In today's digital age, the way we store data has become just as important as the data itself. Traditional cloud storage solutions offer convenience but often come at a cost: centralisation. This centralisation poses risks like single point of failure, service outages, cost, data ownership, geographic risk and more. Enter Filecoin, a decentralised storage network that aims to revolutionise the way we think about storing data securely and efficiently.

What is Filecoin (FIL)?

Filecoin is a decentralised peer-to-peer digital file storage network and marketplace that allows users to store, retrieve and share files in a secure manner and at a fraction of the cost. The network enables users to rent out their unused storage space or purchase storage space from others. The network's native token, FIL, is used to transact, pay for storage and retrieval on the network.

The founders of Filecoin developed the popular peer-to-peer file distribution network IPFS (InterPlanetary File System), which is a peer-to-peer distributed storage network. Filecoin builds on IPFS and enhances it by adding a blockchain incentive layer on top. This blockchain layer incentivizes storage providers to reliably stored all continents and ensure the files are replicated across the decentralised network.

The Filecoin service aims to stake its claim as the “storage protocol” of the decentralised web, where developers can create applications on top of it — think Dropbox and iCloud but without centralisation.

How Does Filecoin (FIL) Work?

Filecoin is simply a file storage marketplace powered by blockchain technology. In the Filecoin market place, available storage, and the price of that storage, are not controlled by any single company. Instead, Filecoin facilitates the open market for storing and retrieving files that anyone can participate in.

Imagine a marketplace filled with storage providers and users, where storage providers compete with one another to offer the lowest price for storage to users in an open market.

Storage Provider

Storage providers are blockchain miners that contribute storage space to the Filecoin network in return for FIL. These miners are responsible for storing files and data for users on the network, while also providing constant cryptographic proofs to verify they are storing what they say they are.

Much the same as a normal blockchain, storage provider miners can also earn FIL tokens over and above the user's fee by mining and adding new blocks to the blockchain – this provides an additional incentive to provide storage to the network.

But how do they get the chance to mine a block?

Network Consensus

Like Ethereum uses proof-of-stake, Filecoin uses proof-of-storage for the block leader election, meaning the likelihood of being elected to add a block depends on how much provable storage power a miner contributes to the network. 

‍Proofs

Blockchains rely on mechanisms called proofs to ensure that all users of the network can agree on new transactions. Filecoin is built on the proof-of-storage in which miners contribute their vacant storage space to the network to store data and then provide 2 proofs for the client to verify if their data has been stored correctly and for the agreed period. 

Proof-of-Replication: Proof-of-replication (PoRep) allows storage providers to prove that they have created a unique copy of the client’s data and stored it on behalf of the network.

 Proof-of-Spacetime: Proof-of-spacetime (PoSt) allows storage providers to prove that they are continually storing the user's data for the whole lifetime of the storage deal.

Retrieval Providers

Retrieval providers are another form of miner on the filecoin network. These miners are paid by users to provide quick access to their data and speed up transmission. They focus on rapid access to data, rather than long-term storage. Most of the time storage providers also provide retrieval access to their users as part of the same system. 

What Makes Filecoin (FIL) Unique?

Data Integrity: Web2-based storage systems only validate data each time the data is read or written. Colder data that you don't need to access as frequently therefore may go for long periods of time before being validated. This may hurt the data integrity and cause errors. Filecoin validates all data, whether it is being accessed or not, on a daily basis to ensure its integrity using proofs.

Security: Filecoin leverages blockchain technology to achieve immutability and decentralisation of file storage that is tamper-resistant.  Data is distributed across many storage nodes in the Filecoin network and users can determine specific geographical distribution of data so it can stay within certain countries or regions – web2 cloud providers are limited in this area.

Performance: Filecoin can deliver comparable performance to Web2 cloud-based storage.

Cost: Filecoin is over 4000x cheaper than AWS S3. Prices for storage and retrieval are determined by supply and demand, not corporate pricing departments. Filecoin makes reliable storage available at hyper-competitive prices when compared to web2 options.

Censorship Resistant: Filecoin resists censorship because no central provider can be coerced into deleting files or withholding service. Faulty or malicious actors are noticed by the network and removed automatically.

API: With Filecoin, applications can access all storage providers using the Filecoin API. In web2, applications must implement a different API for each storage provider.

‍What Gives the FIL Token Value?

Filecoin’s cryptocurrency, FIL, is the native token powering its network. FIL has multiple functionalities that it can derive its value from. 

Value can possibly be derived in the following ways:

Mining Rewards: FIL is the incentive and payment token behind the filecoin ecosystem. Miners are rewarded with newly minted FIL by providing storage space and maintaining the network. 

Currency and Transactions: All transactions relating to storage space utilise the FIL token. That means FIL is used to pay for storage and retrieval, and for any other transactions on the network. 

Earn a Yield: FIL owners can stake their tokens to earn a yield.

Growing Ecosystem: With the market for global data storage estimated to grow to nearly ~$800B by 2030, Filecoin could be poised to take market share away from centralised players due to cost and security. If Filecoin can see large user growth the need for the token increases, therefore driving demand and value up.

Where can I buy Filecoin (FIL)?‍

At Altify, you can seamlessly buy, sell and trade FIL for fiat currencies or other cryptocurrencies.