David Vorick, 24, is one of those techies with a plan to change the world. His startup runs a data storage service called Sia, similar to those of Amazon.com Inc. and Google Inc. The difference is that Sia is totally decentralized. People who need a digital file cabinet are matched up with hosts with extra storage capacity in an online marketplace that runs on blockchain, the same technology that supports the virtual currency bitcoin. To Vorick, this isn’t just a nifty technical accomplishment but an idealistic challenge to the power of the internet’s oligarchs. “We are really passionate about making this network that is fully independent of anybody who can step in and say, ‘You’re not allowed to use it anymore,’ ” Vorick said last month at a conference in New York.
For finance types there’s something else interesting about Sia. To buy storage space—or get paid for it—you need to use the system’s own digital tokens, called Siacoin. And on sites where people trade virtual currencies, Siacoin has surged more than 1,200 percent in U.S. dollar value since May 1. The total value of this startup money was about $400 million on June 13. Other digital coins have also gone through the roof. XRP, the token for a global payment system called Ripple, has increased almost 4,000 percent in the past three months, giving it a market value of about $10 billion.
Blockchain businesses don’t always sell their tokens—they may be generated by the system itself. But more and more startups are offering tokens as a way to raise money upfront in so-called initial coin offerings (ICOs), a nod to traditional initial public offerings of securities. So far this year, 63 sales have raised $521 million, according to blockchain research firm Smith + Crown. That has already far surpassed the $260 million raised in 2016, says Emma Channing, general counsel at Argon Group, a year-old digital finance investment bank in Los Angeles. Channing expects well over $1 billion in token sales this year.