers in the crypto space and like Sia got off the ground with a working implementation. For that reason, I'll give some more details. If you're a Storj fan, do point out mistakes, and assume that I like to learn and improve.
First, some key details about Storj:
- The pricing is determined by Storj Labs: As of January 28, a gigabyte of storage costs $0.015, to transfer it costs $0.05.
- The coin behind Storj is a ECR-20 token, based on the Ethereum platform. Among other things it means its smart-contract capabilities are ready for use.
- Of the 425 million premined tokens, 299 million, or 70%, are still held by Storj Labs, the devs. That's a looming threat for a price dump, of course, but one the Storj team is aware of: They recently put these tokens, as promised, into a time-locked contract, meaning they're not available for spending and therefore not threatening for a while.
- Terminology: Sia's hosts are called “farmers” in the Storj world, since they farm coins by storing files.
- Bridges are an important part of Storj, which also cause a certain degree of confusion.
- Bridges are HTTP API servers, providing entrypoints into the Storj network. They make the Storj network easy to use from the outside, by managing contracts, host reputation, proof of storage, payments, and all the protocol details necessary to store and replicate files. Since they know about a lot of contracts, they also have a much better sense of the reliability of farmers than individual users can.
- In their current form, they limit Storj in two ways: First, the only existing bridges are managed by the Storj company. Second, because of their functionality, existing wallets and clients use those bridges to access the network. That's the opposite of decentralization. The company has become a single point of failure (and power). See also this GH issue on the topic.
- As with Sia, there are rough edges to iron out. One of them is payouts to farmers are still done manual once a month, see the Storj Ethereum address. Here's how they are calculated. Note that an automatic smart-contract variant is on the roadmap, SIP 8 contains the design discussion. Smart contract here refers to the common definition, in this case code run by the Ethereum network.
- Past troubles. Storj has gone through their share of troubles. Here the two most important episodes:
- Leadership. In summer 2017, the team somewhat desintegrated, with core members leaving. It seems the team has recovered from this by now, but it cost them. Communication from what I understand was not great, leading to a fair amount of uncertainty about the project for a few months.
- Token technology. Storj had to switch their blockchain technology, which powers their token. Needless to say, this cost precious time as well.
Comparison to Sia
- Blockchain: The use of blockchains is quite different between the two projects. This is important, because blockchains are a tool that is supposed to solve problems, not an end by themselves.
- For Storj, the coin and its block chain seems to be intended as a currency only, with some automation for payouts. Since the bridges may accept whatever payment method they choose to implement—for example Paypal or credit cards—the coin is mostly the currency for hosters.
- The Sia network on the other hand uses the blockchain to establish trust about file contracts and storage proofs, and therefore can manage the storage payout itself. Reputation can also partially be based on this information.
- Pricing: Storj pricing is fixed and determined by Storj Labs. Pricing in Sia follows a free-market model, based on host offers and client demand. In my opinion, the costs are much more transparent on Storj side.
- Payment. In Storj, bridges implement payments, currently using credit cards. Conceptually, bridges can do whatever they want in terms of payments. Sia is restricted to Siacoin so far, and users must go through the trouble of getting Siacoin.
- HTTP Bridges: Bridges give the Storj network an easy way to implement CDN and S3 functionality, as questionable as the current incarnation of bridges is in terms of decentralization. Sia did not make a move in terms of HTTP bridges yet.
- Dev team incentives: Storj Labs retains 70% of coins. That's a massive risk of inflation right there. Sia on the other hand is long-term incentivized by Siafunds.
In summary, each project has their nose ahead in different directions: Storj in terms of bridges towards CDN / S3, Sia in terms of reputation system. A known major long-term worry with Storj for me is the incentive model: With Sia I know the team profits from long-term success. With Storj, due to the large number of coins held back, I have to trust individuals not to dump and run. I'd rather not have to trust people to be nice—that's what blockchain is about. Regarding teams, I got the feeling that Storj is the way more business-savy, attention-seeking project with a ship-it mentality, while Sia is the quiet, idealistic nerd startup.
Pointers for your convenience:
- Storj whitepaper (here is a simplified explanation by Robert Greenfield)
- The roadmap for the next year or so has been revealed at the recent townhall meeting. Highlights: micropayments, smart contracts, reputation system (ping, uptime), streaming, CDN
- Some latest news (unverified!)
- Some blogs / posts:
FileCoin is a high-flying project that gathered a lot of interest in 2017, mostly because of it's massive ICO. It's the one project that I see as having the capability to side-line Sia in the long-term. Here some facts about Filecoin:
- The ICO raised more than $200M. Wow. It was incredibly hyped, so it's good to also hear the other side, for example this article at Token Economy where Stefano Bernardi explains why participating is not a good idea, and also that they probably wanted to raise around $500M, which is an insane amount of money.
- While there was not even a prototype for Filecoin at ICO time, Protocol Labs and Juan Benet are known names in the cloud storage space, having developed and running the InterPlanetary File System (IPFS) (on Wikipedia). Protocol Labs is seeing IPFS as the precursor and basis for Filecoin, adding the trust-free market of blockchain on top of it. In particular, the IPNS is a service to provide addressable names to files, which solves the problem of having a browser-visitable URL for a file. (A problem Sia hasn't solved yet, and Storj implemented with bridges.)
- The coin is not yet released. It's expected in middle 2018.
- Notable ideas from the whitepaper:
- Proof of replication, which ensures independent copies. Oftentimes replication is described as “has been replicated to its own uniquely dedicated physical storage”, which may be confused with “different hard disk, so if one fails, the other copy is still there”. That, of course, is not true. This proof handles sybil attacks, where one attacker simulates many hosts, but actually only stores one copy.
- Mining power does not follow proof of work, but the amount of committed storage that a storage miner provides. I think this is equivalent to “Proof of Capacity” in Sia's blog post about ASIC mining, and you should read why they think it may not be as great an idea as it sounds.
Comparison with Sia:
- They are sitting on an immense pile of cash. Sia is poor in comparison. If ever Filecoin launches a continuous marketing campaign, the best outcome for Sia is that the rising Filecoin tide lifts their boat as well and does not capsize it.
- Obviously Filecoin is so much better at selling their idea. :)
- It is just an idea so far. There is no working implementation, no network, not even a coin.
- The Filecoin proof of storage (spacetime) takes as input the previous run. That means, any one proof should be enough to prove continuous storage. That's neat. In Sia's case, you'd have to traverse the blockchain to find all storage proofs. I'm not sure how Filecoin's proof handles the case where a host has been out shortly, missed one proof, but then came back up: will their mechanism still work?
Links for FileCoin:
- Updated Filecoin Whitepaper and IPFS Whitepaper. This blog post aims to condense the whitepaper, if you don't want to read the whole thing. I find the whitepaper fun for the different attack vectors that are glanced at.
- Youtube video titled The Decentralized Web, IPFS and Filecoin by Juan Benet.
- A rather critical opinion piece on the overvaluation of Filecoin and uselessness of the business. I think it's a good read, though, like anything, including this blog series, must be read critically. I share the authors views regarding Filecoins overvaluation, but the technology is not necessarily as useless as described. In particular, if Filecoin decouples “pieces” from servable content, as Sia does, then the market is not nearly as restricted.
Not a competitor but worth a mention if you're interested in decentralized cloud storage to know about: A 2013 proposal by Microsoft Research.
And then there are projects like MaidSafe, whose scope dwarfs storage projects like Sia by orders of magnitude.
MaidSafe is one of those over-the-top visionary projects, and if ever they achieve their goals, that'd be so interesting. What they do? They are building a decentralized computer, effectively, complete with computing engine and storage. The whole thing is free from human intervention and error: Governed by algorithms, files are distributed across the network to minimize latency and costs, prices are set according to supply and demand automatically, cloud apps are run wherever it makes most sense. Amazing stuff.
But. The project has been started in 2006. Yes, 12 years ago. We're now somewhere in the Alpha 2 stage of the roadmap. Storage comes in Alpha 4. Let's talk again in 2020. By that time, Sia has either secured a good chunk of the storage market, or it doesn't matter anymore what MaidSafe does. :)
In the meantime, they are super active on Twitter and on their blog. Have a look at their whitepapers, or their numerous fan blog posts and videos. As a fun side, MaidSafe is somewhat proud of not using a blockchain. They are still a crypto project, though, as they base their economy on the MaidSafe token. As a less fun side, it seems like only 10% of all MaidSafe tokens are in circulation, with the rest still controlled by the company, with the idea of introducing them slowly in exchange for storage. Don't worry, trust MaidSafe. ;)
Flixxo goes the other direction: The scope is much more narrow, but because of it, they may just happen to solve a problem that people can understand.
Flixxo has a much narrower market: video streaming. It wants to replace Youtube and compete with Netflix. You want to host a video, and earn with ads? Alright, here you go—people understand that. These kinds of more specialized projects, with a narrower market, might end up marginalizing generalists like Sia. Flixxo will have massive storage needs, because videos are huge. And it will have to build a lot of exciting technology to provide its videos fast, globally.
Here some thoughts and personal opinions. Feel free to disagree.
- is the typical geeky startup, focusing on tech and product.
- has its dev incentive connected to success of the network, not only coin price.
- seems better on what ultimately makes a startup successful: building the minimum necessary and ease of use (looking HTTP bridges and pricing here).
- has had turbulent times, and is currently recovering.
- feels dangerous to coin investors because of its incentive structure.
- is way better funded than any decentralized competitor.
- has innovative ideas, also because they're 2nd generation: they can learn from the mistakes of the 1st generation (Sia, Storj).
- has released nothing yet.
- might pose a problem, if they can convert their massive resources into speed.
- are dreamers: They have a far larger vision than any cloud-storage startup. And that's why they're unlikely to make the storage race. (Best of luck though for the dust-computing race! I do love the vision.)
- are consistent in their marketing output over time, producing lots of content and tweets. For a long-term vision, it makes a lot of sense to focus on content marketing.
Since it's a time game, all depends on Sia starting to invest early and heavily enough in marketing & sales. That way, they'd leverage their so far superior foundations over Storj, and keep Filecoin at bay. If they don't, Storj's more pragmatic approach may just make the battle.