David Vorick: Sia – Creating a P2P Marketplace for Data Storage to Disrupt the Cloud Industry (#318)

Transcript

this is epicenter episode 318 with guest David vork hi welcome to epicenter my name is sebastian Cuchillo I hope everyone's having a good pre year-end holiday week to all of you who will be travelling over the next few days I wish you the best of luck and patience I find that traveling at this time of year can be particularly exhausting but the payoff of being with family and doing

nothing for about a week is always well worth it so I arrived in Canada over the weekend they'll be here for the next ten days or so before heading back to Europe for the new year today our guest is David vorak David is the founder and CEO of SIA sighs an interesting project for a number of reasons now before doing this episode I have to admit I was not extremely familiar with SIA but I'm really happy that I was able to learn about it it's a decentralized file storage platform which has been around since 2014 now needless to say it's definitely less talked about than other projects in this category I'm thinking of ipfs and storage for instance but I think it

deserves a lot more attention than it does saya is a true decentralized Dropbox and its potential is huge the technology seems quite mature and the cost of storing files on saya is surprisingly affordable and as someone who runs his own at-home cloud server I can definitely see saya complementing or straight-up replacing that setup sunny and I talked to David about the history of the project how it works under the hood and some of the really interesting features it has like seat based file recovery which allows you to recover your entire file library with just a seat which is one of my favorite things

about this product we also got into David's views on proof-of-work David's a strong proponent of proof of work and even started a company which builds miners for saya now a few years ago there was some drama surrounding a hard fork of the sire protocol which was somewhat contentious going into the interview I actually had a little context for what happened during that hard fork and so my reaction to it was as genuine as it could have been anyway I'm curious if you all knew if this and what you think about what happened so it's quite possible that we have David back on the show in the near future he's quite outspoken on the topic of

trusted set ups and zkp systems in fact I first encountered David when he gave a talk on trusted set ups at Starke recessions and tel-aviv but unfortunately we didn't have time to get into this as it deserves an entire episode on its own before we go to the interview I'd like to tell you about our sponsors for today's episode Papo is a community of creators sharing short video content on crypto and entrepreneurship and on Peppo you show your love for content creators with Pepco coins when you like something you send pepper coins and when you want to take part in a conversation you show your interest by putting up coins as well so if you want to try it out now is the perfect time because the Peppo team

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right to the contest thread and then reply with your unique what is crypto explanation by December 20th at 12:00 p.m. New York time to enter the contest and while you there you can also check out my entry and send me some pepper coins if you like we'd like to thank TEPO for the support of the podcast we're also brought to you by eToro now if you're interested in getting into the financial markets and you don't know where to start eToro is a great place to begin building your portfolio you Toro makes trading easy because you get access to stocks bonds ETFs indices commodities currencies and crypto in one single easy-to-use platform you Toros unlike any trading platform you've ever

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with David vorak David is the co-founder of the sign at work David thanks for joining us thanks glad - glad to be here so tell us how did you get involved in crypto and what's your background what were you doing before getting into the Crippler space yes so I got involved freshman year of college this is in 2011 and basically what happened was a someone from my dorm just popped their head through my doorway and said you should check out Bitcoin and then they disappeared so I was like one sentence that changed my life it was your own little Satoshi yeah so he didn't even care that much but Bitcoin wasn't wasn't really his thing but he

knew it would be my thing and he was definitely right so I I just basically from the age of 18 dived really deep into Bitcoin started studying it looking at it experimenting with it trying to find ways to make it better and by the time I graduated I decided to start a company around blockchain and crypto currency that ended up being the tsiyon at work so yeah Saye platform was started by me and my co-founder we both did it straight out of college so we don't have any anything between so I guess I've always professionally been a Bitcoin guy what was it about you that you know your friend knew that you would be super attracted to like working on

Bitcoin stuff that's a great question I think he knew that I was pretty libertarian I was pretty pretty excited about technologies like Tor and BitTorrent and a Bitcoin kind of falls under the same like Internet and you know fight the man gain independence sort of philosophies think I think he knew that there would be a match there so you started SIA in 2014 yep and so I mean I only recently learned about SIA when did you guys go live or what are the more the different sort of like iterations of that cuz it seems it's AI has you know gotten much

more attention recently than it did like you know in 2015 or 2016 yeah so we launched the first version of the network in 2015 June June 2015 which seems kind of insane to say that from from here because at that point we were just like panicked about you know his his storage gonna come to market first as file coin gonna come to market first like we really wanted to be the first platform that worked and we were and then it was like it took all the way until 2019 when our we've launched for there to really be decentralized like competitor but yeah so we we first launched the Sai network way back in

2015 and then we've just been working on it building it I think we're a bunch of builders more than like marketers or businessmen and so as a team especially early on before we had you know grown and expanded and kind of filled out the roles that we were missing we were just focused on building up the technology and now today we actually have people on the team who are responsible for growth and product strategy and and like customer fit and and so I think that that's really where more of the attentions coming from is yeah we have we have non builders or people who do more than just write code helping sy out you know I was remarking that you guys have a pretty impressive blog presence like your blog is pretty

frequently you know seeing new articles and things in like community updates quite regularly so I think that's quite good so you mentioned storage and ipfs explain how you differ from those two products so I think in our audience a lot of people will be familiar with ipfs we also did an episode with storage like years ago but yeah how see a different yeah so I think chief way we distinguished from our competitors that we're fully decentralized so I at no point in the standard like sia flow or architecture do you have to deal with a centralized party and so like storage is pretty transparent about the fact that

their architecture has centralized elements to it they have you know satellites and coordinators and they you know they need if storage the company disappears the network stops working i PFS also has like a similar weakness in that like when you put data on ipfs it's not guaranteed to stick around unless you contract a centralized like a pending service like in fear or something so on the sign at work none of these limitations exist so I you know today when you put data on the sign at work it goes up in a permanent way and and because you're paying for it you don't have to worry about pinning it you don't have to find a centralized party if if our company disappears tomorrow you know the website would go down but the people actually using this I would

would not notice there would be no decrease in speed you would you know you'd still be able to upload and download and form new contracts so in that sense sighs like a fully fully independent network okay so do you think that people are aware of the fact that you know ipfs for instance has these centralized elements and why does it matter so I think most developers that are building applications on top of IP FS are aware because they either either they run into the problem that their files disappear or they are actively contracting these centralized services and I think it's it's pretty transparent from that side of things I don't know if users people who use apps that use IP FS are aware

that these centralized elements are in play but I think it is important because what it means is that some third party has the ability to shut down the app if if in Fuhrer decides that they're not serving your apps files anymore you know with one executive decision someone you know some leader at the inferior company can decide to your entire application and that really like decentralization is about building things that other people don't control and so we see we see that as a huge weakness and really we want to build a web and like an application system where there is no counterparty who can decide

to turn off your access to an application or an app but isn't it true that you could use ipfs in I mean like so you're contracting out these centralized services but it is possible as well to utilize like layers on top of IP FS to build a decentralized network of stores providers is it I think that remains to be seen the ipfs team would say that it is possible however no-one's done such a thing and I think that there would be substantial challenges another another thing I'd point out about IP FS and I think this is also something developers on top of IP FS are well aware of is that the architecture is just fundamentally very

very slow so if you want to open up a file especially one that doesn't get accessed very often it's going to take you many seconds to get that file open and the way the sign-out work is built is fundamentally much much faster not only is it is it much easier and like the storage element of Saia is you know we started with storage first and then we're moving on to these other elements second whereas whereas ipfs the storage has to be like bolted on later and that really I think has a big impact to the user experience IP first and cyah are not exactly you know comparable because one is more of a content delivery network and the other is sort of a desexualize cloud service very different use cases right and even that like you

know maybe a closer comparison would be to like file coin but even that I think there's some quite a few differences and so maybe like before we start to like delve more into these comparisons maybe we should get a good base ground of what SIA is trying to do what is the product here saya is a progression so it's a technology that we are iterating rapidly on the very first thing that's I could really do is is our Kai ville storage so if you have data that you want to backup or protect the sign network is a very fast very efficient very cost-effective solution robust you know decentralized place where you can store your data so first and foremost like saya is a an

archival platformer or a backup solution but the reason that that's what it is first is because that's what we felt as you look at more things you can do with distributed data or decentralized data that was the easiest thing to build so that's where we put all of our attention because above everything else we wanted a practical decentralized storage platform as fast as possible so that v1 would be sort of like a personal cloud like let's say I had a bunch of files on my Dropbox instead of putting them on Dropbox I would go ahead and put them on the tsiyon at work but I wouldn't be serving a website for example from this b1 yes so v1 doesn't do do website serving or content delivery however v2

does do website serving and content delivery and so as we are finishing up you know the final edges on this archival storage are like object storage platform really where that moves on if you think about the pieces we have hundreds of hosts all over the world and you know near many major cities if you want to download a file and it's on the side network the sign at work is going to have the you know the distribution and the locality and the ability to serve that file very quickly and so we've been building you know from day one starting in 2014 with the idea of eventually turning into you know an IP FS style content delivery network or you

know competing with like saying Akamai that's just we've known that that's going to be step two not step one so that's that's kind of where we're we're we're pointed for the future so is this a B - what's live today or is it be one that's live right now the one is live right now and we are actively building both to make the one better and to bring v2 to production I see so let's talk a little bit let start off by talking about v1 and that and like some of the economics and design around that and then we can shift towards v2 so in this v1 could you tell us a little bit about okay I have a you know on my hard drive currently I have a movie collection of hundred gigabytes

and I want to get rid of my hard drive and put it on the side network and you walk me through what is the process of doing that both what I'm doing as a user and then what's happening technically behind the scenes yep so as a user what you do is you'd go to our website you download saya or if you want to get it some other way you could clone the github repo or get lab clone the get lab repo and build it yourself either way you're gonna have to get get the Sai of software and run it then it's gonna have to sync the chain and it's going to need funding so the Scion etwork philosophy is that everything runs on money when you upload that cost money when you store data that cost money when you download that cost

money and it's all on a big open marketplace so things are generally extremely cost competitive because every single host on acai network is competing with every other host on a sine network and and price is a big factor in yeah which which hurts get selected so that prices are constantly being pushed down on this high network so you're gonna have to give this high client society owns and then you have to set up an allowance which is basically just like a control mechanism so it knows how much money it's allowed to spend that way it doesn't go and spend you know a thousand dollars a month or something but really that's just a like a safety feature more than you know more than I like a critical element once you're there once

you're set up you'll be able to just upload your files to the sign at work so you will either you know drag and drop or you know open the folder uploader or there a couple couple ways to put files on to decide client but once you start uploading them it'll go ahead it'll saturate your home connection so cyanide working do about 400 megabits per second most people's home connections are not that fast so for 100 gigabytes it might take you you know one day a full day of uploading to get that onto the side network at which point your data is on the side network and you can download it anytime seiyya today supports video streaming so in your case you gave the movies as an example if you want to watch your movies

this is actually something you can do directly from the sign at work so you don't need it you don't even have to download them and then watch them you can just stream them directly from the sign Network and then the other thing that the tsiyon at work supports which i think is really critical to making it a practical backup solution is seed base power recovery so once all your data is uploaded and it's a in good health and the and the you I will show you you know the health of your files you can create a snapshot so there's a there's a tool to walk through this has create a snapshot it'll make a snapshot it'll upload the snapshot it will take maybe an hour to get everything in place and then it'll report that the snapshot was

successful and has completed and what this means is that your wallet seed that you use to fund your account also now has access to your data so if you lose your computer and you have to start over you get a new computer you install SIA and you you know you open up the type in your seed screen when you put your seat in not only will you get your money back like a traditional cryptocurrency wallet but you will also get that snapshot back and you'll have all your data what exactly is going into that snapshot beyond just my crypto private key for example yeah so when you upload data to the sign at work what you're doing is you're

storing it on a bunch of machines around the world each piece of data ends up on 30 different machines and to make things fast you have to we don't have like a DHT or any sort of lookup mechanism so what you need to do is you have to remember where each piece is and you're gonna have an encryption key for that piece you're gonna have the IP address of the host and you're gonna have the content ID that you give to the host to get the piece back and so for 100 gigabytes might have you know 50,000 pieces on it so you're gonna have to remember all the metadata for those 50,000 pieces so what a what a snapshot is is essentially it bundles up all that metadata and stores it on the sign at work and it gets kind of complicated

here but in a way that we can recover it using only your file seat basically you give the you distribute the metadata to the hosts in a very specific pattern when you're doing recovery later you can ask hosts for a specific location of data rather than a specific content address in that location will unpack to all of your metadata that's really cool so essentially you could store files in saya and this opens up some interesting use cases so someone could do like an interesting kind of inheritance planning scheme where you know they upload something to saya it could even be like encrypted blockchain

private keys for instance and then have a single key that's stored somewhere and then as part of a will for example that key gets given to the beneficiary and then that beneficiary uses that key to get files it could be pictures it could be letters or whatever but you be sort of like a lock box where you keep files until like a later date it would be interesting also if you know if you guys were to implement some sort of time lock mechanism where like a seed could only unlock files I'm just like thinking about here but like whereas he could only unlock files after a single like after some time has passed though something like that yeah off the top of my head I don't know if there's an easy way to do that but definitely aside from

the time control thing like creating a lock box on site is something that you could do today I believe yeah that's cool so let's talk about the the architecture a little bit because saya is a little different from well we've already talked about how different it is from the other file storage systems that exist but it leverages a lot of different technologies that you know we all know and understand in the crypto space so it has some sort of a blockchain mechanism but it also has file storage and it also uses payment channels and and encryption so talk about the technical architecture and how all those those building blocks fit together yeah so philosophically when we were building saya we we use to like

bedrocks just to two requirements the first requirement is that it has to be fully decentralized so that decentralization always Trump's every other decision if it's not decentralized then then we don't make you know we don't go down that route but then the second thing that we always focus on it and we ask ourselves every time we build something is how fast is this is it as fast as possible like is there theoretically a faster way to do something and if the answer is yes there's theoretically faster ways to do it we make sure that we build so that performance is ahead of everything else and so what that means on the side network today is is basically and moving

forward that the whole thing is set up to be completely point-to-point so it was something that a lot of distributed systems do is they have some sort of lookup routing or content hashing or you know that they'll have these distributed algorithms to find data and that means that you have to ask someone who has to ask someone who has to ask someone and that like multi-hop step takes a lot of time on the side network every single request is point-to-point as soon as you want to file you immediately know exactly who's storing the file you find that out and you know in under a microsecond and then after that then you can do the the network request to fetch the data so I think that's something that's really critical to us so another

thing is like scalability you know block chains don't scale very well they only get a couple transactions per second on the side where you know it's I think during you know peak times the sign I work is probably seen more than a million transactions in a single hour and of course that's not happening on chain that's that's all going over payment channels and so we use something similar to the inter ledger protocol basically every time you download data you download a small piece of data so you pay for it first then you trust the host is going to send it to you so the host could could steal that small payment but it's it's very tiny and if they do you know they're dishonest you know not to use them anymore you know to penalize them and so so there's very tiny amount of trust that you extend to

the host and they give you data then you you know extend another tiny amount of trust then they give you the data and this allows us to scale very well you know we don't need a payment channel system that's as complicated as the Lightning Network we do data over state channels so you know we're not just sending money or simultaneously updating the file contract for what the host is is required to store so this is specifically for when I'm retrieving data right so when I'm but creating a new contract with someone then I you know will make a new what were they called file contracts or something about contracts that file contract and then if I'm constantly requesting data let's say I'm streaming it like a movie or something right then

I use the payment channel but what if I don't want to be like retrieving data very often I'm just using it primarily for archival purposes do I still use payment channels in that case yep so what we do is is when you create your allowance what what happens is the scien node is going to go and form a contract with basically the 50 best hosts on the network so you're gonna end up with 50 state channels that you use for both uploading and downloading and so those state channels have a lifetime of several months and then anytime you upload or download and update these state channels and so you only need to make on chain transactions on the sign at work about once a month and then

otherwise all activity uploading downloading or even just you know storing and sitting there it's going to happen through these payment channels state channels and so when I give this data to 50 best hosts right I'm assuming there's some sort of reed-solomon type encoding going on what is generally the like best practices here to make sure that your data is well redundant fide so you hit the nail on the head with reed-solomon by default we use a ton of 30 scheme so every piece of data is going to go to 30 out of those 50 hosts and out of the 30 who receive it any 10 is sufficient to recover the original

data and so basically what the sign-out works gonna do because hosts on the side network you know they're not unreliable right there they there tend to be pretty reliable but they're not Amazon reliable and we don't expect them to be Amazon reliable because that's very expensive and we want we want to be cost competitive so instead we just monitor and we see have hosts gone offline you know are there are there issues and so we have this constant monitoring service that's checking in on the health of your files and this information the health information that is being monitored I presume is being monitored by the individual nodes yep so the person who uploaded the data is the person who's doing a health monitoring this is

information somehow gets stored somewhere where the entirety of the network has access to it like is is that where the blockchain comes in they're like explaining where also the blockchain falls into this architecture we'll come back to the blockchain thing so the answer is no the health the health is not monitored by anyone except the person who uploaded the data and I think this is one key departure from file coins ambitions so it's a it's a very difficult theoretical problem to do decentralized data repair so what file coin wants to do is that you upload data to the file coin network and then you disappear and the file coin network will automatically restore the health of your

file as host go offline but the challenge here is that file coin can't restore the health of your file unless it knows how to erase your code things if it knows how to erase your code things hosts can collaborate with each other to deduplicate the data and create this sort of false redundancy make things look highly redundant when they're not or make things look decentralized when they're actually you know it's it's six copies of the same file on one hard drive and the answer to like how do you prevent hosts from doing that is not easy and I would out say is strictly unsolved I don't believe foul coin has solved the problem certainly it's been one of the challenges for them in launching so we sidestepped the issue by just saying the

network will not repair your files for you you have to repair the files yourself and so that goes back to your question Sonny what do you have to do is someone storing data on the sign at work you have to run your node every once in a while you know it doesn't need to be on every day but maybe you know if you leave it overnight once a week or you know leave it on all weekend once a month that'll give it a chance to check in with the files see what the health is if any files are kind of low on health it can it can restore them to full health how does that still help with solving like civil attack on the host side how do I know I'm not getting false redundancy on saya

yeah so the important thing here actually so civil civil attacks and false redundancy are I think two different questions false redundancy we have a super simple solution which is that we encrypt the data after we erase your code it so first you make these 30 redundant pieces and of course every piece is different and then you encrypt each piece with a different key so we have super high confidence that at least three copies of the data like definitely exists because we know no one no one has the cryptographic ability to deduplicate that what's this term use erasure code yeah a race you're coding erasure coded data means I give you a big set of data and then if some attacker or some you

know process in the middle cuts out pieces of it erases parts of it the racer coding means that up to some threshold of erase data you can restore the things that got deleted and so it doesn't matter that things got lost okay is this similar to how like a raid would work some like that yeah raid is is a very simple form of racial coding so I guess one of the reasons it makes sense in SIA but it's a little bit different in file coin or at least since IRB one is because here it's my personal data that I'm trying to distribute amongst them a number of hosts and so what I can do is I can encrypt to each of the hosts I can give a different encrypted copy and I know

that they can't convert they can't be colluding because they don't know how to decrypt one person's data and turn it into another person's data but that with file coin what they're trying to do is more for public data rather than private data and so they're assuming let's say it's Wikipedia right and so there's no private decryption key you know that the decryption key has to be public everyone in the world so how do you solve this in for example sigh of e to so the solution that we are favoring right now is that you would actually publish you'd have two versions of the file so let's say for a public thing instead of doing a ton of 30 you might do a 10 of 40 or a ton of 50 and then

you would publish 20 out of those 50 pieces which means that if hosts are colluding if those 20 pieces disappear you still have these 30 pieces that you know you know can't be colluded over because you never release the keys to those and this also kind of gives you a nice canary because it lets you see if hosts are colluding if suddenly a file unexpectedly disappears you know that hosts are colluding over over the public data but doesn't matter because because you kept some of the redundancy back so I think I think that's the strategy we'll be using in in v2 for the that public data you just won't won't publish all of it at once so you mentioned like the dissent you know you really focus on the decentralization as a primary focus

obviously the decentralization helps us with the censorship resistance and you know all that fun stuff but does it also help with the cost of these things so you mentioned that cyan cost the storage is like 10x lower than AWS is it something about the decentralization that allows this to happen or could I have created a centralized Airbnb for storage and I could have gotten the same cost savings yeah that's a great question so I think in the long term the decentralization is absolutely critical to how the pricing model works what we see with centralized systems and services is that even if they're competitive for a while once

they've obtained the brand once they've obtained the trust once they've obtained the market share they always I mean Google Google is a famous recent example they always switch gears from being you know super consumer friendly super cost oriented super everything that people want to being this more value extracting prices go up terms of service get nasty even if a centralized service can provide good prices in the short term you're really depending on the goodwill of that entity to maintain that good pricing once you depend on it and and I think we've seen consistently in the business world you know once a business has established a moat it cashes in on that moat by increasing prices and just

making making things better for the company and worse for the consumer so I think in the long term this decentralization is really important for consumer protection it's it's the only way that consumers can guarantee that their service will continue to work as it did when they joined so let's come back to the the technical components just briefly where does the blockchain fit into this because I know there's a blockchain in here somewhere yes great question so basically the chief challenge that we face with a decentralized payment network right so so we're changing value for storage and we're also requiring hosts to fulfill certain promises and the big promise is like in the final contract the final

contract says you know you have to hold this data for this amount of time and so what we need is some sort of system that can check in on the hosts and then can decide ok you you kept the data here's a payout or oh no you didn't keep the data we're gonna you know we're gonna penalize you we're gonna slash you and in a decentralized setting I think the only way to do that is to have this this blockchain where everyone can validate did the hosts fulfill the promise or not and then and then based on that update this decentralized ledger to say whether or not the host gets paid so the where the blockchain comes in is it stores the file contracts and specifically it audits whether or not the host has correctly stored the data

that the host was supposed to store and then and then from there we can you know penalize or pay the host so that's why we need our own blockchain then it's also just helpful in general everything runs on money if you want a decentralized money I think you need a blockchain somewhere in there but for that you could use you know a Bitcoin or whatever so we need SIA for final contracts so the settlement layer is is the blockchain this also stores the contracts between users and hosts and the payments for storing but also downloading and uploading files happen over the payment channel so there's a

layer one blockchain NLR two payment channel solution or state channel built into into sia with all within this last act yep that's correct okay and which block teen are you using or did you build your own or are you leveraging an existing framework yes so we built our own it's highly inspired by the Bitcoin blockchain but it is from the ground up so we wrote we wrote all the code that's in our inner software but it's very similar in design philosophy to the Bitcoin blockchain what is the functionality of Saia that was of the base layer the l1 layer that

wasn't available on Bitcoin like could we have done this as an l2 solution using Bitcoin like payment channels were there op codes that were missing that were needed yeah so you have to remember that we we launched saya in 2015 June 2015 that's pre aetherium I believe it definitely pre tender mint and so we were we were working with much much smaller technology base Bitcoin today still can't do the sci-fi contracts we're missing two really critical things I think for the cyanide work the first is that Bitcoin doesn't have updatable payment channels so the Lightning network is based on HT l CS and these like crazy draconian penalty schemes

that really just don't don't work with size complexity but l2 is an example of a network being built or an extension to Bitcoin and I think if we had l2 we might be able to do everything we need on the Bitcoin network directly the other thing that the cyanide work really needs that the Bitcoin network doesn't offer is we need decentralized entropy and so we get this by looking at the block hash so the block hash is you know the tail bytes are highly random and we can depend on these to essentially have hosts construct secure proofs that they're actually storing data and that's that's a bit of a more complicated topic there you know because block hashes are

not perfectly random you have to be careful with how you use them but the sign out work is careful with how it uses block hashes and make sure that despite the fact that they're not perfectly random every everything still checks out economically there's obviously the Bitcoin network has block hashes but I guess the issue is that you can't access that data from within a Yuki EXO contract that's correct so that that's the challenge and so if we got that and we also got l2 then I think you could probably build something that's functionally equivalent to size file contracts on Bitcoin so something that maybe you know maybe a lot of listeners don't know is that you are sort of in part inspired me to go

work on cosmos because I I met you the first time at coined s consensus in 2017 and at the time I was interning at consensus about the why and roughly around the same time as when storge or a storage or Harvey said just transition to shifting onto aetherium and so I was kind of asking you like why don't you guys shift onto a theorem as well it seems like that's that's the hot thing these days and then you kind of went and pitched me on explain to me why application-specific blockchains makes sense which is kind of what led me down to cosmos so could you explain a little bit now for the listeners of why not shift on to aetherium or something like that yeah absolutely this is a good point

even even if Bitcoin had all the primitives that we needed to build saya on top of Bitcoin we probably still would have our own blockchain and and the reason for this it comes down to governance so on the on the side at work every single user of the saya blockchain is storage oriented they're thinking about how do I store data how do I retrieve data how do I make money from hosting they're all aligned around this common goal of data storage and so that means if something comes up if we need to make some sort of blockchain governance decision a hard fork or or we need to extend the protocol in some way or something like that everybody's aligned around the same goal and so it's going to be easy to support the common use case on a blockchain like

aetherium you have this competing interest problem this this political thing where you have some people who really care about stable coins and defy some people who really care about like crypto kitties some people who really care about icos and then also people who care about storage and so if the storage network you know says oh we need to do XYZ to make storage successful and the dphi people are like wait now X Y Z is is going to harm the defy use case you have this internal battle and it's it's much more difficult for the storage people to push their storage stuff or if like if D Phi is the big thing and defies like yeah we need X Y Z and the storage community's like wait that's going to break us well too bad like you're a small player and so I really

like the application-specific blockchain because it means that we're never every governance decision every community decision is oriented around a common goal and that just makes the storage platform a lot more powerful and a lot more agile when you build SIA initially proof of stake was hadn't yet that experimented with at least not to the skillet which is today to see I still use proof of work yeah so size is a proof-of-work blockchain I'm a huge proof work proponent I'm really not a fan of proof mistake although I know lots of people are happy to debate me on that I think right now where we are with the Sai blockchain is is actually 95 to 98% of

our time is focused on the application layer so we assume you know a decentralized consensus mechanism we assume a file contract we assume a payment channel system and then once we assume all those things 98% of our dev time is focused on using those primitives to build a decentralized storage network and so you know if three years from now it turns out that that proof of stake is is absolutely the way to go or if three years from now it turns out that we need to switch our underlying consensus mechanism you know that's something we're not really worried about today because doing so we should be able to carry over you know 98% of our effort so I think

right now we don't even think of the consensus element just just because it's so it's so in flux in terms of deleting research we're really happy to be proof of work and we think we have a secure system as is and then if we can get more by switching we're happy to wait it out and we don't we don't think there will be a big switching cost most of the things we've built will just we'll just be able to transplant over if we ever do need to switch have you ever thought about maybe using some sort of proof of storage style system so similar to like Chea kind of stuff where let's say providers don't have contracts that they're fulfilling but they have extra space maybe they can use that for consensus and then as contracts come in

they can you know shift that around or even if you take it even a step further file coin seems to want to see they think they can even do proof of the useful storage not useless storage like Chea do you think that's even a feasible thing yeah so I don't think proof of useful storage is ever going to be a desirable consensus mechanism Chea of course has sidestepped issue by by having proof of useless I think they have their own set of challenges primarily the time element how do you prove the data has been stored for a specific amount of time is there ways to cheat that so fun fact back in in 2014 when we started building the sine network it was actually a proof of storage based system

I was BFT based it looked very similar to a lot of previous state networks today it had a lot of 51% assumptions or 67 percent assumptions and then it was all based on showing storage and proving storage and so I actually took this and presented it to the Bitcoin core developers and specifically greg maxwell and he pointed out all these issues with with what we had built and he convinced me substantially that i was not ready to build my own consensus system and that actually just used proof work so we kind of abandoned that I think many of the issues that he pointed out then still apply today both to Chia and a file coin I don't think they've solved a lot of

the fundamental issues but also like I'm happy to see the research happy to see the experimentation maybe they'll have some incredible you know discovery or breakthrough and in the meantime as like someone who's trying to build something that's going to be used as soon as possible I think proof of work does but our use case and so since it's since it's what we know best we're happy to use that for now and like I said you know if if there's some big consensus breakthrough I think it'll be relatively easy for us to move over down the road so given that we're talking about proof of work you know the other thing that you're quite well-known for in the crypto community is also a lot of your research on Asics and whatnot that data are we met in 2017 you convinced me of

two things one which was application-specific baktuns and two Asics are good which heavily inspired a lot of my design for how atoms work in this cosmos system but so can tell us a little bit about why you really believe in a six and then why you even went ahead and built an ASIC company that's a very interesting question so the reason I believe in a six is because it creates alignment with your consensus builders and the long-term health of the network well and the long-term value of the coins that they mined basically an ASIC is a giant upfront payment for hardware that has exactly one purpose the only way you can see ROI on that Hardware is to mine coins and those coins have to

have value so if you're mining coins that have no value you're never going to see ROI to the best of our ability we want to build proof of work blockchain such that if the network's not healthy the coin price is also not healthy and the miners aren't getting paid that way the miners are strongly motivated to push the network forward and maintain the health of the network make sure it's not getting attacked etc whereas with like you know GPU mining if one network fails you just jump to the next one you know if yeah I don't even know it's GPU mine these days well I'll say grin cuz there are no grin Asics yet if grin fails a GPU miner can just jump back to aetherium and they'll see maybe you know one to two percent reduction in their revenue but it's not going to be a big

deal they're not they're not married to grin the same way that like an ASIC miner is going to be married to its cryptocurrency so we think that's very valuable from a security perspective yeah and so then the follow up to that was sort of why did you go ahead and start an ASIC company in 2017 nebulous created a subsidiary called obelisk obelisk purpose was to become a mining and nebula is your company yes nebulous is the parent company of SIA nebulous has two major projects one is SIA and the other is obelisk so between 2014 and 2017 SIA was the only focus for nebulous starting in 2017

it also had this mining focus and in 2017 this is when a lot of the drama with bit main was really heating up but main was making a lot of political power plays against Bitcoin but bit main was controlling a lot of the alts and we were and and also just the general sentiment at the time and and you know my personal belief at the time was that having distributed hash was really important and so we didn't want any single party to own more than 51% of the hash rate of the tsiyon we we felt bit main was a big risk so obelisk was actually an attempt to give users an alternative to bit main for mining on the sidewalk and so we we did we created an ASIC company we designed a chip we

manufactured the chip we designed a rig and manufactured the rig and we shipped something like I think 15 thousand machines total the purchasers on the side network owns and so for a while we had some of the best distributed hash of any ASIC mind block chain as it turns out I think that the more we studied Bitcoin and if you look at the people who really you know dive deep and proof-of-work in 2019 and I think this is really just an idea that that started to take root in mid to late 2019 is that it doesn't actually matter if a majority of the hash rate is controlled by one entity because that entity is still financially heavily aligned that entity

still has to worry about hard Forks so really all you want from a security perspective is one an entity that's heavily financially aligned with your network and then to an entity that that is capable of being threatened so if it's a perfect monopoly and they know no one's ever going to compete with them that's a situation but if they have like 80% of the hash rate and there's some you know there are some other companies or some other opportunity for people to step in if they get lazy or slow or stop innovating there's an opportunity for that 80 percent to switch hands from one company to another that I think is you know it's sufficient for a secure Network and this is quite a controversial opinion I do think over the next two or

three years it will become more broadly accepted I think it's very sound from a research perspective but is certainly very different from how most people were thinking about proof-of-work blockchains between you know 2010 and 2019 and so what was like different about what obelisk was doing is you know I know one of the things is there's a those heavy emphasis on open source hardware what made obelisk different than bit main or inner silicon and stuff yeah so we had a couple of really big things we carried about one one was open source we wanted the firmware to be open source one the hardware to be open source blend the gate level to be open source we

wanted competitive hashing network we wanted it to be such that you know a bit man couldn't lock everyone out so we we wanted to pave the steps so that if someone wanted to come in and compete with us they would have as low barrier to entry as possible to do that another thing that we really cared about is transparency and this is actually important to the person buying the ASIC it's it's less important to the network health more important to the person buying the ASIC what we saw a bit mean and you know silicon do and continue to do even today as they would sell a bunch of hash rate they wouldn't tell you how much had manufactured and so miners would go in and they you know make these

projections they're like okay well as long as bit Maine made less than twenty thousand machines then I'm gonna roi and I'm gonna make a ton of money and then what bit Maine did was they made you know one hundred and fifty thousand machines and they sold all 150 thousand and so they have a hundred and fifty thousand customers who all are oh I only if less than twenty thousand machines were sold and the result is that if you know the block reward for two years is forty million dollars but may made a profit of a hundred million dollars bit Maine made more money than was possible to even mine selling you know a six for a cryptocurrency and of course this money comes directly out of the pockets of ASIC buyers and so Ovilus really wanted to fight a lot of the mining space is

absolutely saturated with these crazy dark patterns patterns designed to abuse the customer and abused the ecosystem for the profit of the manufacturer and habla stand against that you know we just kind of realized that bit bit Maine has sales channels and and they're going to be able to sell it's very exhausting for obelisk to try and like shut down those dark patterns it bit mein has a source of people that they can talk to and sell to that obelisk doesn't you know it doesn't have communication channel with there's nothing we can do to like stop those sales so could you tell us a little bit about this you know infamous hard fork in SIA where I remember I was like peripherally

following it but there was like a lot of drama around essentially it was hard fork design to brick a lot of the bit main and inner silicon Asics but not the obelisk ones one how does that even work technically and two why was that done and is that like you know potentially a conflict of interest yeah so I will say that is the most stressful and difficult decision that I've ever had to make so practically speaking there was no conflict of interest obelisk could already sold all of its hardware obelisk doesn't mine itself never did so we we've never mind a substantial amount on the side network like yeah sure we had machines we had to test weight to make sure they worked in

that that was happening on the sign at work but we never controlled like say even 1% of the SIA hash rate as obelisk and and so the actual conflict of interest was a lot smaller than the apparent conflict of interest there's still a conflict of interest there just because you know we we did control oblah smaller sales for obelisk meant you know more revenue for us more profit for us but a lot of people assume that obelisk was mining obelisk had claimed at one point and it's an obelisk nebulus his primary revenue at the time yes it was the primary cash flow for nebulus and you know obelisk had stated that it would not mind more than 25% of the hash rate of the network which of course most

people assume that we were mining 25 percent of the hash rate of the network we'd kind of or I think 20 percent one of those either way we had carved out the ability for us to mine a substantial fraction in the network that we never did didn't help with the apparent conflict of interest so you so you had all these like conflict of interest issues that both made it difficult to think clearly made it made it difficult to establish as a leader that you are you know just internally to convince yourself that you're making an impartial correct decision but then it made it basically like almost impossible to present to the rest of the world that the decision was impartial so I think that you know that was a very difficult situation

but I also think that we we made the right decision overall and I'll dive into that a little bit more so the background of the situation is like obelisk at announced this open transparent effort to decentralize the mining of SIA so one critical mistake we made is we had never established like policy as you know going into manufacturing we never established a policy on secret Asics as you know just the just the governance tools but we had mentioned several times that we felt that if someone had made Asics in secret this would be considered a hostile action because it comes back to the you know if bit main cells 90,000 machines

to a market that can only reasonably sustain the production of 10,000 machines everybody gets screwed except that name and so secret Asics come in to the exact same thing we we felt at the time that these are secret Asics you mean like a manufacturing secretly making a 6 and then dumping them onto the market yeah exactly so the only way to make an informed decision as a consumer when you're buying a six is to know how many Asics are on the market because it's a zero-sum game the more Asics there are the less money you make we held the position internally and we had spoken about it nonchalantly we had never established a policy that secret Asics would be considered an attack on the network because it would substantially

damaged the revenue of people who had attempted to make informed decisions of course what happened was bit Maine announced with one week notice hey we have SIA a six that were shipping and then we discovered through some back channeling that they made 90,000 machines and again the sign-out were could sustain maybe 10 maybe 20 thousand machines but Maine had manufactured 90,000 that's what our information said so it was this like transparent attack then I received a call from BTC track of all people who said like hey we've been working on our own ASIC we've been working within our silicon and so we also have a secret ASIC so what you can do is you can break bit Maine

and just use our ASIC instead which of course like completely misses the point that the problem is the secret ASIC it's not bit made specifically but at the action of creating a secret ASIC so it would definitely every purchaser of obelisk Hardware perceive this as an attack on them and then because it was a huge fraction of the committed side community had purchased obelisk Hardware it was kind of an attack on the cyano work as a whole and so that this was like the big dramatic challenge he had all these people suddenly accounts that had never been seen before we're very active on discord we're talking exclusively about how bit mains a good actor and how you can't break bit main and like just this is like hold social engineering mess ultimately we decided

and it really really came down to a no silicon was actively mining themselves as a manufacturer more than 51% of the network so not only did they dump a ton of machines on a network then also over produce they also kept most of the machines for themselves and so you know silicon and a party that had already attacked the network and shown to be acting in bad faith also had the ability to you know 51% the network that was kind of what pushed me all the way over inside like ok now we have enough enough reason to fork even with all this like conflict of interest mess we're gonna go ahead and fork but like one common theme that I felt in every interaction that I had with the other mining manufacturers

you know specifically bit main in you know silicon but we were talking to other manufacturers as well was the sort of like manifest destiny they're like SIA is a decentralized network if there's a way for us to make a ton of money by crapping all over the network then it's our right to do so and it's it's our right to make a giant mess of SIA and then make a ton of money off of that and so that I just felt like had to be shut down so a big part of the fork was also this element of like no you have to behave like we as a community can make decisions that directly impact your financial status and your financial gain and if you're going to be like a bad bodyguard we're gonna fire you and

so that's what we did we forked and something that I definitely noticed following the fork is that mining manufacturers for other proof-of-work cryptocurrencies suddenly became a lot more attentive to the developer's desires developers are suddenly part of the discussion when miners are being manufactured because they realized that that could be Forks so those who had bought your own mining machines as well at abydos who were also then basically forked out of the network no there's this strategy that most if not all ASIC manufacturers do I again think we need to credit greg maxwell with coming up with the idea of but basically what you do is you make your

hardware capable of mining the main algorithm then you also add you know just a little branch somewhere in the chip somewhere in the gates that allows it to mine this alternate algorithm so it's just a slightly modified algorithm there are you know a million ways to make a slightly modified algorithm every manufacturer when they pick a tweak is going to pick a different tweak and what that allows us to do is hard fork to tweak the mining algorithm so that instead of doing you know mining algorithm a you do mining algorithm a prime or if there's one bad actor and four good actors you tweak it so that it's a prime or a prime prime isn't this also building some kind of a

secret ASIC I can't help but to see the irony in all of this because on one hand you've been saying since the beginning that you're for decentralization and I really think you are but by doing this by acting as a privilege actor who had access to the community and the code of Saia but also making an ASIC that you could change the algorithm on a whim how do you see yourself as different from the free market actors that are just producing Asics in a free market and you know playing by the rules of the market they're allowed to make ASICs and sell them the customers that they want to and it's up to them on whether they want to

inform the market of their desire to do so so it's important to clarify like you know silicon also had the switch in it and we don't know for certain but I would be very surprised that bit Maine didn't also have support for some alternate algorithm what's the point of them putting a switch in it because how could they choose what the next hashing algorithm would be unless they're also their developers so it's about governance what bit Maine is doing what obelisk was doing and before we conclude we should definitely get into the actual mechanics of the fork because I think it's very interesting what we did and and very important the way we executed the fork but before that as a manufacturer when

you put this alternate algorithm this tweaked algorithm into your ASIC what you're doing is you're offering the community the option to switch to exclude some Asics and not others so you're giving them the flexibility to make governance decision to exclude other manufacturers but retain you if manufacturers aren't doing this the only tool that the community has is is like a nuke is to break all a six at once if every manufacturer has this tweak that they either disclose to the developers or disclose the community you know at their discretion then instead of dropping a nuke that kills everything you can drop a targeted nuke that leads certain parties alive

manufacturers do this because it gives the community a choice there's very little downside to the manufacturing for example a possible scenario where we would have or where the Scioto network would have selected bit Maine's Asics overino silicon's is like you know silicon really was like the bad actor in the space so if we assume that obelisk didn't exist that made it come to market then a no silicon came to market with much superior hardware you know silicon has 51% of the hash rate this included inner silicon's hardware was superior tube it means if a no silicon had 51% and the network is now like being attacked or something bit man could have come forward and said instead of breaking all a six but

clearly the bad actors inner silicon we have this tweak that we know in our silicon doesn't have or we strongly suspect in our silicon doesn't have who's to decide that about a silicon or bit main I mean I don't have any opinion on this but who's to decide who are the bad actors and do you not feel that as a privileged actor in this whole ecosystem by making the decision to tweak the algorithm to favor that of which your miners were ready for that is not a huge conflict of interest this really gets into the deep nitty-gritty of decentralized governance it's difficult for people to wrap their heads around how leadership works in a

decentralized way and actually to the detriment of decentralization in a decentralized Network if there's one leader and everyone assumes that the leader has the unilateral ability to make a decision that leader in fact does have the unilateral ability to make a decision we see this I think very strongly in aetherium it also is strong in the sign at work however we are doing everything we can to show people that we don't have the unilateral ability to make a decision and the way we structured our hard fork I think underscores very well like I think it's the right way to do it and we made sure that any dissenting minority could opt out or the hard fork was opt in so you could choose not to opt in to

the hard fork you can neglect opt into the hard fork and remain on the old network the important thing about decentralization is that every political decision each person can make on their own and they can go any way they want and be successful in activating this hard fork and in activating this switch the important thing was to make sure that anybody who didn't like the hard fork anybody who wanted to resist the hard fork had easy trivial means to do so or any group that wanted to you know opted out and not follow the hard fork would not have to work very hard would have to do very little work in order to maintain the old network so that was

very important to us and we did it came down to about four things to make sure that this hard fork was not our decision but like the collective's decision each person on their own got to decide so the first thing is that sign network does not have mandatory upgrades so every time you upgrade your synote you have to do it yourself and that means that the developers cannot push an update out onto the network so we couldn't just sign a binary send a bunch of messages around and then have the default network be this hard floor so if we wanted to instigate a hard fork we'd have to convince every member individually to upgrade the second thing we did was we did replay protection and Wipeout

protection and these conversations that came up a lot in Bitcoin with the usf and and whatnot but what it means is that the transaction format on the hard fork network on the new network where we changed approval work algorithm was slightly tweaked so that transactions that you signed on the new network were completely invalid on the old network and then vice versa transactions signed on the old network were completely invalid on the new network so you had no fear of you know trying to send someone saya classic coins and then receiving your side coins as well and no fear of you know vice-versa happening and then wipe out protection similarly means that the proof-of-work algorithms are immediately different

from each other on both networks so if one network you know gets more work than the other nodes will not switch from one network to the other day you don't have to worry about this massive this other network 51% attacking you or wiping out a ton of history so the next thing we did was developer maintenance we wanted to make sure the people on the old network would be trivially able to continue merging our updates and continue merging the code that we were writing for the new network if we had misread the situation and the true side community that the users of the saya community really did not believe in the hard fork the cyanide work would continue to benefit from all the developed work we were doing we would

see that we'd made a mistake we could switch back to the old network so the line of code difference between the hard fork and the not hard fork with the replay protection with the wipe out protection with the proof-of-work change was three lines of code and they're actually just configuration switches in a header somewhere you do not need any developer ability to keep the two networks synched with each other in terms of code there are no merge conflicts there's no challenge in keeping the two networks updated which we felt was important you don't need an experienced developer to maintain the saya classic chain you just need someone who knows how to click the merge button on gitlab finally we made it so that the storage

network files would not be impacted so whether you chose to go onto the new sign at work or stay on the old side network and whether your hosts chose to go onto the new sign out worker or not your files would stay intact which i think was probably the neatest most interesting trick that we pulled but basically if you personally did not like the hard fork you wouldn't have to go along with it you wouldn't lose your files you money wouldn't be at risk it'd be easy to maintain you you'd continue to receive you know updates as we made the network faster and more scalable etc is very easy for the community to reject the leadership's decision to do this hard fork and I think that's really what

separates us from like a Google just passing down to users oh now your your android phones have DRM now your blockchain uses a different proof-of-work algorithm and we break Tinto silicon is very easy for the community to say no that's not what we want and we're not going to go along with it final thing is if you you know live under a rock or whatever you don't pay attention to any of the news because we can't update the network if you didn't update your software if you didn't know that this hard fork thing was happening your default was to end up on the old network so no one no one ended up on the hard fork on accident they chose to upgrade to the hard fork Network that kind of illustrates the lengths we went to to make sure that this was a

decision not handed down from the top but one made by the community in a in a decentralized way going back to the for content itself weren't you primarily sort of hurt if bit man had already sold all of their Asics at this point weren't you no longer hurting bit made but now you're kind of punishing everyone who bought Asics from bit mean yes which is a good point in practice actually the only people we were hurting were in a silicon you know silicon was mining more than 51% of the hash rate themselves so it wasn't customers of inner silicon who was mining theirs in a silicon

themselves who was mining customers of a no silicon had already lost 90 plus percent of their money just giving it a no silicon at these ridiculous margins with these assumptions that inner silicon knew at the point at time of sale were incorrect but it was more than happy to sell an overpriced device to a customer that main was in a similar situation all their customers that already lost all their money because one bit main oversold so the money was all gone anyway into a no silicon came in and completely destroyed bit main so all the money was gone anyway so in practice we were only hurting in a silicon but philosophically I think you know if you're going to buy hardware to mine on a network

it's kind of your imperative to do research and make sure that your purchase is not contributing to the downfall of that network or you know contributing to drama or contributing to instability etc and so even though we're not hurting bit made directly I do think there is some moral responsibility on the people who gave bit made money and contributed to the disaster that happened but as it were we didn't hurt those people anyway I don't know how you can say that I mean like the people that are buying the harder from bit Manor consumers the people that are buying a hardware formula silicon is consumers they're looking for you know the best miner and they might not even have that much skin

in the game when it comes to SIA to put that on the consumer as their responsibility to choose the right miner and have to understand all these political implications and all this drama you know happening underneath all of this it's nonsensical I mean maybe this goes down to like the application-specific chain and like every measure that's why he believes in Asics where he expects miners to be active participants in the network you can be if you want but you know have to be an active participant network you can see this simply as an investment opportunity or whatever I do want to come back to SIA and the evolution of decentralized storage and get your

thoughts a word you see decentralized storage and three five and even maybe ten years ahead in the next one year we're gonna see a lot of power users starting to put their storage on to decentralized mediums I believe so probably as a secondary backup people are increasingly getting nervous about the control that AWS has about the control that Google Cloud has psy is a very cheap alternative so if you're worried about Google handing down this like nasty Terms of Service decision oh we terminated your account you don't get your data back you know you're done SIA for just a little bit of overhead like a 10% overhead of what you pay Google you can ensure that your data

is immune to this sort of centralized decision so I think over the next year you know we're going to see increasingly people moving that direction in the two to three year horizon I think we're also going to see a big shift in how content is distributed on the internet so you know when you go to Vimeo and you watch a video when you go to Netflix and watch a video I think it's very likely that that data is going to be coming from a decentralized network as opposed to the current like centralized content distribution when you do live video streaming how are we making it efficient to like get data from so many different sources decrypt it and like reverse every sure coded and to provide a seamless streaming experience it

basically comes down to a lot of parallelism the data needs to go through a fan-out process because it you know the uploader only has so much bandwidth so they're gonna upload to someone who has a lot more bandwidth and that person is probably not going to distribute directly to users they're probably going to upload themselves to people with even more bandwidth so you get this big fan out that takes maybe one second or so fan out you know three or four layers and then once you're fanned out four layers now now you have I mean four layers is enough to have the entire bandwidth of the scientist tribute content so the answer is a lot of scalability engineering essentially these can all be done using classical techniques and then you just make sure

that the the primitives are decentralized I'd like to get your thoughts on this and I'm very much looking forward to having like more decentralized storage solutions available and people using the centralized storage use and I think like we agree on on the online premise that one would be better off storing their files and their personal files on decentralized storage that's encrypted that censorship resistant rather than on like Google or Google clocks don't like that I see a problem with the space getting big enough to sustain storage needs one of the blog posts on your blog if forget which one it says that you know by 2025 what we're expected to create like over 400 petabytes of data

per day and to expect that decentralized storage networks which rely you know if you want to keep it too centralized primarily on storage provided by individuals to expect that storage need to be met by that I think is unlikely see that and the reason why I think that's the case is that there is a trend where you know perhaps 10 or 15 years ago a lot of people had storage in their house right like there were probably more people that I mean this is my assumption but probably more people had Nass hard drives or USB hard drives because cloud storage wasn't so prevalent and cheap and even like free

but increasingly it's becoming niche thing you know I think I know three people that have like an ass or like an external hard drive that's constantly connected to the Internet and I have the same issue with like something like space mesh for example which built on the same premise that there will be an abundance of decentralized highly available storage available out there is this something you guys have thought about and how do you counter this you know what if we go into a trend where people just don't have a whole lot of storage available to put up on the network this is something we've thought about a lot basically from day one and you'll see in a second that we answer this problem very effectively to justify your

concern when we looked at other peer-to-peer storage systems that that had popped up in the past whether it's BitTorrent space monkey sin form all of them konna were built with this assumption that the people who are storing data and the people who have storage are the same people and this really like cause struggles on the network they always had these imbalances where either they had you know too much storage or they had too much data and it was very difficult to convince people who wanted to use you know say 10 terabytes of cloud to also have 20 terabytes at home serving up to the cloud so in say oh we intentionally and very sharply divorced these two situations that's why we pay people so

we actually envision for the scientist just like mining farms you know we have mining farms all over the world that do proof-of-work mining and they do it because they make money not because they have some you know ideological you know decentralization imperative but because there's profit to be made so we we see the same thing for sia we pay people to store our data on an open marketplace if there's a lot of demand for storage people will set up data centers that are designed just to service the sign at work and so we will be able to meet an unlimited amount of demand so long as that that demand is unlimited at you know at a price point that makes sense for people to open up data centers and so so

we have this marketplace and we don't actually expect storage to come from individuals we expect storage to come from professional data centers that are tuned to you know be profitable on the side network you're expecting a sort of parallel data center market to emerge and I say parallel to the AWS is the azure is the googles of the world that are serving purely serving the tsiyon and providing storage for that decentralized network and perhaps even other decentralized storage networks yep that's correct leveraging existing storage like partnering with manufacturers of

embedded devices and using that as a way to incentivize people to basically pay off devices that they would buy right so if you have like a Roku or something that has a hard drive in it well then as a user of that hard drive you're already getting yet you're automatically getting back so like you're paying for it with these these sire rewards that you're gaining from just having it plugged in we've looked at that a number of times and I think the conclusions actually always been the same is that the economics don't don't make sense once you have these kind of like mining it be the same sort of idea as you know just having your phone mining all the time the truth is that your phone is not a device that's optimized around mining and therefore it's one two three four

five orders of magnitude less efficient than a six in a datacenter and I think storage is going to end up being much the same way you know if you took if you increase the cost of like say a smart TV by a hundred dollars to put a bunch of storage in it that smart TV is going to make the company maybe $1 a month in storage revenue by serving on the sign at work where is like an optimized data center can get that same $1 a month of revenue for maybe an additional $25 a build-out cost competitively speaking I think even if the smart TV can lean in on things like free space yeah like free physical space free electricity etc it still just doesn't make economic sense so I don't

see that happening in the future just purely because economies of scale are really really sharp when you're specializing very much looking forward to seeing how this plays out and I know I'll probably be using SIA providing space as a host of my Synology nests will be glad to have you alright thanks a lot for coming on the show David thank you I'm glad to be here thank you for joining us on this week's episode we released new episodes every week you can find and subscribe to the show on iTunes Spotify YouTube SoundCloud or wherever you listen to podcasts and if you have a Google home or Alexa device you can tell it to listen to the latest so to the epicenter podcast go to

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