Filecoin is a decentralized digital storage platform hosted on blockchain technology.
It is similar in function to DropBox or WeTransfer, except that data is not stored on a single server but rather on a peer-to-peer network.
Aside from that, Filecoin differs from centralized data storage providers in that it allows users to rent out their excess storage space. Think of it as an Airbnb to lease out the unused space in your computer!
Filecoin offers a more sustainable and affordable alternative to conventional digital storage services.
In creating a larger free market for data storage, storage costs could be driven lower for users. Tapping into millions of computers around the globe instead of building new storage centers helps Filecoin scale more economically.
In addition, a decentralized network means that there is no single point of attack versus the likes of Dropbox and iCloud, both of which have been hacked in the past.
How does Filecoin work?
Filecoin permits users to rent unused hard drive space using a blockchain.
The blockchain serves to record these “rental agreements” to store particular files and transmit FIL, the unit of value account on the network.
Filecoin is built on the InterPlanetary File System (IPFS) blockchain architecture, which uses a hash-addressed content structure to store data.
The Filecoin Protocol interacts with nodes that are either storage providers or retrievers. These participants are then rewarded for contributing resources to maintain the network’s operation.
Just like Bitcoin, the Filecoin Protocol employs a Proof of Work (PoW) consensus mechanism. But unlike most decentralized blockchain initiatives, Filecoin’s participating nodes process data storage instead of cryptocurrencies.
Instead of validating transactions on the blockchain, Filecoin’s PoW mechanism proves that a miner or node has successfully stored data for a specified period of time and replication.
To be specific, Filecoin leverages two sub-types of PoW systems:
- The first is called the Proof of Replication (PoRep) which validates whether stored data has been reproduced,
- The second is called Proof of Space Time (PoST).
Miner proofs create the Filecoin network using three methods: put, get, and manage.
As their names suggest, the ‘put’ function is responsible for storing data while the ‘get’ function is in charge of accessing it upon the request of the client. ‘Manage’ has to do with maintaining buyer and seller reputations on the platform.
What is the Filecoin (FIL) token?
The Filecoin network operates in two different marketplaces, one for data storage and the other for retrieval, and the native token FIL functions as the payment for these activities.
Storage miners receive ‘put’ requests and store clients’ data. To do this, they pledge an amount of FIL token commensurate to the client’s data as collateral. This helps provide end-users with a form of assurance.
On the other hand, retrieval miners run ‘get’ requests and retrieve clients’ data. They are then compensated in FIL for their contributions to the network.
The FIL token can also be used to purchase storage space on the network.
Filecoin was developed by Protocol Lab, which was founded by Juan Benet in 2014.
Benet studied Computer Science at Stanford University before working with Silicon Valley companies like StartX and co-founding Loki Studios.
He developed the InterPlanetary File System (IPFS) protocol with the goal of making the web faster, safer, and more open.
Notable Investors: Blockchain Capital, Boost VC, Digital Currency Group, Galaxy Digital, Genblock Capital, Union Square Ventures, Polychain Capital, Pantera Capital, Winklevoss Capital Management, LLC
- Circulating supply: 304.7 million FIL
- Raised $205 million in ICO in 2017