In this video we’ll take a look at Filecoin and its competitor Siacoin, two key cryptocurrency projects aimed at decentralising online data storage.
With recent scandals such as the deletion of Parler’s web presence from Amazon’s cloud servers highlighting the risks of centralised data storage,
will Filecoin or Siacoin solve this problem once and for all and disrupt the industry?
We’ll compare how Filecoin and Siacoin work and provide our price prediction for each coin.
Which coin will win the cryptocurrency data storage war?
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Filecoin is the incentive coin for the decentralised data storage project, the InterPlanetary File System
being developed by Protocol Labs which was founded by Juan Benet, a Stanford graduate who also participated in well-known startup incubator Y Combinator.
IPFS is a protocol designed to distribute files amongst participating users, in a similar way to peer to peer file sharing platform Bittorrent.
Filecoin incentivises users to rent their unused hard drive space to the platform.
By decentralising files across multiple users, this protects data from being reliant on a central server
and may also offer a cheaper solution to established players in the cloud storage space such as Amazon Web Services and Cloudflare.
Filecoin is known for having the largest ever ICO in 2017.
The coin has many big name supporters and recently, it had a spike in price,
after cryptocurrency investment management firm Grayscale announced it was setting up a Filecoin trust for investors.
However progress on the data storage solution underpinning Filecoin has been slow.
After missing its previous deadline in 2019, the Filecoin mainnet was finally released in October 2020.
Further Filecoin has been plagued by various issues including a double credit issue with Binance
as well as reports of Chinese miners not getting compensated enough to maintain the network.
Siacoin basically sets out to do the same thing as Filecoin. Skynet (formerly known as Nebulous Inc.), is the company behind Sia and Siacoin.
As explained in Siacoin’s whitepaper, Sia, named after the Egyptian god of perception, aims to be a decentralized cloud storage platform.
In some ways Siacoin is the antithesis of Filecoin with its founders openly calling out projects that profit from pre-mine ICOs
instead choosing to undertake an alternative funding model for its development company by having a separate token called Siafunds, which is completely different to Siacoin.
Skynet was investigated by the SEC for offering Siafunds without registration, and ultimately settled, and now treats Siafunds as securities.
Investors in Skynet include venture capital investors such as Paradigm, Bain Capital Ventures and Bessemer Venture Partners.
Sia officially launched in June 2016 and it says that it is currently the leading decentralized cloud storage platform.
However whilst Sia has had a significant head start compared to Filecoin, it is still very far from widespread adoption.
This is probably part of the reason why Siacoin forked in February 2021 to create the Sia Foundation
which will focus on enhancing Sia and will be led by Luke Champine one of the co-founders of the Sia project.
Meanwhile the remainder of the Skynet development team are focusing their energies on developing the Skynet portal which is built on top of Sia.
As at the time of recording this video, the total market capitalisation of Filecoin is approximately US$12bn whilst the total market cap of Siacoin is hovering above US$1.3bn.
Accordingly to Allied Market Research, the cloud storage market size was valued at $46.12 billion in 2019, and is projected to reach $222.25 billion by 2027.
Therefore there’s plenty of growth opportunity in this space, even if neither project takes the reigns off Amazon.
The recent boom in the Filecoin price, which saw it enter into the Top 10 of cryptocurrencies by market cap for the first time, is apparently fuelled by heavy Chinese interest.
The tokenomics of both Filecoin and Siacoin require providers of file storage to first buy into the coin to use as collateral in order to have an incentive to stay online.
Therefore, this wild price rise that Filecoin is recently experiencing is likely to settle down once hosts have bought all of the coins they need to start operating on the platform.
The fact Sia has been live for years and hasn’t gained much traction gives rise to question marks as to whether decentralized data will even take off
though perhaps the launch of the Sia Foundation may change this as they start to focus more on driving adoption of Sia.
Also Filecoin appears to have plenty of institutional support as well as support from Chinese miners which is raising awareness that can benefit both coins.
However even if demand for the coins increase, there’s also serious questions to be asked about the supply of both coins.
You’ll notice that Filecoin's fully diluted market cap is massive because it has only released a very small portion of its maximum supply of coins into circulating supply.
Meanwhile Siacoin has an unlimited supply so it’s anyone’s guess how many more will be pumped into the market over the next year
especially now that it also needs to fund the Sia Foundation.
Whilst I do have some reservations about both coins, investor sentiment on these coins seems overall quite positive, particularly in China.
Therefore my price prediction is that Filecoin can still move up to about US$300 a coin.
I predict Siacoin will continue to move with Filecoin, as it has been doing over the last couple of months
however because it is only a few cents each this could attract people looking to make a quick dollar from the rising crypto tide.
Therefore I predict that Siacoin could reach up to US$0.09 and close the gap with Filecoin.
I hope you enjoyed this video. Let me know in the comments below where you think Filecoin and Siacoin are likely to go in 2021.
Thanks for watching and until next time.