Filecoin is a decentralized system designed to store some of the world's most crucial information. It got its start through a $205 million initial coin offering (ICO) in 2017, and although it originally aimed to launch in mid-2019, the mainnet's official start was delayed until block 148,888, which is projected to occur around mid-October 2020.
The concept of Filecoin was introduced in 2014, envisioned as an incentive layer for the Interplanetary File System (IPFS), a decentralized storage network where users pay for storing and disseminating data using $FIL. Filecoin operates as an open protocol supported by a blockchain that logs the commitments made by network participants, with transactions being carried out in FIL, its native cryptocurrency. This blockchain utilizes both proof-of-replication and proof-of-spacetime.
Being open-source and decentralized, Filecoin is governed entirely by its community. The platform provides developers with the capability to build cloud storage services similar to Dropbox or iCloud. Anyone can participate in the Filecoin network, either by storing data or by earning money by offering storage space to others. The creators of Filecoin implemented their blockchain technology and token to power the network with their unique consensus mechanism.
In the Filecoin ecosystem, $FIL serves as the fundamental currency that fuels all processes and transactions. Clients transact using FIL tokens, while miners offer FIL as collateral, ensuring the reliability of their services.
According to its developers, Filecoin addresses the problem of inefficient file storage and retrieval. Clients can leverage an efficient toolkit, along with the foundational IPFS, to find optimal solutions for their needs.
Who Started Filecoin?
Filecoin was founded by Juan Benet, the creator of the Interplanetary File System as well. Benet is an American computer scientist who graduated from Stanford University. He established Protocol Labs in May 2014 and later participated in Y Combinator during the summer of 2014 to support both IPFS and Filecoin, among other initiatives.
What Distinguishes Filecoin?
Filecoin distinguishes itself by storing data in a decentralized way. Unlike centralized cloud storage providers like Amazon Web Services or Cloudflare, which face centralization vulnerabilities, Filecoin uses its decentralized framework to safeguard the data's location, ensuring it's both easily accessible and difficult to censor.
Decentralized storage solutions like Filecoin empower individuals to manage their own data, contributing to a more accessible web for people around the globe. Because participating as a miner and storing data in the Filecoin network is directly linked to earning block rewards, the system incentivizes participants to be honest and maximize data storage.
How Does Filecoin Operate?
Filecoin involves three main parties: clients, storage miners, and retrieval miners. These users interact closely, completing transactions, sharing data, and making micropayments in $FIL.
Clients pay to store or retrieve their data. They place orders on the online storage market, where agreements are made with storage miners. These miners store the clients' data and receive compensation. They place files into available hard drive sectors, with all actions being recorded on the blockchain, and clients receive private keys.
Retrieval miners extract data upon client requests. Clients place trades on the off-chain Retrieval Market, and retrieval miners can also double as storage miners.
Built on IPFS, Filecoin ensures that all data is stored on a peer-to-peer blockchain. Users initiate the process by selecting miners to store their data, paying with FIL tokens. Miners then execute these trades and earn fees and rewards in FIL. The more storage a miner offers, the higher their chances of being rewarded. Clients can always verify how their data is stored, as proofs are logged in the blockchain. Filecoin employs the Proof-of-Replication (PoRep) and uses Proof-of-Spacetime (PoSt) for miners.
To securely store data on the Filecoin network, clients need to compensate the miner. The open market determines the cost, influenced by several factors, with fierce competition among miners who set their lowest storage prices.
How Many Filecoin (FIL) Tokens Are Currently Available?
Protocol Labs outlines Filecoin's economic model as a "market for data," where users can offer their storage to others seeking rental space. This involves five key stakeholders: developers, clients, miners, token holders, and ecosystem partners. Protocol Labs identifies three main Filecoin markets: file storage, file retrieval, and token trading.
During the fall of 2020, approximately 400 miners took part in the "Space Race" testnet phase, boosting Filecoin's network data capacity by over 325 pebibytes. Close to 3.5 million FIL tokens will be distributed among the Space Race participants.
How Is the Filecoin Network Protected?
Filecoin ensures security through proof-of-replication and proof-of-spacetime. In this network, retrieval miners compete to deliver data to clients swiftly and are compensated with FIL fees, encouraging a network eager to replicate and preserve files.
Storage miners vie for contracts to provide storage solutions to clients for specified periods. When clients and storage miners finalize a deal, the miner holds the client's data in a sector and "seals" it to create a unique copy. They earn FIL from clients as deal fees and can further mine blocks to receive block rewards.
Where Can You Purchase Filecoin (FIL)?
Before the launch of the Filecoin mainnet, exchanges like Gemini and Kraken have confirmed their support for FIL. Huobi plans to list FIL following the mainnet's activation.
