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Host Centralization

Bitcoin mining, and PoW mining in general, is typically highly centralized. The centralization happens because of economies of scale. These types of economies of scale are in play for datacenters, so it makes sense to ask, will Sia hosting also become highly centralized?

Bitcoin mining suffers some key disadvantages. Miners can insert themselves into the system without any permission. The miner who hashes the fastest gets the most rewards, and - by design - nobody can stop them from participating. Another disadvantage is that all hashrate is the same. US hashrate and Chinese hashrate is equally valuable on the blockchain.

On Sia, the situation is a lot different. Everybody chooses their own hosts. A host cannot force a user to store data with the host, the user evaluates the host independently and then decides whether the host is worthwhile. If there's a big scary host that you don't like, you can blacklist the host from your renter. Your renter will then choose some other host, and decentralization prevails.

All storage is also not equal on the Sia network. Storage in the US is going to be faster for US users. And storage in China is going to be faster for Chinese users. There will be a natural pressure for users to favor the hosts that are geographically closest to them, because they will likely have lower latencies and higher speeds.

Finally, hosts will be able to take on different specializations, unlike miners. Some hosts can specialize in cheap bandwidth. Some hosts can specialize in SSDs. Some will specialize in cold storage. Each specialization improves the overall decentralization of the network.

Ultimately, the user has control over the situation. If the user wants to be certain that data is decentralized, they can be sure to select hosts that are all over the world. And, if they are dedicated, they can even research individual hosts and set up a whitelist or a blacklist for their clients to use.

All of these factors mean that datacenter centralization is not a risk for Sia, even if some hosts are able to obtain significant economies-of-scale advantages.

renter/host_centralization.txt · Last modified: 2017/04/19 06:35 by mr. taek