Episode Transcription

Austin: Hello everyone and welcome to The Decrypting Crypto Podcast, a Castbox original show. I’m Austin Knight and I’m joined as always by my cohost Matthew Howells-Barby.

Matthew: Hey Austin and thanks to everyone listening, if this is your first time listening welcome to the podcast, if you’re a continued listener thanks for continuing to support the show, and listening to me and Austin ramble on every week.

Austin: We’ve got plenty more rambling for you this week, we promise. Following on from last week’s episode we’re going to continue with our format of rounding up some recent news and then digging into one topic as our main feature, so exciting stuff here.

Matthew: Yeah, I’m looking forward to this one. So, this piece … this episode should I say is where we’re actually going to do our first ever project deep dive. Right?

Austin: Yeah. So, we’re going to take one blockchain project and go into detail about how it works, what it’s trying to do, and then generally give you an unbiased overview of what it’s all about.

Matthew: Yeah, we have had a lot of guests on and while they’ll always try to be unbiased, and I think a lot of our guests, we’ve tried to make that very clear, they’re ultimately often talking about their own project, so it is tough.

Austin: Yeah.

Matthew: You’re not going to just shit on your own project, right? And, I think with this format, we actually do all of the research ourselves, and just simply share our thoughts and understanding of how the project works, and what we generally think about it.

Austin: Yeah, exactly and we’re acting as people that don’t really have a dog in this fight, so hopefully for you as the listener, the end result will be that it’ll educate you about a project and maybe peak your interest to learn a little bit more about it on your own.

Matthew: Right, and at this point I also want to clarify we have no affiliation with the projects that we’re talking about, we haven’t received any compensation to talk about them nor will we ever do that, that’s basically the whole point of this podcast is deliver unbiased information, and if we do see things that we don’t necessarily agree with in the project, or think there could be areas of improvement we’ll actually highlight them, and yeah we don’t have a dog in the fight. This is all about us just simply taking an unbiased view.

Austin: Yeah, and for that matter in the spirit of discourse and transparency, if anyone from one of these projects is listening and disagrees with the things that we’ve said, or maybe agrees with what we’ve said, you can reach out to us on Twitter @thecoinoffering, and we’ll chat about it.

Matthew: Yup. We’re always available on Twitter, you can email us at podcast@thecoinoffering.com if you’d rather get in touch more privately, but before we go into our main feature where we’re going to be talking in great detail about the project Sia and it’s cryptocurrencies Siacoin and Siafunds, let’s just talk about a few recent developments in the blockchain space first.

Matthew: So, the first piece of news is all around ShapeShift. And, Twitter has honestly been all over this one. Austin, I know you’re a big fan of ShapeShift, that’s Shapeshift.io the website, and I think we’ve actually talked about them previously on the podcast.

Austin: Yeah, I think that was in series one, where we were discussing the different places to buy and sell crypto currencies, and how you can transfer from fiat currency to one crypto currency, and then from crypto currency to another crypto currency via ShapeShift.

Matthew: Yeah, I think you’re right. And, well the news itself, and we’ll explain why this is kind of important, ShapeShift just announced in the past couple of weeks, that they’ll now be requiring all users of ShapeShift to create and account on ShapeShift, before they can trade.

Matthew: So, previously you didn’t need to sign up, you just basically said which crypto currencies you have, which you want to trade it for, you send the crypto currency to the address, and it processes the transaction. Now, you’re going to need an account, and what this means is that they’ll actually be complying with KYC, that’s Know Your Customer, and AML, Anti Money Laundering rules.

Austin: Yeah.

Matthew: Yeah, and Erik Voorhees … and, I think this is why it’s so controversial, because you may be thinking right now “Well, okay what’s the big deal here?” And, Erik Voorhees, the ShapeShift CEO, who is honestly a true industry OG, if you read anything about blockchain Erik’s name comes up, he’s a great person to follow on Twitter, while I may not necessarily agree with all of his opinions, I think he’s an interesting character to listen to and has some very interesting thoughts.

Matthew: He’s a very public libertarian and has spoken in the past about really separating consumer finances from state surveillance, so this really is likely a bitter pill for him to swallow, because the feeling that we get here is, that it feels like he’s being forced down this route. Erik has been in trouble with the SCC previously and I think he’s probably realized, that resistance is futile to a certain extent to keep his company going.

Matthew: But, a lot people have been coming out on Twitter, and we’ll share some of these tweets in the show notes, in criticism of Erik. But, I know, Austin we’ve talked a bit about general KYC, Anti Money Laundering, and general regulation, and I’m not even sure if this is a bad thing, right?

Austin: Yeah, I think that we, per usual probably feel that there is a happy middle ground that ShapeShift could, or any blockchain piece of technology that is dealing with regulation, versus decentralization could arrive at here.

Matthew: Yeah. And, I think people that are very much huge proponents of blockchain technology and a particular decentralization, I personally feel sometimes can get a little too hung up on the anonymity and privacy side of things. I think that is absolutely a huge advantage, I think when we talk about gaining wide spread adoption for crypto currency, like “Rome wasn’t built in a day.” Very much that phrase comes to mind in the sense, that there are still legal frameworks, there are processes in place, we’ve not just flicked a switch and moved to a whole new world where all of a sudden we can completely transform every nuance of the financial services sector and the way in which we separate ourselves away from the state.

Matthew: As much as that would be wonderful for many, many people, I think there is also the fact, that as we’ve talked about, and as some of the guests on the show have talked about there is also a certain degree of protection that’s needed for consumers, and accountability from those that are ultimately in the blockchain space to create a profit, and seeing so many ICOs out there, I think we were talking about this in the last episode briefly, that ultimately have not necessarily been created in the best interest of the consumer.

Austin: Yeah, absolutely.

Matthew: Yeah, so that’s going to be interesting to see how that develops, and ShapeShift to one side, there’s also been some interesting comments form Jack Dorsey in the past couple of weeks, right?

Austin: Yeah, so Jack Dorsey, he’s the CEO of twitter, and recently in a congressional committee meeting that Twitter was involved in, he noted that they we’re exploring blockchain as a way to verify identities, and “fight misinformation scams”.

Matthew: Yeah. We talked a bit about social media giants like Facebook talking a lot about blockchain. We were chatting a bit before we started recording this episode, Austin and me, we were talking about how Jack Dorsey came out, I’m trying to think of his exact quote, but basically saying “Bitcoin is the currency of the future.” And, he’s very pro-blockchain. I think it seems like a matter of time before more social media platforms do the same thing. I guess, I wonder when we’re actually going to see a big move from one of these companies.

Austin: Yeah, I think that …

Matthew: Tell us Austin, tell us when.

Austin: I think it’s all a matter of finding a practical application within the context of what the company is already doing, right? And, so that’s perhaps what’s so interesting about Twitter exploring this as a solution to a problem, that I think they’ve always faced, and they’ve attempted to solve indifferent ways in the past, arguably without success.

Austin: So, for Jack Dorsey to say … he literally said “Blockchain is one that I think has a lot of untapped potential, specifically around distributed trust and distributed enforcement potentiality.” That’s really interesting, that’s a real use case. How they plan to do that is … that could become a completely different discussion, and debate around whether, or not that would even be healthy for the platform in the first place, and how important anonymity is to Twitter as a whole, but I think it is interesting to hear people at the helm of mainstream companies exploring this technology as solutions to their preexisting problems.

Matthew: Yeah, I agree. It’s a real shining testimonial at least for blockchain from someone of Jack Dorsey’s stature, obviously also CEO of Square, and Square have been dabbling in with some of their Square functionality, adding Bitcoin functionality at some point to accept Bitcoins from your retail stores, things like that, so I think we are going to see this being applied.

Matthew: I don’t necessarily buy, that the first ways we’re gong to start seeing this is trough payments. It seems like with the added importance around fake news, and verifiable identities the blockchain’s immutable ledger seems like the perfect use case for Twitter, and Facebook were also investing heavily, were also giving shinning testimonials of blockchain as well to start using this technology as well, so we’ll see.

Austin: Yeah. I think, that just as we had originally observed in season one, this space is still very nascent and being defined, and it’s an interesting technology with a lot people poking at how it can be applied, and yeah it will be cool to see how that actually shapes out in the end.

Matthew: It certainly will. All right let’s move and to our main feature section, before we ramble on all day long.

Austin: Yeah. Today we’re going to be taking a deep dive into Sia.

Matthew: Okay, so before people get on our asses on Twitter, it is pronounced Sia, it’s spelled Sia, it’s not “sia”. We have clarified this, and we ourselves have been saying this wrong for a long, long time, so we’re making amends now, just to clear the air there.

Austin: Yes.

Matthew: Austin, why don’t you give a brief introduction to what Sia is?

Austin: Yeah. So, Sia is a blockchain based cloud storage solution. You could think of it as a decentralized version of Google Drive, or Dropbox, or iCloud, or Amazon Drive, take your pick. David Vorick, a former software developer at IBM is the CEO of Nebulous, which is the company that runs the Sia project, and they’re actually based in Boston, so we have some common roots there.

Matthew: Yeah. Just down the road from where I am actually. And, on the Sia website … So, just to read here … I think, actually I took this from that LinkedIn page, it was a bit more concise. So, this is how the team describes the project and the platform. So “Sia is a new approach to cloud storage platforms. Sia is a decentralized network of data centers, that taken together comprise the world’s fastest, cheapest and most secure cloud storage platform.”

Matthew: Actually, not a crazy amount of jargon in there for once, which is a refreshing change. Ultimately, what we’re talking about here is, Dropbox on the blockchain is probably the best way to think about Sia, and there is a bunch of competitors to Sia, albeit not a huge amount, but some that I would call out is Storj, MaidSafe, Golem, Filecoin. And, Filecoin, I think we talked about Filecoin in series one, maybe I’m making this up, but at the time, which was around September 2017 Filecoin broke the record for the largest ICO in terms of the amount they raised, it was $257 million, I mean nothing now compared to the $4 billion that EOS raised in their ICO, but at the time I think this really did kick on a big part of the ICO boom.

Austin: Yeah.

Matthew: Which was pretty much stagnant around that time, right?

Austin: Yeah. The Sia project was first conceived at Hack MIT in 2013. It works by chopping up encrypted fragments of data and spreading them around multiple hosts, so if you want to access your files the fragments are then recompiled and made accessible as normal. So, you could think of it as being very similar to Bittorrent, but a little bit more secure.

Matthew: Yeah, if anyone listening has used Bittorrent before, I’m sure you’ve never illegally downloaded a movie, but if you have you’ll know, that the way that works is the torrent file gets broken up into fragments, you use seeders, and there’s leechers, that connect up to the host, and it re-compiles this file that’s made up of a ton of different fragments. The main advantage here with Sia is it’s distribute in a decentralized network, which makes it incredibly secure.

Matthew: So, before we get too bogged down into this, it’s worth probably just having a brief chat about the cloud storage space in general. This is actually a really fucking huge space, it’s an enormous industry.

Austin: Yeah, so the cloud storage market, it’s expected to grow from $13.7 billion in 2017, as if that weren’t already large enough to $88.91 billion in 2022. So, just over the course of a few years this is going to balloon in terms of the revenue that’s being generated, because more and more things are being stored in the cloud, more businesses are operating in the cloud.

Matthew: Yeah.

Austin: Something useful to note about this is, that Dropbox recently, as of March 2018 IPO’d raising $756 million, which is one of the largest tech IPOs ever.

Matthew: Yeah.

Austin: And, their current market cap is $10.85 billion, that’s just one player in the cloud storage market.

Matthew: Yeah, I know for the past ten years now, people have been talking about when is Dropbox going to IPO, and it’s eagerly awaited. I mean, so far, it’s early days the stock has been pretty well received, but in the grand scheme of things, yeah they’re a big player in this space, but nowhere near the size of … I mean, Apple are one of the huge players in this space.

Austin: Yeah.

Matthew: With the iCloud product, they just became a trillion dollar company, so that’s pretty big. But, in the … let’s just call it traditional cloud storage space for now, here’s some of the disadvantages that you could look at, some of the current technologies that aren’t running via a blockchain cloud storage system, or decentralized cloud storage system.

Matthew: So, first of all you’ve got the fact that typically, this is usually the case, but not always the data isn’t actually encrypted. One huge piece, which is nearly always the case is, that it’s often housed … all of the data, it’s often housed in one legal jurisdiction, and is actually owned by one single entity, that does definitely create a huge honey pot for someone to hack into, and get access to huge amounts of data.

Matthew: And, because of the added risk that these individual companies take on, and have to build these platforms themselves consumers will often pay a premium on this. It’s a gated platform, they need to often pay a membership to be a part of it. The final point of this is … and, honestly, I do think this also applies to a certain extent to decentralized platforms though is, the motives of the company may not necessarily align with those of the consumer. I think within centralized cloud storage platforms there’s certainly and incentive for companies to do things with consumer’s data, that maybe consumers would not necessarily want to be done with their data. That doesn’t necessarily mean that they will, but there is an incentive there to do that.

Austin: On the flip side, some advantages of decentralized cloud storage are first off individual consumers have complete ownership of their data, so the need for trust is eliminated, and the distributed network removes any of the honey pots, and it dramatically increases security in doing that.

Matthew: Yeah. Seems like the big piece here is how you actually have ownership of your data. When you’re storing data on something like iCloud, or Dropbox, you don’t own that data anymore, and if there’s something that the celebrity iCloud hacking scandal thought us, it’s that sometimes you want to own your own data. Right?

Austin: Yeah. It’s a fairly simple and straight forward concept, but of course executing it in practice, and determining where you’re going to store your data, that can be difficult. You don’t always know what’s happening at that centralized entity, or company that’s keeping your stuff. And, I think that, that could be the appeal of something like Sia is, that it’s much more transparent and straight forward in terms of where your stuff is going, and who has, or for that matter doesn’t have control and influence over it.

Matthew: Yeah, I agree. I think it’s like saying … we’ll come into this when we start discussing some of the challenges that platforms like Sia properly have. The big advantages here seem to be more on the technical side. So, security, ownership.

Austin: Yeah.

Matthew: Whereas when you look at some of the centralized traditional cloud storage space, the way they really gain a foothold here is by providing a really great user experience, and building trust that way. But, we’ll park that for now, because I just want us to briefly summarize for our listeners how Sia works. We’re not going to get too technical here, but let’s just kick off, and we’ll go through this step by step Austin.

Austin: Yeah.

Matthew: We’ve tried to outline this in a simple way, but why don’t you kick off the first part of the process of how Sia works.

Austin: Yeah. So, Matt and I are still wrapping our heads around this, but this is what we know about how Sia actually works. First and foremost the process involves tow parties, the renter and the host. The renter is the consumer, so the person who wants to have their data stored in the cloud. And, the host is a member of the Sia network who makes storage space available to the community. So, what the host is doing, is they’re actually renting out spare storage space on their hard drive and allowing the renter to place their data in that space.

Matthew: Right, and the key piece here is these two parties, for them to actually work together, and for you to store your data using some of the storage space of the host, you need to participate in what Sia calls a file contract. And, a file contract is like a smart contract, but published on the Sia blockchain. We’ve talked all through smart contracts in a real detailed level in … I think it was episode 8 of series one, when we were chatting about Ethereum, if you haven’t checked that out I would highly recommend doing that.

Matthew: And, within the file contract it contains the terms of the agreement between the renter and the host. So, an agreement would be like how long you’re going to store the data for, how much data is going to be stored, and how much you’re going to agree on as a price. And, the real advantage of this approach is it actually eliminates the need for trust. You’re just setting rules within a smart contract. The terms of the agreement are enforced in an impartial and trustless way.

Austin: Yeah. A cool part of this is, that the renter is able to set a budget for how much they want to spend, and then the amount is locked into that file contract, and then the renter’s walled picks 50 hosts which best fit the renter’s budget constrains. So, prices for renters are roughly around $2 per terabyte per month, which is fantastic, but there’s a catch. The price is agreed in Siacoin, so it could fluctuate a lot with the market price after a file contract has been agreed, and it’s kind of difficult to go back on that.

Matthew: Austin, you’re telling me there’s fluctuations in crypto currency? I don’t believe it. Yeah, I mean, just looking at the price of Siacoin as we’re recording it’s under one cent, it’s half of a cent roughly in USD, and going back to … I think around December time of 2017 it got to points where it was close to the $10 mark. I mean if you set up a file contract around then, you would have significantly over paid for your storage, and then you’re locked into a contract.

Austin: Yeah.

Matthew: Now, I think that’s a challenge of price volatility, something we talk quite about quite a lot in crypto, and certainly for now that’s going to be a real blocker, but when you actually compare it to … Let’s just take roughly $2, they do reset the price in Siacoin to usually match around about $2 per terabyte, and if you compare that to Dropbox, so you’re looking at pretty much $10 per month pre terabyte to store on their platform, and Apple via iCloud charges the same amount, like $9.99 in USD per month for 2 terabytes, they actually don’t offer one terabyte. So, let’s even just say they charge $5 per terabyte for argument’s sake, that’s still more than double what Siacoin are charging on a just straight like for like level.

Austin: Yeah. So, this is a classic case where the technology itself is very interesting, but the unpredictability of the currency that is powering it can kind of make the technology look a little bit less attractive. I think it’s important to separate those two things at least for now.

Matthew: 100%. So, the final part of the file contracts is you’ve got … well, there’s two final parts. So, the first part, you’ve got the host who’s serving up the storage space, they actually lock in some Siacoin into the file contract, the main reason why they do this is just in case … well, to basically only allowing, or ensuring that good actors will participate. If you’re locking in funds into a file contract, which you’ll get back if you hold up your end of the bargain it means that you have vested interest in participating by the rules, and it will avoid just people who have nothing to lose potentially doing harm to the network.

Austin: Yeah. And then, finally some small fees are paid. These constitute roughly 3.9% of the renter’s allowance, and 3.9% of the host’s collateral. So, these are paid to holders of Sia’s second crypto currency Siafund.

Matthew: Yeah.

Austin: So, interesting dynamic there Matt. Can you explain to us what Siafund is and how that works?

Matthew: Yeah. This really confused me when I was first looking into Sia, because they had Siacoin, which is the native crypto currency of the Sia network, and then they have Siafund, and it sounds weird when you talk about it like this “Well, what these fees are going into another crypto currency?” Actually, this is in my opinion at least, a very good and interesting concept.

Matthew: So, similarly to two other projects that do a similar thing, Dash and Cardano, Sia aims to actually fund itself by levying small fees. So, we talked about these fees that are taken from the renter and the host, they go into Siafunds, and there’s a total of 10,000 Siafunds that have been pre-mined, they’re out in distribution. And, Nebulous, which is Sia’s parent company, it owns around eight and a half thousand of these, with the remainder of those having been sold in the ICO in 2014. I’ll come into that in a moment.

Matthew: But, the income that they generate by Siafunds is primarily used to aid the development of Sia, so that’s always there without having to rely on donations. That’s one of the biggest challenges in the space, when you’re doing things where you’re not taking a slice of the pie you have to rely on donations, which is often unpredictable, is really difficult from a scaling point of view, especially when competitors come into the fray, and more than anything, as more people actually use Sia’s file contracts, more fees are paid, frees up available resources, and then the Sia team can do better work

Matthew: But, also it’s probably worth … I was just touching back on the fact they actually did an ICO for Siafunds at one point. Right?

Austin: Yeah. So, an ICO was completed for Siafunds, but not for Siacoins. That ICO in 2014 sold 1,135 Siafund at about a half of Bitcoin, so that was around $190 at the time.

Matthew: Oh, those were the days.

Austin: Yeah.

Matthew: Yeah, so basically the long and short here is, that separated out the token in Siacoin that’s used to ultimately fund and power the network and be used for transactions with this Siafund coin, which is purely used to aid the development of the platform itself. I almost think about this as the checking and the savings account of the Sia team.

Matthew: You’ve got the Siafund, which is like the savings account, which all these fees go into and is used to purely just fund development, and you’ve got the checking account where these transactions are flowing to create these agreements, these file contracts with users, and actually power this whole system.

Austin: Yeah.

Matthew: But, it’s not just Siafund, we mentioned they’re all pre-mined. Siacoin, the cryptocurrency that’s actually used on the platform to create these file contracts, that can actually be mined.

Austin: Yeah.

Matthew: And, it uses proof of work. Maybe we just briefly touch on that as well, because there’s some big drama, that’s going on around Siacoin relatively recently as well, that we’re going to touch into.

Austin: Yeah. So, it can be mined. It uses as you mentioned proof of work. The current block reward is around 150,000 SC, or Siacoin, and like Bitcoin a new block is created every ten minutes. It’s one of the few cryptocurrencies that actually doesn’t have a limited supply though, so interesting.

Matthew: Yeah. That is interesting. I find that … I’m actually not so familiar in all honesty with how that economic model worked, maybe we’ll try and get someone from the Sia team to talk to us a bit about that, because scarcity is something that we’ve talked about a lot.

Austin: It’s like a fundamental piece of what makes a currency.

Matthew: Yeah, I mean we talked about that literally the last episode. Right?

Austin: Yeah.

Matthew: So, I’m super interested to understand why and how that works.

Austin: Yeah, same here. There was some huge drama when Sia planned to launch it’s own ASIC miner via Obelisk though, as Matt sort of hinted to earlier here. Matt, do you want to tell us about what unfolded there?

Matthew: Yeah. I mean, it’s unlike the blockchain space to have much drama, right?

Austin: Yeah, usually everything is very stable and quiet here.

Matthew: Yeah. This was a … I know, a big blow for the Sia team. The Sia team, actually I have to say I love following their team. They push out some really cool content, and a few of the team speak at conferences, I’ve seen and heard from them a few times, and they seem like genuinely really nice people, and the community is one of the few communities that I’ve seen, especially within Reddit, and I think they have a Discord channel as well, it seems to be generally very accepting, and not too much of this kind of drama filled aggressive community, that some projects have facilitated.

Matthew: But, this is probably testing the community quite a lot right now. So, earlier on in 2018 the Sia team announced, that they would be launching in tandem with the company Obelisk it’s own ASIC miner. So, we’ve talked a bit about mining, and ASIC miner in short, if you don’t know what this is, is a piece of hardware that is specifically built to perform one single task, and that task is to be incredibly efficient at mining a certain cryptocurrency, or a certain set of cryptocurrencies.

Matthew: Previously ASIC miners weren’t operating on the Sia network, which basically means, that you could have lower spec hardware and you could use just a standard PC, and you’d be able to mine Siacoin pretty well. When I was playing around with this near the end of last year I was just using an old PC that I had in my apartment, that I dug up, and I was like “Oh, I’ll stick that in.” And, I was mining a bunch of Siacoin every day, and then the moment ASICs came on it’s like “Okay, well that computer doesn’t work anymore.”

Matthew: But, the community actually largely funded the creation of Obelisk, which is this company, that used to create the ASIC miner for Siacoin, they were promising “We’re going to put this at a reasonable price, performance is going to be great.” The big advantage for Sia, is that it will add more hash rate to the network, makes it more secure, it’s better for everyone in the long term arguably, a lot of people are very anti ASIC, so I don’t want to get Twitter on fire already.

Matthew: And, the problem was, Bitmain that tiny little Chinese company, that we every now and then talk about caught wind of this. And, using it’s cloud, and ultimately superior hardware development and research team built their own Sia ASIC miner that was, launched it ahead of time, which really hurt ultimately the community that funded the ASIC miner via Obelisk, but on top of that, when the Obelisk miner did launch later than planned, which should’ve hopefully then beat out Bitmain’s processing power and ability to mine, it was very underwhelming.

Matthew: And, it basically meant, the long and short of it was, that it was impossible for miners to make a profit, and as a result the Sia team and community are currently planning … I don’t know whether they’ve confirmed this, or they’re just exploring this right now, but looking at forking their Sia network to ultimately make the Bitmain miners redundant, but yeah there’s been a lot of price volatility around Sia dropping off a cliff. I mean, we’re also seeing that across a lot of crypto currencies right now, but this seems a lot more of a concern for the Sia project and the community.

Austin: Yeah. So, that’s a pretty good overview I think, of what Sia does, how it works, and some of the challenges, that they’re dealing with today, and some of the things they’re thinking about. If we want to just wrap this up. What is the future of Sia and where could it go, what are some of the challenges that they’re going to be up against in summary?

Austin: I think, that the first thing that we’ve observed here is, that they’re up against some industry giants. We mentioned big names Dropbox, Amazon, Apple, that they’re competing with. At the same time they have superior pricing in one respect, but of course it fluctuates a lot, so it’s a little bit less stable, and they also have an interesting value proposition from the technology side of things with the data being fully decentralized, and within the owners control. At the same time UACs for accessing the system isn’t really even close to what an everyday user of those big names would expect.

Austin: So, it’s still going to be very confusing for people that aren’t in the crypto, or blockchain space to get their heads around this service. And, I think, that this is a recurring theme for us.

Matthew: It is.

Austin: That, we see a lot of amazing technology, that could be disruptive to preexisting incredibly well established organizations, but there is an aspect of volatility, and then there is and aspect of difficulty of access and use, that the incumbents don’t deal with today.

Matthew: Yeah.

Austin: There’s also per usual some legal challenges of course.

Matthew: Just a few, yeah.

Austin: Yeah. In terms of liability around storing illegal content via the Sia network. A lot is still unknown here, we think that they should be okay in the US, but elsewhere in the world things are less clear.

Matthew: Yeah. I think, if there’s one thing that we’ve learned from, especially the past couple of years in the general tech space is, that regulation is starting to catch up.

Austin: Yeah, absolutely.

Matthew: Especially in Europe. There’s things like the GDPR regulations, there’s been new directives around copyright, that have been coming out specifically made for the web. We’re miles away from building our specific legislation that accounts for blockchain technology right now, especially on a file storage level. And, yeah what happens if I upload copyright material onto the Sia network, or if someone uploads pornography, or something illegal? Who is liable for that, because I’m not housing it on my machine, I’m not necessarily housing it on a central Sia server, it’s distributed across a number of peoples? I have no idea what liability comes into play there.

Austin: Yeah. You could imagine there being this terrible nightmare scenario, if the host were to work with a renter, and the renter put something in that sort of fragment of hard drive, that they allowed them to use, that was illegal, could our terrible outdated bureaucratic system somehow find the host, and in a weird roundabout way liable for that? I doubt that, that would be something that would actually happen in practice, it’s irrational.

Matthew: Yeah.

Austin: But, I think it points to the major challenges and questions, that have to be discussed with a distributed file system like this,

Matthew: Yeah. And, I think only time will start to tell. I’m sure as we’ve seen in, probably I would argue, the most interesting space in the past 30 years has been around file storage, like the rise of ultimately what this is to a certain extent. This is a decentralized version of Napster. So, peer to peer file storage and sharing platforming in some respects. And, what we saw with he rise of both Napster and Bittorrent was regulators didn’t really understand the technology, content creators were pissed off, and as a result they made examples of a few individuals.

Austin: Yeah.

Matthew: I still remember when people, just everyday consumers, like their kid had downloaded and MP3 of some song, and their parents were in court, they have no idea what was going on.

Austin: $250,000 fine, the FBI knocking down doors.

Matthew: It’s just ridiculous.

Austin: LimeWire was fined for more money than existed in the world at the time. That is just the perfect-

Matthew: Write them a check.

Austin: That’s like headline out of The Onion.

Matthew: It really is. But, this is the challenge, right? And, I think, that there have been some lessons learned on three layers. The consumer level being more aware of this, the business and the corporations entering these spaces, and then I think also to a certain extent the regulatory and enforcement bodies properly learning a few lessons from the backlash out of some of that. But, it still represents a problem, because if the copyright holders of material … let’s just go down the copyright angle, versus the illegal content angel to begin with.

Matthew: It’s like they are potentially losing out, and who is there to compensate them? And, that’s an interesting question, but hey we’ll see. I do think though, to take a step back on one of the previous points you said, the user experience pieces is very important. I think a lot of people that are very much avid supporters in the crypto currency and blockchain space are overlooking this to a certain extent.

Austin: Yeah, I agree.

Matthew: Because, they are technical in themselves. But, I think that’s a good discussion piece for us to maybe dig into a future episode, because we talk about this all the time.

Austin: Yeah. And, we also know, that while they are in the absolute minority, there are couple of players in this space, we’ve even had some of them on as guests on the show, that have recognized the importance of user experience and design for wide spread adoption, and ultimate success of their project. So, people are doing it, and it works very well for the people that focusing on it, but of course, because this space is still so nascent as we’ve said so many times, the focus I generally on the technology, and the end result is that it’s very interesting technology, that is utterly unusable.

Matthew: Absolutely. And, I don’t think by any means that’s what we’re saying about Sia, but a general theme in the industry is definitely being that. But, just to wrap things up here, I do think, that Sia is a very interesting project. I think as an application, blockchain, or decentralized cloud storage is a really, really useful application of blockchain technology. We’re seeing unprecedented levels of data breaches on a daily basis now, and the cloud is largely contributing to a lot of that.

Matthew: So, what I would just say is, go read up, go use Sia, go let us know what you think about it, make sure you tweet us @thecoinoffering, and as we mentioned, if anyone from the Sia team agrees, disagrees, wants to publicly shame us for misinformation, feel free to reach out to us, and until next time, we’ll see you on the show.