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

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 traveling 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 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 will be here for the next 10 days or so. Before heading back to Europe, for the new year today, our guest is David florrick, David is the founder and CEO of Saia size 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. Sia is a true decentralized Dropbox and its potential is

huge. The technology seems quite mature and the cost of Files on Sia is surprisingly affordable and as someone who runs his own at home Cloud Server, I can definitely see sayaka complimenting or straight up replacing that set up. Sonny. And I talked to David about the history of the project, how it works under the hood and some of the really interesting features of has like seed based file recovery which allows you to recover your entire file Library, just to 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 minors for Sia. Now a few years ago, there was some drama surrounding a hard Fork of the Sia 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.

And 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 setups in zkp systems. In fact, I first encountered David, when he gave a talk on trusted setups at Stark recessions and Tel Aviv. But unfortunately, we didn't have time to get into this as it deserves an entire episode on

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We're here with David vorik. David is the co-founder of the sign at work. David, thanks for joining us. Thanks glad to glad to be here to tell us. How did you get involved in crypto? And what's your background? What were you doing before? Getting into the grip of the space.

Yeah, so I got involved freshman year of college, this is in 2011 and basically what happened was a someone from my dorm, just pop 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 cryptocurrency that ended up being the Sian at work. So yeah, sigh of platform was started by me and my co-founder we both did it straight out of college so we don't have any anything but Tween.

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 tour and BitTorrent and Bitcoin kind of falls under the same like internet and you know, fight the man gain independence, sort of philosophy. So I 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 were the different sort of, like, iterations of that? Because it seems that sighs, you know, gotten much more attention recently than it did like, you know, 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, is storage going to come to Market first as file coin. Going to come to Market first, like, we really wanted to be the first platform that worked when we were and then it was like, it took all the way until 2019. When are we've launched? For there to really be a

decentralized like competitor. But yeah. So we first launched this, I 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 are 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 focus on building up the technology. And now today, we actually have people on the team who are

responsible for growing. And product strategy and like customer fit. And so I think that that's really where more of the attention is coming from is we have we have non Builders or people who do more than just write code helping sigh out. Yeah, it was our marking that you guys have a pretty impressive blog presence. Like your blog is pretty frequently, you know, seeing new articles and things and 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 is he a different Yes, I think Chief way we distinguish from our competitors that we're fully decentralized. So at no point in the standard like Sia flow or architecture, do you have to deal with the 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 ipfs. It 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. And so, on the side Network,

none of these limitations exist. Who I, you know, today, when you put data on the sign Network, 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 our company disappears tomorrow. You know the website would go down but the people So using this, I app 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 and so in that sense size 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 ipfs 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 pretty transparent from that side of

things. I don't know if users people who use apps that use The 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 in fira 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 Cripple your entire application and that really like decentralization is about

building things. 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 counter party, 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 ipfs to build a decentralized network of storage

providers. Is it Mom? 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 ipfs and I think this is also something developers on top of ipfs 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 access very often, it's going to take you many seconds to get that file open. And the way, the Sigh network is built is fundamentally Much much faster. Not only is it is it much easier and like the storage element of SIA is 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. I'd be first since I are not exactly, you know, comparable because one is more of a Content delivery Network and the other is sort of a decentralized 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 comparison, maybe we should get a good base ground of what Sia is trying to do, what is the product here. Sia 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 archival storage.

So if you have data that you want to backup or protect this, I now work 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, Sia is a in archival platform 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. 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. And the scien at work, but I wouldn't be serving a website, for example, from this V1. Yeah, so V1 doesn't do do website, serving, or content

delivery. However, the two does do website serving and content delivery and so as we're finishing up, you know, the final edges on this archival storage or like object storage platform. Really, where that moves on. If you think about the pieces, we have hundreds.

Of hosts all over the world. You know, near many major cities if you want to download a file and it's on the sign Network, the sign network is going to have the you know the distribution in the locality in 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 known ipfs 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 knots. One. So that's kind of where we're we're pointed for the future. So is this a V2? What's live today? Or is it V1 that's live right now. V1 is live right now and we are actively building both to make the one better and to bring V-22 production, I see. So let's talk a little bit of the 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 100 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.

Yeah. So as a user, what you do is you go to our website, you download Sia 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 sigh of software and run it, then it's going to have to sink the chain and it's going

to need funding. So the science Network philosophy is that everything runs on money when you upload the 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 honest, I network is competing with every other host on this, I Network and price is a big factor in yeah, which which

hosts get selected. So that prices are constantly being pushed down on this, I Network. So you're going to have to give this I client Society coins. 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. It Go and spend, you know, a thousand dollars a month or something. But really, that's just a, like a safety feature, more than more than it 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 Network. So you will either, you know, drag-and-drop or, you know, open the folder, uploader order a couple couple ways to put files onto the side client, but once you start uploading them, it'll go ahead. It will saturate Your Home Connection. So, PSI networking 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 Sigh Network at which point your data is on the sign Network and you can download it anytime Saya today supports video streaming. So in your case, you gave the movies as an example. If you wanna watch your movies, this is actually something you can do directly from the sign out work. So you don't need, you don't even have to download them and

then watch them. You can just stream them directly from the sign at work and then the other thing that the cyan Network supports which I think is really critical to making it a practical. Backup solution. Is seat base file recovery. So once all your data is uploaded and it's in good health 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 the says create a snapshot it'll make a snapshot, it will upload the snapshot, it'll take Maybe an hour to get everything in place and then a little report that the Snapchat was successful and has completed. And what that 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 crypto currency 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 Network, while 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 look at mechanism. So what you need to do is you have to remember where each piece is, you're going to have encryption key for that piece, you're going to have that IP address of the host, and you're going to 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 going to 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 Network in a guess, 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. A turn.

When you're doing a recovery later, you can ask posts for a specific location of data rather than a specific content address that location will unpack to all of your metadata. That's really cool. So essentially you could store files in Sia 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 Sia.

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 benefit of the beneficiary and then that beneficiary uses that key to get files. It could be pictures, it could be letters or whatever, but you'd 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 out loud here. But like, we're a see could only unlock files after a single, like, after some time has passed or 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 lockbox on size something that you could do today, I believe. Yeah, that's cool. So let's talk about the the architecture a little bit because Sia is a little different from what we already talked about how different it is from the other file storage systems that exist.

But it leverages a lot of different technologies that we all know, and understand and the crypto A. So it has some sort of a blockchain mechanism, but it also has file storage and 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 style, we use to like bedrocks, just 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 that 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 sign, Today 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 look up routing or content, hashing or the 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 sign 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 in, 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, blockchains don't scale very well. They only get a couple transactions per second on the side Network. You know, it's I think during, you know, peak times, the sine of work is probably seen more than a million transactions in a single hour.

And of course, that's Happening on chain. That's all going over payment channels. And so we use something similar to the inner 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 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 there's very tiny amount of trust that you extend to the Stand. They give you data then 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 overstate channels. So you know we're not just sending money or simultaneously updating the file contract for what the host is required to store. So this is specifically for when

I'm retrieving data, right? So what, when I'm, for example, couldn't a new contract with someone. Then I You know, we'll make a new what were they called file contracts or something about contracts, have five contract and then if I'm constantly receive 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? And that case Yep. So what we do is when you create your allowance, what happens is, the side note is going to go and form a contract with basically the 50 best host on the network. So you're going to 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 any time 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 host, right? I'm assuming there's some sort of reed-solomon typing coding 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 10 of 30 scheme. So every piece of data is going to go to 30 out of those 50 hosts and of the 30 who receive it, any 10 is sufficient to recover the original data.

And so basically what this I networks going to do because hosts on the side Network. 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. We want, we want to be cost competitive. So instead, we just Monitor and we see have host gone offline are, there are, there are 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 the health monitoring this information somehow, get stored somewhere where the entirety of the network has access to it like, is, is that where the blockchain comes in or like explain where also the Block Chain 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 very difficult, theoretical problem to do, decentralized data repair. So what file coin wants to do is that you upload data to the file core Network and then you disappear and the file coin network will. Matically. Restore the health of your file is 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 race your code things host can collaborate with each other to D duplicate 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 six copies of the same file on one hard drive and the answer to, like, how do You prevent

host from doing that is not easy and I would, I would say, is a strictly unsolved problem. I don't believe file coin to solve the problem. Certainly it's been one of the challenges for them and launching. So we sidestep 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 Network? You have to run your node every

once in awhile. You know. It doesn't need to be Beyond 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 PSI 0?

Yeah, so the important thing here actually so simple. Several 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 coded. So first you make these 30 redundant pieces of. 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 No, no one, no one has the cryptographic ability to deduplicate, that was his term. Use Erasure code. Yeah, Erasure coding Erasure, coded data means I give you a big set of data and then if some attacker or some, you know, processed in the middle cuts out pieces of it, erases parts of it. The racial 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 sentence idea but it's a little bit different in file coin or at least entire V1 is because here it's my personal data that I'm trying to distribute a bunch of them, a

number of hosts. And so what I can do is I can encrypt to each of the host 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 with file coin, what they're 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 that decryption key has to be public to everyone in the world. So how do you solve this in? For example, Sy R V2, 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 10 of 30, you might do a 10 of 40 or 10 and 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 it's also kind of gives you a nice Canary because it lets you see if I was circulating 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 will be using in V2 for the that public data. You just won't won't publish all of it at once. So you mentioned like the decentral, you know, you really focus on the decentralisation 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 of storage is like connects

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 gone to 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 mode by increasing prices and just making making things better for the company. Open e and worse for the

consumer. And so I think in the long term, this decentralization is really important for Consumer Protection. 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 technical components just briefly. What is 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 faced with a decentralized payment Network, Right. So we're changing value for storage. And we're also requiring hosts to fulfill certain promises and the big promises like in the file contract that the file contract says, 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.

Okay, you you kept the data, here's a payout or oh, no, you didn't keep the data. We're going to, you know, we're going to penalize. You were going to slash you. And in a decentralized setting, I think the only way to do that is to have this, this Block Chain where everyone can validate, did the host, 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 that stores, the file contracts and specifically it audits, whether or not the host has correctly stored, the data that the host was supposed to sort and then and then from there we can. Nope, analyzer pay the host of. 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, Bitcoin or whatever. So we need Sia for file 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 block chain and LR2 payment Channel solution, or state channel built into into Sia with all within this last egg. Yep. That's correct. Okay. And which blockchain are you using? Or did you build your own or are you leveraging an existing framework? Yeah, 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 in our 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 where their op codes that were missing? That were needed. Yeah, so you have to remember that we launched Sia in 2015, June 2015. That's pretty etherium believe.

It that definitely pretty tender moment 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 this, I Network the first is that Bitcoin doesn't have updatable payment channels. So the lightning, our groups based on HTML CSS, 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 this I Network really needs that the Bitcoin network doesn't offer. Is we need decentralized entropy. And so we get this by looking at the Block cache.

So, the block hash is, you know, that the tail B are highly random and we can depend on these two essentially have host construct, secure proofs that they're actually storing data. And that's, that's a bit of a more complicated.

A topic there, you know, because black ashes are not perfectly random, you have to be careful with how you use them, but deciding how work is careful with how it uses black ashes and make sure that despite the fact that they're not perfectly random every everything still checks out economically. I mean, obviously the Bitcoin network has block hashes but I guess the issue is that you can't access that data from within a you T XO contract. That's correct.

So that's the challenge. And so if we got that and we also got l to then I think you could probably build something that's functional equivalent to size file contracts on paper coin. So something that maybe you know maybe a lot of lessons don't know is that you are sort of in part inspired me to go work on Cosmos because I met you the first time at coined as consensus in 2017 and at the time I was interning at a consensus, the why?

And roughly around the same time as when storge or storage or however you say it 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 onto 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 comes down to governance. So on the sign Network every single user of the side 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. Courage. And so that means, if something comes up, if we need to make some sort of blockchain governance decision a hard for core, 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 the blockchain like etherium, 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 all we need to do XYZ to make storage successful and the D5 people are like, wait XYZ 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 through storage stuff. Or if like if defies the big thing and defies like yeah we need x y z in the storage communities 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 see initially proof of stake was hadn't yet been experimented with at least not to the scale at which is today. The Cs still used proof of work.

Yeah, so PSI is a proof-of-work blockchain, I'm a huge proof-of-work, proponent I'm really not a fan of proof of stake, although I know lots of people are happy to debate me on that. I think right now where we are with the side Block Chain 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, Summa 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. That's something we're not really worried about today, because doing so we should be able to carry over.

Over 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 influx. In terms of the leading 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. We'll 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 Chia 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 useful storage. Not useless storage like Jia 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. She of course has has sidestepped the issue by by having proof of useless storage. 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 our, is there ways to cheat

that? So fun fact, back in in 2014 when we started building this, I Network it was actually a His storage base system, I was bft based, it looked very similar to a lot of proof of stake networks today. It had a lot of 51% assumptions, more, 67% 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 kind of broke it down and he pointed out all these issues with what we had built. And he convinced me substantially That I was not ready to build my own consensus system and that I should just use proof of work. So we kind of abandon that, I think many of the issues that he pointed out then still apply today both tsuchiya and to 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. 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 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 day that we met in 2017. You convinced me of two things one which was applications of block chains and to 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 Sick company. It's very interesting question. So the reason I believe in A6 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 mind 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, would 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 in the miners aren't getting paid that way. The miners are strongly. Motivated to push the network forward and and maintain the health of the network. Make sure it's not getting attacked etcetera. Whereas with like GPU mining, if one network fails, you just jump to the next one. You know, if you don't even know it's GPU mind these days. Well, I'll say grin because there are no granny six yet if grin fails.

GPU minor 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 in Asic minor 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? And 2017 nebulous created a subsidiary called Obelisk. Obelisk purpose was to become a mining and nebulous is your company. Yes, nebulous is the parent company of Saia nebulous has two major projects. One is Saya 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 B main was really heating up, but main was making a lot of political power plays against Bitcoin, but that main was controlling a lot of the alt, and we were and, and also just the general sentiment at the time.

And, you know, my personal belief at the time was that having distributed hash rate was really important and so we didn't want any single party to own more than 51% of the hash rate of the sign at work and we felt bit main was a big risk. So Obelisk was actually an attempt to You give users an alternative to bit main for mining on the side Network. 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 fifteen thousand machines total, the purchasers on the sign Network. And so for a while we had some of the best distributed hash rate of any a sick Mind Block Chain. As it turns out, I think that the more we studied Bitcoin. And if you look at the people who really 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 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 bad 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% to switch hands from one company to another, that I think is, As 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 2010 and 2009 teen. And so what was like different about what Obelisk was doing? Is you know, I know one of the things is there's a there's a heavy emphasis on Open Source Hardware what made Obelisk different than b main or no silicon and stuff. Yeah, so we had a couple of really big things. We cared about 11 was open source.

We wanted the firmware to be open source. One the hardware to be open source when the gate level to be open source. We wanted competitive hashing Network, we wanted it to be such that, you know, a bit main couldn't lock, everyone out. So we wanted to pave the steps so that if someone wanted to come in and compete with us, they would have is low barrier to entry as possible to do that.

Another thing that we really cared about is transparency and this actually Important to the person buying the Asic, it's less important to the Network Health, more important to the person buying Asic. What we saw a bit Main 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 it manufactured and so miners would go in and they make these

projections like okay. Well as long as bit main made less than 20,000 machines, then I'm going to Roi and I'm going to make a ton of money and then A bit main did was they made, you know, 150,000 machines and they sold all 150,000 and so they have 150,000 customers who all Roi only, if less than 20

thousand machines were sold. And the result is that if you know the block reward for two years is 40 million dollars but made a profit of 100 million dollars but main made more money than was possible to even mine selling you know a 64, a cryptocurrency. And of course this money comes directly out of the pockets of Asic buyers. And so Almost really wanted to fight a lot of the mining

spaces. Absolutely saturated with these crazy dark patterns patterns designed to abuse the customer and abused the ecosystem for the profit of the manufacturer. And I both really wanted to take a stand against that, you know, we just kind of realized that b if B Maine has sales channels and they're going to be able to sell, it's very exhausting for obelus to try and like shut down those dark patterns it. But Maine has a source of people that they can talk.

To and sell to that obelus, 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 see? Where I remember, I was like peripherally following it, but there was a lot of drama around essentially, it is hard Fork design through brick a lot of the pit Main and in our silicon a 6 but not the Obelisk ones one. How does that even work?

Technically and to 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 obelus doesn't mind itself, never did. So we've never mind a substantial amount on the sign Network.

Like, yeah, sure, we had machines that we had to test way to make sure they worked and that that was happening on the side network. 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 did control Obelisk more sales for Obelisk meant you no 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 says, Obelisk on nebulous is primary revenue at the time. Yes, it was the primary cash flow for nebulous and you know, Obelisk could stay. That it would not mind more than 25% of the hash rate of the network.

Which of course, most people assumed that we were mining 25% of the hash rate of the network, we had kind of I think 20% one of those either way we had carved out the ability for us to - oh substantial fraction a network that we never did didn't help with the apparent conflict of interest.

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 That you are 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 made the right decision overall and I'll dive into that a little bit more. So the background of the situation is like Obelisk, had announced this open transparent effort To decentralize the mining of SIA. So one critical mistake we made is we had never established like a policy as you know, going into manufacturing.

We never established a policy on secret Asics as you know just a just a governance tools but we had mentioned several times that we felt that if someone had made a 6 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, accept it name. And so, secret Asics come into the exact same thing.

We felt at the time that the story of secret A6. You mean like a manufacturer secretly? Making a six and then dumping them on to 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. More Asics. There are the less money you make. We held the position internally and we had spoken about it.

Nonchalantly we'd never establish a policy that secret a 6 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 main announced with one week notice. Hey, we have PSI a six that were shipping and then we discovered through some back-channeling that they made ninety thousand machines.

And again, the sign Network could sustain maybe ten, maybe twenty thousand machines a bit main had manufactured 90,000. That's what our information said. So, it was this like transparent attack.

Then I received a call from BTC Drac of all people who said, like, hey, we've been working on our own a We've been working with in our silicon and so we also have a secret, a 60, what you can do is you can break bit Main and just use our Asic instead, which of course, like completely misses the point that the problem is the secret Asic. It's not B main 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. Jobless card where it was kind of an attack on the sign Network as a whole. And so that this was like, the big dramatic challenge. You had all these people suddenly accounts that had never been seen before.

We're very active on Discord with a talking exclusively about how bit Mains a good actor and how you can't break bit Main and like, just this like, hold social engineering mess. Ultimately, we decided and it really, really came down to enter silicon was actively mining themselves as a manufacturer more than 51% of the network. So, not only did they dumped a ton of machines on the network

then? Also overproduce, 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 and said like, okay.

Now we have enough, enough reason to Fork, even with all this like conflict of interest mess, we're going to 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 and 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 all right to do so and it's our right to make a giant mess of SIA and then make a, my 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 is 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 going to fire you. And so that's what we did. We forked and something that I definitely notice following the fork is that mining manufacturers for other proof-of-work, cryptocurrencies suddenly became a lot more. Attentive to the developers desires developers are suddenly Out of the discussion when miners are being manufactured, because they realized that there can be Forks.

So those who have bought your own mining machines as well at all below Square also then basically forked out of the network. Now 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 a. 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 chips, I'm wearing the gates that allows it to mine.

This alternate algorithm so it's just a slightly modified algorithm there are you A million ways to make a slightly modified algorithm every manufacturer when they pick at week 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 for 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 40 centralization and I really think you are but by doing this, by acting as a privileged actor, who had access to the community and the code of Sion network, 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 a

6 in a free market? And you know, playing by the rules of the market that are allowed to make a 6 and sell them to customers if 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 this switch in it and we don't know for certain but I would be very surprised a bit main 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 the Developers. So it's about governance, what bit main 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 fort, but before that as a manufacturer, when you put this alternate algorithm just tweaked algorithm into your Asic. What you're doing is you're offering the community, the option to switch to exclude some A6, and not others. So you Hang 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 like a nuke is to break all a six at once. If every manufacturer has this tweak that they either disclosed to the developers or just close the community, you know, at their discretion then instead of dropping a nuke that kills everything, you can drop a targeted nuke that leaves 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 side and network would have selected. Bit means a six over in a silicon is like, you know, silicon really was like the bad actor in the space. So if we assume that obelus didn't exist, it made it come to Market than in a silicon came to Market with much Superior Hardware. You know, silicon has 51 percent

of the hash rate, this included. You know, silicon Hardware was Superior to B mains. If you know, silicon had 51 percent and the network is now like being attacked or something. But man could have come forward and said instead of breaking all a six by clearly the Bad actors. In our silicon we have this tweak that we know in our silicon doesn't have or we strongly suspect in a silicon doesn't have Who's to decide that a bat and a silicon or bit

mate. 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 with 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 liter 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 into the hard Fork.

You could 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 in activating the 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 opt 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 Things to make sure that this hard Fork was not our decision, but like the collectives decision each person on their own, got to decide. So the first thing is that, PSY network does not have mandatory upgrades. So every time you upgrade your sign owed, 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 for. 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 wipe out protection and these conversations that came up a lot in Bitcoin with USF and and whatnot.

But what it means is that the transaction format on the hard Fork Network on the new network, where we change, the proof work

algorithm was slightly tweaked. So that transactions that you signed on the noon hour, we're completely invalid on the old Network and then vice versa, transaction signed on the old Network were completely invalid on the new network so you had no. No fear of, you know, trying to send someone saw a 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 notes will not switch from one network to the other that 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. I'm going to continue, merging the code that were writing for the new network. If we had misread the situation and the true Side Community, the users of the side Community. Really did not believe in the hard Fork. The Sigh Network would continue to benefit from all of the develop work. We were doing. We would see that we had made a

mistake. We could switch back to the old So, the line of code difference between the hard fork and the not hard fork with the replay protection with the Wipeout protection, with the proof of work. Change was three lines of code and they're actually just configuration switches and a header somewhere. You do not need any developer ability to keep the two networks synced 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 Sia, 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 on to the new sign at work or stay on the old sign at work.

And whether your hosts chose to go onto the new sign at work 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. Your He wouldn't be at risk, it'd be easy to maintain. You'd continue to receive, you know, updates as we made the network faster and more scalable Etc.

It's 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 Android phones. Have DRM now your Block Chain uses a different proof of work algorithm and we breakdown 0. Silicon is very easy for the community.

I know 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 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. Would you primarily sort of hurt? It bit me and had already sold all of their a sex at this point. Weren't you no longer hurting B made, but now you're kind of punishing. Everyone who bought a 64-bit Maine. Yes, which is a good point at in practice.

Actually, the only people we were hurting were in a silicon and silicon was mining more than 51% of the hash rate themselves. So it wasn't customers of a no silicon, who was mining. There's in a silicon themselves who is mining customers have been 0 silicon had already lost 90 plus percent of their money, just giving it in our silicon at these ridiculous.

Margins with these assumptions that in our silicon new at, 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 to the money was all gone anyway into in a silicon came in and completely destroyed bit mate. So, all the money was gone.

Anyway, so in practice, we were only hurting in a silicon but philosophically I think 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 main 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 mean, like the people that are buying the harder from bit manner consumers, the people that are buying a hardware formula silicon as consumers, they're looking for, you know, the best minor.

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 minor 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 look even better. That's why he believes in A6. Were he expects miners to be active participant in the network?

You can be if you want but you know, have to be an active participant Network. You can see the 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 and word. You see decentralized storage and 35 and even maybe 10 years ahead. And the next one year, we're going to see a lot of power users starting to put their storage onto 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 size a very cheap alternative. So if you're worried about Google handing down this, like nasty terms of service decision, L we terminated your account. You don't get your data back, you know you're done sigh of for just a little bit of her head like a ten percent 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 contents 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 Erasure 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, that the uploader only has

so much bandwidth. So they're going to upload to someone who has a lot more bandwidth and that person's 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 your fanned out four layers now, now you have, I mean, four layers is enough to have the entire Bandwidth of the sign Network to distribute 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 decentralized Origins. I think like we agree on on the underlying premise that one would be better off.

Storing their files in a personal files on be centralized storage, that's encrypted, that's censorship resistant rather than on like Google or Google Cloud, some like that I see a problem with the space getting big enough to sustain storage needs, one of the blog posts on your blog.

I forget which one it says that you know by 2025 will were expected to create like over 400 petabytes of data per day and to expect that decentralized storage networks which rely you know if we want to keep it to centralize primarily on storage provided by individuals to expect that storage needs. Need to be met by that. I think is we're unlikely to see

that. And the reason why I think that's the case is that there is a trend where 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 NOS hard drives or USB hard drives because cloud storage wasn't so prevalent and cheap and even like free, but in Namely, it's becoming Niche thing, you know, I think I know three people that have like an ass or like a, 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 had popped up in the past, whether it's BitTorrent Space, Monkey, send form, all of them, kind of were built with this assumption that the people who are storing data and the people who have storage are the same

people. When this really like cause struggles on the network, they As 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 Scio we intentionally very sharply divorce, these two situations, that's why we pay people So we actually envisioned for the sign network is 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 decentralization imperative, but because there's profit to be made. So we see the same thing for Sia, we pay people to store data on an Open Marketplace.

If there's a lot of demand for storage, people will set up data centers that are designed And just to service this I Network and so we will be able to meet an unlimited amount of demand. So long as that that demand is unlimited at your, 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 sign Network. You're expecting a sort of parallel Data Center Market to emerge as a parallel, to the AWS is the Azure, is the Google's of the world that are serving purely serving the sign at work and providing storage for that decentralized Network. And perhaps even other decentralized storage networks. Yep, that's correct.

And what about leveraging existing storage like partnering with 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 your automatically

getting back. Sort of like you're paying for it with these these Sia rewards that you're gaining from just having it plugged in. We've looked at that a number of times, and I think the conclusion is 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 6 in a Data Center. And I think storage is going to end up being much the same way,

you know. Oh 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, may be one dollar a month in storage, Revenue by serving on the sign Network. Where is like an optimize 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's 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 spaces a host of my Synology Nas will be glad to have you. All right, thanks a lot for coming on the show. David thank you.

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