In this guide, we will provide you with answers to questions such as what is Filecoin and what is Filecoin for.
One of the most talked about cryptocurrencies of recent times is undoubtedly Filecoin (FIL). As we reported yesterday, the cryptocurrency, which is listed on Kraken and Gemini, completed its transition today, before the mainnet launch was completed. On this development, Filecoin has risen by 100% in the last 24 hours, according to data from CoinMarketCap.
So what is Filecoin? Let’s examine it together.
What is Filecoin (FIL)?
FIlecoin is a decentralized data storage network that uses the native cryptocurrency FIL to promote the creation of a secure and reliable storage and recovery network. Users pay FIL to store their files in storage miners, which are computers responsible for facilitating the network. This system can be used by those who want to avoid the hassle of dealing with traditional backups, or who want to circumvent government censorship.
Filecoin is a peer-to-peer network that stores files with built-in economic incentives to ensure reliable storage of files over time.
In Filecoin, users pay to store their files in storage miners. Storage miners are computers responsible for storing files and proving that they have stored files correctly over time. Anyone who wants to earn money to store their files or store other users’ files can join Filecoin. Available storage space and the price of that storage are not controlled by a single company. Instead, Filecoin offers open marketplaces for storing and retrieving files that anyone can join.
Filecoin includes a blockchain and native cryptocurrency (FIL). Storage miners earn FIL units for storing files. Filecoin’s blockchain records transactions to send and receive FILs, along with evidence that storage miners are storing their files correctly.
How Does Filecoin Work?
Filecoin is logically like Dropbox, but powered by blockchains. Users who want to store some data on the Filecoin network must pay a miner to do so. How much they pay is determined by an open market where miners compete with each other to offer the lowest price for storage. Filecoin claims that this market will be “hypercompetitive” and therefore cheaper than centralized data storage like Amazon Web Services.
Miners, in turn, have an incentive to provide storage because they have a chance to receive rewards from the network in the form of Filecoin tokens. The more storage they offer to the network, the greater their chance of receiving rewards.
However, these rewards are not free. Miners must perform a large number of computationally intensive processes (called proofs) to prove to the network that they are storing the data they claim to store and do so reliably over a period of time. If they do this reliably and provide adequate storage, they can create new blocks on the Filecoin blockchain and receive the network reward and transaction fees.
Why Filecoin?
There are many features offered by Filecoin that make it an attractive system for storing files.
Open Market
At Filecoin, file storage and retrieval agreements are negotiated in open markets. Anyone can join the Filecoin network without the need for permission. Running a miner only requires an internet connection and free disk space. Filecoin lowers barriers to entry, enabling a thriving ecosystem of many independent storage providers.
Competitive Prices
Storage and retrieval prices are determined by supply and demand, not corporate pricing departments. Filecoin makes reliable storage available at extremely competitive prices. Miners compete for storage, reliability, and speed rather than marketing or locking users out.
Reliable Storage
Because the storage fee is paid, Filecoin provides a decent economy to keep files available over time. Files are stored on computers that are reliable and well connected to the internet.
Self Healing
The Filecoin network continually verifies that files are stored correctly. The Filecoin blockchain has a built-in self-healing process where faulty miners are detected and their files are redistributed to trusted miners.
Verifiable Traces
In the process of self-healing, Filecoin generates verifiable traces that files are stored correctly over time. Clients can efficiently scan these traces to verify that their files are stored correctly even if they are offline at the time.
Reputation Not Marketing
At Filecoin, storage providers prove their credibility by historical records posted on the blockchain, not by marketing claims posted by the provider themselves. Users do not need to rely on status pages or statistics from storage providers themselves.
Choices
Users can choose their trade-off between cost, redundancy and speed. Users are not limited to a number of data centers offered by their providers, but they can choose to store their files in any of the miners participating in Filecoin.
Censorship Resistance
Filecoin resists censorship because no central provider can be forced to delete files or withholding service. A network is made up of many different computers run by many different individuals and organizations. Incorrect or malicious people are noticed by the network and removed automatically.
Convenient Blockchain
In Filecoin, miners are rewarded for providing storage space, not for doing wasteful calculations. Filecoin maintains the blockchain using proof of file duplication and proof of storage over time. It does not rely on energy-intensive proof-of-work schemes like other blockchains. Miners are encouraged to collect hard drives and store files and use them. Filecoin does not encourage stacking of graphics cards or application-specific integrated circuits for the sole purpose of mining.
Provides Storage to Other Blockchains
Filecoin’s blockchain is designed to store large files, whereas other blockchains can usually only store small amounts of data very expensively. Filecoin can provide storage to other blockchains, allowing them to store large files. In the future, mechanisms will be added to Filecoin, enabling Filecoin’s blockchain to work with transactions on other blockchains.
Content Addressing
Files are referenced by the data they contain, not by sensitive identifiers such as URLs. Files remain available regardless of where they are hosted or by whom. Once a file becomes popular, it can be quickly distributed by stacks of computers rather than relying on a central computer, and this can be overloaded by network traffic. When multiple users store the same file (and choose to not encrypt it and make it public), anyone who wants to download the file benefits from keeping the file available. No matter where the file is downloaded from, downloaders can verify that they have the correct file and that it is intact.
Content Delivery Network
Recovery miners are computers with good network connections for most users who want to download files. By prefetching popular files and distributing them to nearby users, recovery miners are rewarded for keeping network traffic flowing smoothly and files downloading quickly.
Single Protocol
Applications implementing Filecoin can store their data on any miner using the same protocol. There is no different API to implement for each provider. Apps that want to support several different vendors are not limited to the lowest common denominator feature set supported by all their vendors.
No Locking
Migrating to a different storage provider is easier as they all offer the same services and APIs. Users are not locked into providers because they trust a particular feature of the provider. Also, the files are content-addressed, allowing them to be transferred directly between miners without the user having to download and reinstall the files.
Open Source Code
The code that runs both clients and storage providers is open source. Storage providers do not need to develop their own software to manage their infrastructure. Everyone benefits from the improvements made to the Filecoin code.
Active Community
Filecoin has an active community of contributors to answer questions and help newcomers get started. There is an open dialog between users, developers, and storage providers. If you need help, you can reach the person who designed or installed the system in question. Accessing the Filecoin chat and forums is simple.
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