Here’s Why The Siacoin (SC) Economics Set It Up For Future Gains

Siacoin (SC) has been a wild ride over the last six months or so. Back in April, SC went for around $0.0008 a coin. By mid-June, this was up to close to $0.02 a piece – a close to 2,500% run. By November, however, things had dipped to $0.003 and it looked as though the mid-year run was all but behind the coin.

Then things started to pick up again.

At close of play yesterday, Siacoin logged fresh all-time highs and recorded a market capitalization of just shy of $764 million. Today, things have corrected somewhat, but this is likely far more to do with a space-wide correction (and the resulting collateral implications for the smaller coins) than it is any fault of Siacoin’s.

SC Daily Chart

With this in mind, then, where can things go from here?

Let’s take a look.

First up, it’s worth noting that there may be a couple of days of weakness ahead. The wider markets, as mentioned, have taken something of a hit today and there’s a good chance that the weakness will continue moving into the holiday period.

With that said, however, these can be great opportunities to pick up some cheap coins – assuming you can uncover those that have the potential to piggyback the overarching upside momentum as and when things turn around.

So, is Siacoin one of these potential winners?

We think so. For anyone new to this coin, it’s a key component of a storage network type system called Sia, which is similar (in some ways) to the already established networks out there – Storj, etc. It’s also very different in other ways and it’s in one of these differences that we base our long-term bull thesis.

Basically, anyone that wanst to ‘rent’ out some of their hard drive storage space to Sia users has to download a local file and then tell the protocol how much you want to rent out (how much space, that is).

You then have to buy some Siacoin and ‘stake’ it, as a sort of signal that you’re active. Storj doesn’t require this. You then have to make sure that the company always has access to the file (so, you’ve got to leave your computer on). If the person whose file is on your computer tries to access it and it’s not available because you’re not connected to the network, you lose some of your Siacoin (it gets burnt).

And this is why we like it.

First, because participants have to buy Siacoin before they can rent out their storage space. This produces a steady and consistent demand for the coin, which over time should translate to a price increase.

Second, because the supply decreases over time as participants fail to meet the availability rules associated with the network and – in turn – have their Siacoin burnt as punishment. This will cause a steadily decreasing supply of the coin which, again, will gradually push up price (assuming demand for the service remains constant or increases).

Keep in mind that the company has to compete with Storj in this space and that its ability to do so is not guaranteed – Storj has some big names behind it and is (probably) the most well-established player in the decentralized peer-to-peer storage game as things stand. With that said, however, it’s incredibly competitive from a price perspective and this economics of the Sia system, as outlined above, position the coin for appreciation on two fronts as and when the company grows its base of users.

Bottom line: this one could be a winner and right now it’s correcting after a big run, meaning some cheap coins are on offer ahead of a recovery.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

Image courtesy of Sia.tech