A Beautiful Mindset – How Contracts Work
We use public key cryptography to ensure Providers perform to contract specifications and store exactly the data uploaded. Data objects include cryptographic metadata that tells the network where data pieces are located and where they came from. This information is used by contracts to perform random audits called a Storage Proof, which cannot be faked or replicated. Upon receipt of this proof a micropayment is made directly to the Provider’s digital wallet. If proof is not provided because the Provider is inaccessible or data has been tampered with, payment is not made and the contract may be forfeit along with additional funds put up by the Provider.
At no point does any Provider hold more than a small percentage of any given dataset. Erasure Coding is algebra uniquely suited to large distributed groups, providing higher redundancy while mathmagically requiring lower data storage than traditional clouds. When AWS receives data, they typically send two full copies to backup datacenters using a process called Replication. Erasure Codes inside our software chop data into hundreds of slivers and distribute them to multiple nodes. The brilliance of this redundancy is that large numbers of individual nodes can fail and the data is still retrievable. We can also spread this data over broader geographic areas to protect from all kinds of natural and man-made challenges like weather, hackers, etc. We save on storage costs AND we save on bandwidth by uploading less data. More info is available in the Whitepaper.
The price in SCP coins that our company pays for storage is kept low with a marketplace mechanism where Providers compete for storage contracts by offering desirable characteristics. We publish guidelines that bound a range they can charge and be eligible for additional payouts known as Incentives. We incentivize higher performance, auditability, capacity, geographic need and more. For example, medical backups may require compliance with HIPAA, a privacy regime. Providers willing to pass equipment and personal audit requirements can earn higher payouts than average nodes.