What is Filecoin (FIL)?
Filecoin (⨎) is an open-source, public cryptocurrency and digital payment system intended to be a blockchain-based cooperative digital storage and data retrieval method.
“There’s a ton of storage in the world that’s not getting used. Think of it like Airbnb. You had people with rooms weren’t being used; Airbnb built a marketplace for them.”—Juan Benet
Filecoin (⨎) is an open-source, public cryptocurrency and digital payment system intended to be a blockchain-based cooperative digital storage and data retrieval method. It aims to incentivize a global network of computer operators to provide a file sharing and storage service. By allowing anyone in the world to join the network, it can create a huge source of data storage. As more and more systems become computerized, it will be needed to satisfy the increase in demand.
Filecoin is sometimes called an incentive layer on top of IPFS. This just means that users are incentivized to rent out their storage space by getting paid in FIL tokens.
Filecoin is an open protocol and backed by a blockchain that records commitments made by the network’s participants, with transactions made using FIL, the blockchain’s native currency. The blockchain is based on both proof-of-replication and proof-of-spacetime.
Filecoin was first introduced in 2014 when Juan Benet released the whitepaper: Filecoin: A Cryptocurrency Operated File Storage Network. The proposal is a blockchain network similar to Bitcoin, but where nodes in the network can store data, guaranteed by a proof-of-retrievability component. Filecoin is developed by Protocol Labs.
Filecoin raised over $250M in their 2017 ICO, which was a record at the time. The Filecoin mainnet was subsequently launched in October 2020.
Blockchains rely on mechanisms called proofs to ensure that all users of the network can agree on new transactions. The Bitcoin blockchain, for example, relies on a proof-of-work, where a miner must show it has performed a massive number of calculations to earn the right to add new transactions to the blockchain and claim newly minted Bitcoin.
Filecoin uses two new proofs to verify that miners are actually storing the data they claim to hold. Proof-of-Replication shows that a miner has truly stored the number of copies of data it claims to hold. Proof-of-Spacetime shows that a miner has stored the data over an agreed period of time.
Together, these proofs allow users to trust that miners indeed hold the data they claim to hold.
Is Filecoin safe?
Saving your documents on someone else’s computer is risky. However, Filecoin splits up data, a bit like shredding it, so nobody can piece it together. However, it knows how the data fits together and rearranges it when it’s requested.
This means the host cannot simply hack the document on their computer and gain access to the user’s files. If they tried to hack it, they would find just a stream of meaningless data.