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Siacoins (SC) and Siafunds (SF)

Learn about the cryptocurrency behind Sia.

Siacoins (SC)

Why another cryptocurrency coin? Because it's necessary for true decentralization.

Last Updated March 4, 2021

As explained on the About Sia page, Sia is built to be trustless and decentralized. In order to accomplish these goals, a break from traditional payment methods and fiat currency is necessary. For that reason, Siacoins (SC) were created. It would not be possible for Sia to be truly decentralized if there was a party involved in processing fiat payments, even if that party were Sia's developers.

Siacoins are a cryptocurrency with the function of buying and selling storage on the Sia network. When you purchase or sell storage, it will be priced in Siacoins. Like many other cryptocurrencies, they are based on Proof of Work (PoW) and can be mined. Sia uses the Blake2b algorithm for Proof of Work functions, which is not commonly used.

Benefits to Using a Cryptocurrency
  • Facilitates decentralization
  • Facilitates anonymity
  • Facilitates small/micro transactions
  • No exchange rates between users/countries
Drawbacks to Using a Cryptocurrency
  • Can be difficult to acquire, and may be too complicated for the average person to use
  • Not much practical use outside Sia platform
  • Price fluctuations are common
Why not use another existing coin?
  • Sia's blockchain also handles storage contracts
  • Better control over transaction fees
  • Sia development predates most other coins, including Ethereum

Buying Coins versus Mining Coins

Siacoins can be purchased on a cryptocurrency exchange, or they can be mined. Purchasing Siacoins can be done with another cryptocurrency like Bitcoin through an exchange, or through exchanges which allow you to buy Siacoins and other coins directly with USD. Mining coins requires you to purchase specialized mining hardware, which is not cheap but will continue to generate Siacoins over time. To further compare:

Buying Coins
  • Pros: Easier to get coins compared to mining; lower cost of entry; access to coins relatively quickly
  • Cons: Bought on cryptocurrency exchanges, which may not be accepting new users; fluctuating coin prices can sometimes make coins expensive; most marketplaces require identity verification/"Know Your Customer" (KYC)
Mining Coins
  • Pros: Can be profitable to mine if selling excess coins; basically free money after ROI on hardware investment
  • Cons: Takes time; requires a large investment in and knowledge of mining hardware and electricity costs; competition with other miners decreases returns over time; mining hardware becomes obsolete as new versions released

Buying coins is likely the best option for most Sia users. Visit our Guide to Buying Siacoins for step-by-step instructions. We also have some basic information on Mining Siacoins.

Holding Coins for Speculation

Note: SiaSetup does not provide investment advice, and we are not responsible for your decisions and their effects when purchasing Siacoins or any other cryptocurrency or asset. In fact, we're telling you why it's probably a bad idea to consider Siacoins as an investment.

Siacoin is a utility token, which means it is like a car wash token - it's intended to be exchanged for services on the Sia network, such as storage space or bandwidth costs. As such, the price of Siacoins is intended to be fairly stable. You likely wouldn't normally buy a bunch of car wash tokens betting that the price of the token will increase and that you can sell them to other people for an extra $0.50 - so in general, it's probably not a good idea to buy and hold onto Siacoins in the hopes that the price will increase for that same reason.

Since the all-time high in 2017, the price of Siacoins has primarily only decreased, from about $0.10 USD in 2017 to around $0.0025 as of March 2021. Siacoin price has never significantly increased upon any new Sia news or new features. Purchasing Siacoins doesn't even really help the development team, as they do not sell Siacoins to raise funds. As of March 2021, the total Siacoin supply is around 45 billion, about 1.5 billion new Siacoins are created from mining every year, and with the new Sia Foundation proposal this will double to 3 billion Siacoins created per year. There is not yet a significant burn mechanism in place for Siacoins, so between the currently low price, the inflation rate, and the fact that Siacoins are a utility token, it is likely unwise to purchase Siacoins in the hopes that they will increase in price significantly.

Of course, we at SiaSetup cannot see the future, but if you are interested in price speculation, there are likely better cryptocurrencies or other assets which would be more suitable.

Siafunds (SF)

Siafunds are another piece of the Sia network and are geared towards traditional investors.

Siafunds (SF) are another type of token on the Sia network, though they are much more rare than Siacoins. Siafunds are intended to provide long-term funding to Nebulous (Sia's developers), as well as to be a fundraising instrument when sold to actual investors.

There are only 10,000 Siafunds in existence, and currently Nebulous holds about 8,000 of them. The other Siafunds have been sold off to investors in various funding rounds, including a recent Tokenized Security Offering (TSO) which followed SEC rules regarding accredited investors and brought in about $1.5 million USD in April 2018. As such, Siafunds can be difficult to acquire for the average crypto user.

Siafunds provide returns to holders by a fee paid on storage contracts on the Sia network. There is an approximately 3.9% fee collected on certain components of storage contracts, and this fee is usually paid by the renter. The host may become responsible for the fee if the host does not stay online or fails storage proofs. This 3.9% fee is distributed amongst all 10,000 Siafunds, so the more the Sia network is utilized, the higher returns will be to Siafund holders.

As of March 2021, one Siafund trades for around $5,000 USD, but only returns about 6-7 SC per month. As such, Siafunds are not suitable instruments for typical Sia users as they are very expensive and also very high risk. SiaStats has information on historical Siafund profitability and current Siafund distribution if you are interested in Siafund metrics.

Acquiring Siafunds

Currently, Nebulous will only offer Siafunds to accredited investors in a TSO format when they decide to hold fundraising rounds (see the Siafunds website ). However, Siafunds can also occasionally be found for resale by private parties. They can often be found on Bisq (though usually for heavily inflated prices), as well as in the Sia Discord under the #siafunds channel.