We live in a time with significant forecast data storage growth. As better and less expensive networks arise, businesses and consumers will generate more data as items currently too expensive to store become cost effective. Amazon likely holds hundreds of exabytes (1 billion gigabytes) on millions of servers, with dozens of smaller cloud companies also reaching exabyte scale. It is not uncommon for a single enterprise to store hundreds of petabytes (1 million gigabytes).
Suppose the SiaPrime network reaches 500 petabytes of storage used in the near future. It is difficult to grasp numbers like these, but in 2019 petabytes of data are generated on projects like big budget motion pictures as well as millions of security cameras protecting property. As current big data producers grow, new technologies create new data storage opportunity and this trend shows no sign of slowing anytime soon.
On the SiaPrime early network, current average storage price is ~3300 SCP/TB/Mo. Multiply by three for redundancy and now we’re at 9900 SCP/TB/Mo (based on 1 SCP = 5 Satoshis at the time of this post, roughly $.80). Multiply the target 500PB by storage price (500,000TB x 9900 SCP = 4.95 billion SCP) to get the amount required per month in customer budget (Allowance fees). Typical contracts are 3 months, meaning close to 15 billion SCP locked up just from the customer side!
For Collateral, providers use an average 2x multiplier against their monthly storage price, so 500,000 TB x 6600 SCP = 3.3 billion SCP. Multiply that by a 3 month contract and you get another 10 billion coins locked away and not available for trading. Adding the two together, the amount removed from circulation with these two organic velocity sinks is nearly double the total coin supply at the end of 2018.
In practice, as speculators understand how supply is impacted by product use, coin value will rise and providers will drop SCP pricing in response, which will keep the supply from running out. It is this natural coin scarcity that demands a large number of coins to service a potentially global storage market. Most pure utility tokens do not have natural velocity sinks, making them fundamentally bad investments for anything but short term speculation. In the case of SiaPrime, fundamentals fully support the price discovery process.