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.

Proof

The Filecoin network is a distributed, peer-to-peer network formed by Filecoin peers who participate in different ways.

PoRep

Using Proof Of Replication (PoRep), storage providers demostrate publicly that a unique encoding of the data exists in physical storage.

PoSt

Over time, with Proof of Spacetime (PoSt), randomly selected miners provide proof that the data associated with a deal is still stored.

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.

Filecoin Storage Markets

Using these technologies, Filecoin will offer a market for disk storage where users who wish to store data can bid on available storage offered by miners who offer disk-space.
Miners who supply disk-space will also be judged based on their reliability as well as the prices of storage they are offering. Filecoin’s Storage Market will be similar to a financial market, where users can make bids and offer asks.

Filecoin Mining

Generally speaking, Filecoin miners are users who offer storage. This means any user can plug in a hard-disk, run the Filecoin software, and start to offer disk-space in the Storage Market. These miners are known as Storage Miners.
But there is one more category of Filecoin miners, known as Retrieval Miners and Services.
These miners are paid by users to retrieve data and to perform services that speed up the transmission of data, such as caching or participating as a node in a content delivery network.

Read More About Filecoin Mining

Advantages of Using Filecoin

Filecoin promises a number of advantages over centralized data storage solutions. They include:

Cost

By creating a larger free market for data storage, this should drive the price down.

Scale

Bringing millions of computers around the world together will create a huge storage network.

Economy

Instead of building new storage computers, Filecoin makes use of existing resources.

Safety

While Dropbox and iCloud have been hacked, a decentralized network means there is no single point of attack, making it harder to compromise.

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.

Filecoin (FIL) Use cases

Filecoin allows consumers to choose the best storage option rather than having to go with locked-in vendor contracts or high rates for on-demand storage. Organizations and individuals who have unused storage space are able to offer it on the network. By sharing their resources, they are rewarded in FIL. This may not be obvious at first, but you can build DApps for storage, too! These include consumer storage apps, DeFi apps, decentralized video apps, and more.

Fleek

Fleek automatically archives and backups your IPFS/Internet Computer hosted sites and apps, as well as your IPFS-stored files, to Filecoin. This will ensure you have a redundant backup layer existing on a decentralized storage network out of Fleek.

Microsoft ION

ION is a public identity network that provides infrastructure through distributed identifiers or distributed identities. The IPFS community has been cooperating with Microsoft since 2009, and IPFS appears in the picture as the basic storage layer of ION. This is a huge leap forward for the IPFS and Filecoin ecology.

LivePeer

Filecoin miners can simultaneously become Livepeer video miners and continue mining on the Filecoin network by storing transcoded video data. By providing transcoding, storage and retrieval in one place. Making Filecoin miners the leader in distributed video use cases.

Ganache

Filecoin-style Ganache is a one-stop shop for creating Filecoin apps, explains how to build Filecoin apps to improve NFTs, and provides apps for creating decentralized art galleries.

FileHive

FileHive, a Filecoin-based use case, is an incredible application. Anyone can open a marketplace to upload, maintain and purchase datasets. It utilizes the Filecoin network to incentivize the storage and licensing of datasets retrieved from the IPFS network, and this entire ecosystem is built by OB1 on top of Filecoin, Powergate, and Loom.

Chainlink

Chainlink integration with Filecoin brings decentralized oracle solutions to the network, which brings advanced distributed storage solutions to Web3 developers, smart contract developers now have a full Web3 infrastructure stack, including for on-chain logic and state-changing blockchains for off-chain communication and computation with Chainlink oracles.

Brave

Brave actually became the first browser to offer IPFS integration, which is a huge leap for Web3 browsers. IPFS integration provides Brave’s users with easy access to the protocol, while improving the overall resiliency of the Internet.
In addition, in terms of browser strategy, Opera has now added support for IPFS addressing in its iOS browser Opera Touch, which not only supports the integration of IPFS with iOS browsers, but also supports IPFS in Opera desktop for windows, Mac OS and Linux Addressing in.

Who Accepts Filecoin?

On a global scale, more than 300 businesses accept Filecoin payments for goods and services. These stores include Chipotle Mexican Grill, a range of electronics shops, and even some charitable organizations.
There’s also potential for a great number of other businesses to accept Filecoin in the future, thanks to platforms such as NOWPayments, which supports FIL transactions for outlets.