There are many established coins like Bitcoin and Ether in the cryptocurrency ecosystem. We have been asked many times why we chose to issue our own token specifically for Storj. Here are the reasons why we did so, instead of using an existing token or coin:
- Granularity - Bitcoin isn’t divisible enough to support the granularity needed for micropayments. We described this in a blog post back in 2015.
- Bootstrapping - When we first started the network, Storj was an empty market. No farmers, no renters, and nothing to buy or sell. Storj only works at scale. Using SJCX to bootstrap the Storj network lets us kickstart the system. It helps us identify and fix problems at scale, and paves the way for a larger, more stable network.
- Flexibility - Technology develops and changes over time. Using our own token allows us to migrate to the accepted standard, without being locked into a particular technology.
- Stability - Cryptocurrency markets are volatile. A separate token provides a layer of protection from the volatility of larger markets. Volatility is extremely dangerous for long-term storage contracts. All coins rise and sink with the largest markets, but less violently.
- Incentivization - Our token has been a very important part of incentivizing community members for their hard work, compensating them for performing tasks like tier-one tech support, marketing, documentation, and development. Our early adopters and backers are up 20 times since inception and we love that they have been handsomely rewarded for their contributions to the Storj network.
- Micropayments - Hub based micropayment networks require the lockup of funds in channels. These hubs can be funded by the network, rather than the operators (who would require high fees to maintain those payment hubs). This will allow transactions to be quick and only require low transaction fees for the users.
- Currency - As we grow, we are interested in supporting the broader [ethereum] ecosystem and building long-lasting partnerships. Having our own funding mechanism to align interests and goals will give our strategic partners additional flexibility.
- Ecosystem - Our token allows for a positive feedback loop inside of the Storj ecosystem. Farmers can earn the token for sharing their disk space, and then use it for renting data storage services themselves*.
- Future - We plan to use the token in ways raw Bitcoin or Ether can’t be used. For example, the Storj-specific signaling described in SIP0002.
We designed Storj to be flexible and modular. The whitepaper says this up front:
“Storj is payment agnostic. Neither the protocol nor the contract requires a specific payment system.”_
However, we believe that using a token is the best payment system for the foreseeable future. We believe that the future is a vibrant ecosystem of many tokens, and we look forward to being part of it.
* We launched our billing system for Storj just two weeks ago. Currently only credit cards are accepted automatically, but we do accept SJCX manually (just send us an email). There are no current automatic payment processing options for SJCX, but we are working to build one quickly and add it to the service in the next few weeks. Also, Bitcoin billing for the Storj service is almost ready to be activated, we are just going through the final checks before we deploy it live.