Since the advent of cryptocurrency, starting with Bitcoin, we have seen so many innovations hinged on one crypto-coin or another's creation and existence. One that has been startling in recent times is Filecoin which computer engineer Juan Benet created.
Filecoin seeks to simplify the procedure of file and data storage by creating a free and decentralized market.
Imagine being able to exchange the excess memory space on your computer for some money. Like you rent out a part of your disk space to people who need to store their files for safekeeping for some time and get paid in cryptocurrency.
I know it sounds exciting but unrealistic, but whoever thought the Airbnb business model would be an emphatic success story. Like Airbnb, file coin is creating a system where you can get value for unused space. But while the former deals in room and accommodation, the latter deals in storage spaces.
We know right now you're wondering how this is supposed to work, don't worry. This article is a tell-all on falcon; just read on.
Filecoin is a cryptocurrency that incentivizes a decentralized peer-based system that allows people who have available storage space to enter into a rental agreement with those who need these available spaces to deposit their files. The filecoin network would enable participants who have an extra and unused memory space on their computer to lease out such space to a willing client for a fee not fixed but determined by market forces.
For instance, if you have a computer with large storage space, maybe 2 Terabytes, and your storage needs consume only half of that, rather than leave the remaining 1TB unused, you may decide to rent it out and then earn some filecoin token in the process.
Please think of the filecoin network as an alternative to dropbox or any other cloud storage service provider where people subscribe to and have their data saved. But in this case, rather than have a central operational body that holds all deposited files in one place and fixes price, clients would have the liberty to bid from a plethora of miners offering storage spaces and at a price agreed between them. In summary, no one body would have all save files, and nobody can arbitrarily fix service prices. The filecoin is only the bargaining tool or currency approved for use within the network.
The system proposes maintaining the largest network and size of information deposit facilities by inviting people in every part of the world to contribute their unused disk space in exchange for economic gains.
Filecoin would be able to satisfy huge storage needs by pooling together the different storage contributions of members.
As of February 2021, the blockchain system was announced that the deposit volume within its network had surpassed 2.5 billion gigabytes.
This is interesting. Who would imagine that you could earn value for the unused disk space in your computer?
Filecoin first came into the public space in 2017 through an Initial Coin Offering that saw it raised the largest funding ($257 million) any cryptocurrency before that time had ever raised in a public offering. Following the ICO's success in 2017, the Filecoin mainnet was officially launched for public use in October 2020.
The idea to build a peer-based storage infrastructure operated on the blockchain pre-existed the introduction of Filecoin. Founder of Product Labs, Juan Benet, had in 2015 initiated the IPFS to simplify and enhance saving and keeping of files in a shared system. The introduction of filecoin was the icing on the cake; it added spice to an already existing idea by promoting a cryptocurrency as a reward for the network's clients.
The introduction of a reward system in the cryptocurrency mode enhanced the use and wide acceptance of the filecoin model. Miners give out their extra storage on the network for a reward of filecoin. The devolved of the network means that Product Labs manage no single centralized database. Implying that people's files and information will not be susceptible to an organized hack or data theft as there is no one point of entry.
Unlike most other cryptocurrency and blockchain projects developed strictly for financial transactions, Filecoin highlights the versatility and cross-functional nature of blockchain technology. It was developed to promote safer, cheaper, and distributed file deposit activity.
Like earlier explained, the Filecoin model expedites file storage by allowing miners from every part of the world to provide extra storage space. This is an innovative way of keeping files that individuals and corporate bodies can take advantage of. We will briefly consider in detail how the entire network functions.
The system is a distributed peer-based network made up of participants who take up different positions based on their needs and aim. While some people on the network are storage providers, others are hirers seeking storage spaces. Participants may communicate among themselves through secure channels.
Filecoin allows hirers to rent memory spaces from a verified miner or miners within the system and deposit their files and data therein. Storage rent prices are not fixed or regulated by anybody but according to market movements per time. This makes the system highly competitive and business-friendly.
Hirers can decide on a particular miner to transact according to their storage wants, which may depend on size, pricing, fastness, or any other relative factor. Hirers can confirm their storage demands' correctness and safety by probing Filecoin's blockchain for proofs.
The hirer pays the space provider in filecoin for saving and retrieving his files.
A storage provider, also called a miner, can be anyone or an organization that wishes to lease out deposit spaces to hire within the system token for some filecoin token. Eligibility for operating as a miner is the ownership of digital deposit-space either on an internet-enabled computer or a storage system/database specifically developed for offering value on the Filecoin infrastructure. Miners and hirers transact in an open marketplace.
The Filecoin system also includes Retrieval miners
A retrieval miner earns a fee for every successful file retrieval request they complete. So when a hirer decides to retrieve an already stored file, retrieval miners jump on the request by placing bids and retrieving the file. They earn according to the size and importance of the file to be retrieved.
As with most cryptocurrency systems and blockchain projects, mining in the Filecoin network can be resource demanding. High-end hardware devices and computers would be needed to complete proofs and mine successfully.
A proof in a cryptocurrency or blockchain transaction is like a validation exercise people on the network (in most cases, miners) engage in to ensure that a transaction is legit. Bitcoin's consensus system and another popular cryptocurrency (PoW and PoS) differ from the filecoin network. The filecoin model endorses the Proof of Replication (PoRep) and the Proof of Spacetime (PoSt).
The cryptographic proof type in the Filecoin system is to authenticate that storage providers perform their duties and respect the terms of a contract entered. They must show evidence that they have deposited all the files brought by a hirer and that they must be safely stashed for the whole duration as agreed.
The Proof of Replication guarantees that a miner has collected all the information/file and has encrypted them such that it cannot be replicated in a future transaction.
This implies that no one set of data can be stored in one storage space more than once while the first agreement is still in effect.
Proof of Spacetime assures that all deposited data still in effect is maintained until the end of the rent duration as agreed by the parties. Every miner needs the consensus mechanism to certify that they are still holding every data they have kept.
The Proof system automatically detects miners that have defaulted in carrying out their duty and places a sanction on them.
The filecoin model is made up of different participants, basically the hirers and the miner. The miners are usually storage miners and retrieval miners. A storage miner may also decide to act as a retrieval miner, and a participant may decide to be any of the two.
While the hirer requests for deposit spaces to keep their data, the storage miner makes available deposit space. The retrieval miner recovers a file for the hirer at the end of the rent period or requested.
A storage miner wins some filecoin token for every file stored, while a retrieval miner also wins for every file retrieved. The volume of tokens to be paid by the hirer is not fixed but dependent on size and agreement between the transacting peers.
Following the debut of Filecoin mainnet towards the end of 2020, the FIL token became available for purchase or exchange on different popular cryptocurrency trading platforms worldwide. Buying a Filecoin is easy; all you need to do is enter an exchange that has listed it, buy as much quantity as you would want, and then store it in your wallet. Most crypto-trade platforms that sell the FIL token usually pair it against Bitcoin or USDT.
Filecoin is a cryptocurrency and cannot be held physically but stored in digital cryptocurrency wallets that can retain the coin. Normally, any exchange that has the filecoin listed should provide a supported wallet for safekeeping. However, Filecoin suggests using three wallets for storing the FIL token; the Lotus wallet, Glif wallet, which is web-based, and the Firefox wallet is also web-based. The mentioned suggestions do not undermine the usefulness of any other wallet that supports the FIL token.
Since the filecoin mainnet went public, the cryptocurrency has been on a steady uptrend, although there have been some downward movements but nothing significant to worry investors. In October 2020, when it was launched, the coin was trading around $30.
On the last day of December, it had dropped to $21. But at the time of writing this article, Filecoin is trading at $199.42. on average, it has appreciated by over 500% in three months. The recent pump experienced only affirmed the projections of experts and enthusiasts.
According to data furnished by CoinMarketCap , filecoin is now at the 11th position on cryptocurrency rankings. With a market cap of over $12.5 billion. The cryptocurrency has a distributed supply of 63million coins out of a limit of 2 billion.
Although no analysis can be 100% correct, going by the value and use of the FIL, we may be seeing more uptrends in the coming future.
There are a number of platforms where hirers can use the filecoin in exchange for storage services on the filecoin network.
Here are a few applications that can be used to store files on the Filecoin network
Slate: With this application, hirers may upload files and data directly from their browser to the network. It also supports upload of image galleries. Slate offers up to 50gb storage space for free for first time hirers.
One of the highlights of the blockchain is the beauty of decentralization; nobody controls the system. Now imagine a storage system that is based on decentralization and a distributed network. We would briefly discuss other benefits of the filecoin network.
Unlike the conventional storage platforms where the regulators or developers determine the market and have sole ownership of providing services, filecoin network operates an open system. All you need to be eligible to be a part of the market and provide services is internet connection, and an extra disk space.
Prices on the network are determined by market activity (demand and supply). Miners set their prices under efficiency and offerable storage size. Hirers also bid and decide what price and services best suit their needs.
The filecoin network distributes a hirer's data amongst different miners. No one miner can have all your data. Rather different fragments are stored with different miners. This ensures that your information cannot be accessed or used by anyone. At the point of retrieval, the system collates all different data fragments stored up differently and provides them in a whole format.
Also, since there is no central storage system, it becomes very difficult for cyber-criminals to penetrate the network with the intention of data theft.
Before the emergence of services like the filecoin network, it was almost impossible to earn some economic value with your excess storage space on your computer or other digital storage infrastructures. You just left them until anytime there is a use for it which sometimes never happens. The filecoin network provides a reward system from one of the unlikeliest of things.
The Filecoin network further emphasizes the change narrative and highlights the versatility of blockchain. Blockchain and cryptocurrency are changing the world and how we do things. We have seen use cases and experienced this in the financial system and gaming world. Now the revolution is sweeping across various sectors of the world. Decentralized storage powered by a cryptocurrency (filecoin) would be more beneficial to individuals and big corporations.
