What Is Filecoin? All You Need to Know About FIL

What Is Filecoin?

Until some time ago, it was common that information and access to it was centralized and in the hands of large companies such as Amazon, Google, and other market giants. These companies typically invest in large-capacity and high-cost servers, giving the user the possibility to use them for storing their files of interest in exchange for recurring payments and even access to personal data. Not always under explicit consent. In addition to monetization, that is, the user pays for the service, it is quite common for these companies to access users’ personal data and manipulate the content and information displayed to that same user. This is one of the main consequences of centralizing information storage and sharing services and, as a result, a decentralized solution has become necessary.

In response to this issue, the InterPlanetary File System, or IPFS, emerged. IPFS is a universal, interplanetary network protocol designed to create storage between computer networks and facilitate the connection of points or nodes between users, providers, and servers. Perhaps you have come across pages using the ipfs:// protocol instead of the famous http://, isn’t that right? So let’s dive in. Considered by many as the internet of the future, IPFS aims precisely to decentralize providers and servers, creating decentralized nodes among users throughout the planet.

Currently, when you enter a URL in your browser’s address bar, your computer sends a message to a server and asks for some page of your interest. However, factors such as your location and search history may change the direction you are sent, and even whether the information you receive back is complete or has been changed recently. For example, when searching for a news item on a website, even if you use the same URL, you might be looking at a more up-to-date version of the text, compared to the one you accessed yesterday. Another possibility is that the text does not even exist anymore, by censorship or lack of interest of the readers of the website. Thus, this information will be lost forever regardless of whether or not there is a large number of people interested in it.

IPFS, on the other hand, works through hashes that point to content and not to a page. Even if in practice there is not much difference, this is a big change in how we deal with the information that is out there.

In IPFS there are three basic changes, based on its very similar model to the blockchain network. These are as follows:

• All content available on the IPFS network cannot be moved, changed, deleted, or lost. The moment a hash points to content, it will always show it.
• Any change to content creates a new hash, that is, a new file that contains the new information, even if it is mostly derived from another file. This creates a context of traceability in changing available data and information, fighting censorship, and preventing users from referencing different information within the same address (fake news).
• The IPFS network is essentially faster than the current internet. Whenever a user is trying to access content, the IPFS network will ask for that information from another user (who will act as a server/provider) who has recently searched that content and who has a copy of it on their computer. That is, instead of the same information coming to two users from the same location, away from both, it will now come from the nearest node that has a copy of the content, making it faster and more efficient.

IPFS functions as a decentralized P2P network of files that cannot be dropped, changed, or deleted, without the attempt leaving no trace. Every change creates a new hash for new content, without actually changing or deleting the previous content. It must be remembered that the content is not lost as long as any user (and consequently all users around) is the holder of it. That is, if knowledge is not shared, there is a possibility that it will be lost. But with billions of users sharing thousands of pieces of information all the time, the chances of that happening are very small.

For users who lived through the 2000s, the concept is very similar to the µTorrent app, which shared media, music, and movies. This means that one of the problems faced by the application is repeated with IPFS: its operation depends on the adhesion of new users to the network to hold the contents and rent the storage space. With Filecoin we can envision a decentralized cloud storage alternative where the user rents part of their hard drive for storage and in return receives tokens as an incentive to use the network.

History and Team

Filecoin came as a proposal after its ICO (Initial Coin Offering), where the project is exposed for investment in the form of offering digital assets. In 2017 the ICO of the Filecoin project was launched, at an initial price of $0.75 cents, and raised $200,000,000 for the start of the project. After the investment, the dev team obtained funds for the project development and final adjustments. In fact, the main net came into operation at the end of 2020, a time that coincided with a period of historical highs and an absurd appreciation of +700% after its launch.

Although there is a team behind the project, the major developer behind the project was the American Juan Benet. He is also known as the creator of Protocol Labs and the InterPlanetary File System itself that brought Filecoin to life years later.

Source: filecoin.io

How Does Filecoin Work?

Currently, what keeps the network running are its users. Each has a role to play in ensuring decentralized data storage. Below, we will clarify some of these roles and concepts related to the consensus that the network uses to ensure that everything is in compliance.

Storage Miners

Storage miners are the users who make their storage space available for use, saving content and adding new blocks to the network. Depending on the amount of space made available on the network, miner storage is able to earn more rewards through the native token FIL. In addition to the rewards given by the network, the miner storage is also paid for by the user who has its content stored. What happens is that the space that mining storage makes available is put to be rented in an open market, where other users bid for storage, while miners compete to offer the service at the lowest price. This open market system guarantees price competitiveness and better maintenance of the network, as well as ensuring the interest of both ends of the service.

To secure their payments and rewards, storage miners need to conduct proof of consensus to prove to the network that they are storing the data they claim to be storing and that they’re doing so reliably over a period of time. Simply put, this user acts as the network server.

Retrieval miners

Retrieval miners can be related to providers and are usually paid outside the network, although the platform also has an open market for this service. In this case, the retrieval miner is paid to function as one of the nodes in the network. Imagine that you need that information faster and a user close to you still has a copy of that information. Or that you need some files to be sent faster to someone else. You can pay the users who will serve as intermediary providers (the nodes on the network) who will make this happen. In these cases, retrieval miners who have a better internet speed and are closer to certain services have higher gains.

Consensus - Proof of Replication and Proof of Spacetime

Proof of Spacetime proves that a network node user has kept some file for a certain period of time. A little different from the PoC, already mentioned here in some blog articles, which requires the user to prove that he is maintaining a certain storage capacity. In Proof of Spacetime, the storage capacity (space) needs to be allocated to the network in a given period of time. This consensus is called ‘Proof of Spacetime’ because the true cost of storage is proportional to the product of storage capacity and the time that it is used.

Proof of Replication, on the other hand, requires the user to prove that he kept only the number of copies of the file on the network that he claims to have. Together, these proofs allow users to trust that miners indeed hold the data they claim to hold.

What Is the FIL Token?

FIL is the native token of the Filecoin project and is used as an incentive for users to contribute to IPFS. Users create a relationship where one of them rents out some of their unused storage space to other users and receives FIL tokens in return. The amount of tokens is proportional to the amount of storage data provided and the currency can also be used as a dictator of community governance in matters related to the project. Some users often call the project the “paid version of IPFS” and this becomes possible with the FIL token that serves as a reward for data storage, mining, staking, and other functionality services.

What Problems Does Filecoin (FIL) Solve?

Source: filecoin.io

There is no denying that all the problems solved by the Filecoin project have to do with the decentralization of the data and information storage service, handing users the responsibility of maintaining information and the possibility of accessing content free of charge and available forever.

Filecoin allowed users to enter the IPFS concept, making it possible to monetize it and make the project leave the field of ideas and reach the status of a company, with customers, products, services, and solutions.

Compared to other competitors in the crypto world, it is still possible to highlight Filecoin not only for its team (the IPFS creators themselves) but also for security and ecosystem.

However, for users who have not yet begun to migrate to Web 3.0 and do not yet understand the differences between centralized and decentralized services, it is important to compare the differences, advantages, and disadvantages between the service that many of us already know and others with great potential.

Filecoin vs Google Drive

When it comes to cloud storage, Google Drive is one of the first names that comes to mind. In addition to others such as Amazon, Dropbox, OneDrive, and others, the Giant of Data is one of the main monopolies for this type of service. The main page of the project itself clarifies some of the differences, as shown below.

Is Filecoin a Good Investment?

There is no denying that, at the time of writing this text, the situation of the crypto market was a bear market, preparing positions and creating a favorable environment for the growth of large projects, while ending the smaller ones. The expectation is that, with the return of big names in the market, such as Ethereum and Bitcoin, projects solid enough to survive bearish times would be brought up to the point of achieving their full potential.

To identify these projects, experienced traders need to analyze factors such as stability, innovation, and investment targeting. The project needs to have the interest of the community, have a good team and have relevance to be carried out in Web 3.0.

The Filecoin project has been stable as to its price, but it does not mean that it is stopped. Even with the market down, the team was able to establish alliances and important business partnerships that show that the project is here to stay. Despite some competitors within the context of decentralized storage service, Filecoin has managed to maintain many of the features that make it unique and superior to other names on the market and managed to acquire more users.

The project has some interesting technical characteristics that add details and justify the interest of the community in its usefulness and investment intention. The project has an offer ceiling, which basically means that there is a maximum amount of FIL to be made available, with a total of 2 Bi FIL, but which reached the 70 million mark not long ago. This in itself ensures scarcity, even if the token is a utility token, displaying the potential of the project.

How to own Filecoin?

To own FIL, you can use the services of a crypto centralized exchange. Start by creating a Gate.io account, get it verified and funded. Then you are ready to go through the steps to buy FIL.

News on Filecoin

in June 2022, Marta Belcher, president and head of the Filecoin Foundation, said that decentralized systems provide an alternative to centralized solutions for data storage and website availability. By merging the processing power and storage capabilities of numerous individual devices into a supercomputer-like network that can store multiple copies of data, she claimed that initiatives like Filecoin are capable of building a better version of the Web.

Also, in September 2022, due to the increasing regulations in China, RRMine Global, a Filecoin service provider delivering global cloud-computing asset management, announced its relocation to Singapore. In order to improve yield efficiency, the service provider also disclosed the introduction of a new system upgrade.

Useful References

For the latest updates about the Filecoin project, you can visit:

• The official project website
• The official project blog
• Twitter
• Discord
• WeChat
• GitHub
• Slack
• Reddit

Take Action on Filecoin

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