Filecoin

Filecoin is a decentralized storage and decentralized network designed for the $46 billion cloud storage industry. Filecoin connects customers and data storage providers from around the world to achieve efficiencies and create a strong market for data storage needs. This market is growing rapidly as streaming video becomes more popular and digital resolution and connected devices become more important.

Filecoin is a decentralized protocol that allows individuals in need to rent storage space on the network for a fee. Instead of trusting just one company with important data, they can split the data and store it on different computers around the world. Filecoin was first launched in 2014, when Juan Benet published a white paper: Filecoin is a file storage network operated by a cryptocurrency. Filecoin is a blockchain network similar to Bitcoin, but nodes in the network can store data and are guaranteed by traceability.

Filecoin is sometimes called an incentive layer on top of IPFS. This means users are incentivized to rent out their storage space by paying FIL tokens. IPFS is a peer-to-peer data storage and retrieval protocol built using a more decentralized approach. Unlike HTTP or HTTPS, IPFS does not rely on a centrally located server to store data. Filecoin raised over $250 million during its 2017 ICO, a record at the time. In October 2020, Filecoin launched its own mainnet.

How Does the Filecoin Platform Work?

Filecoin is based on a peer-to-peer distributed network, and its goal is to provide everyone with a simpler and more efficient way to store necessary data on the network. If people had free storage, they would be responsible for storing data on the Filecoin network, aka storage miners. FIL tokens are the currency used to pay for data storage and retrieval. Access miners are another type of participant. These people typically make the data retrieval process between clients and memory miners easier and receive a small amount of FIL coins for their services. Filecoin uses end-to-end encryption and the storage provider does not have access to the decryption keys. Because it is a distributed system, files remain secure across multiple storage locations.

So, what makes Filecoin potentially better than its competitors? First, Filecoin provides end-to-end cloud storage solutions for businesses and consumers. Since the same item is "in storage" offered by different sellers at different prices, consumers ultimately benefit from this competition. While sometimes you may not have enough memory to store all your data, sometimes you will have extra space and it can be sold.

Features of Filecoin

Decentralization

The Filecoin network is supported by more than a thousand miners around the world. Similar to how Bitcoin leveraged incentive economics to become one of the most secure global networks, Filecoin aims to be a powerful file storage protocol by reducing the need for file service providers.

Censorship-Resistant

Filecoin is operated by a large network of miners that provide storage and computing resources. By building on this decentralized network, Filecoin provides the foundation for auditing memory and building a fully decentralized foundation for digital ecosystems. Using Filecoin, anyone can participate in auditing file storage. This is especially important as the company's technology struggles to meet the needs of an increasingly polarized political environment.

Cost Effective

Filecoin eliminates the middleman, creating a transparent and cost-effective peer-to-peer storage marketplace. Filecoin has no fixed price—storage buyers and sellers actively negotiate prices. While storage prices vary by deal, Filecoin allows customers to store data for as little as 3% off Amazon services. Just like Airbnb, Amazon, and eBay were disrupted, Filecoin aims to provide a marketplace for storage.

Powerful

Through an extensive network of miners, users can store data across different providers to ensure their data is always available. Through mathematical proofs, users can verify that their data is stored as expected. Today, more than 650 hosting providers collectively contribute nearly 800 petabytes (one million gigabytes) of storage and network capacity. By comparison, the 10 billion photos on Facebook cumulatively require about 1.5 petabytes of storage space.

Verifiability

Customers can use Filecoin protocol cryptography to verify the integrity and location of their data rather than trusting third-party cloud storage services. The network introduces two novel proofs - Proof of Replication (PoRep) and Proof of Spacetime (PoSt). PoRep verifies that a portion of the data has been copied to physical storage. PoSt verifies that this replicated data is stored correctly over time. These proofs work together to act as the glue for Filecoin’s economic system.

Offline Data Transfer

Filecoin allows users to batch transfer datasets offline via storage miners while still validating transactions on-chain. The client passes a unique identifier describing the data, which the miner must then match with verified data for the transaction to go through. This is an important feature for huge data sets that can cost hundreds of thousands of dollars to broadcast and can take months to transmit.

FIL Token

The FIL token is generally considered the utility token of the filecoin ecosystem. FIL tokens are often used for a variety of purposes, with Filecoin’s ICO (FIL) considered to be the largest token sale in history, bringing in a whopping $257 million as a result. When the pre-sale and ICO are combined, they account for 10% of the total allocation of FIL tokens.