Filecoin

What is Filecoin?

Filecoin is a digital currency designed to incentivize a global network of computer operators to provide a service for sharing and storing files. The creators of the project believe that if a large number of people adopt it, Filecoin could become the fastest and most cost-effective method of storing data on the internet. One of its key advantages is its decentralized nature, which means that the exchange of files cannot be censored by governments or other entities.

The operation of Filecoin relies on miners who contribute their computing power to support the system. These miners are rewarded for making storage space available to users. In turn, users of Filecoin must compensate the miners for the storage, retrieval, or distribution of their data.

Filecoin operates on top of another decentralized file handling protocol called the Interplanetary File System (IPFS). While both systems share many similarities, the main difference is that IPFS is free to use and does not generate income for miners, whereas Filecoin requires payment but offers the potential for revenue generation.

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Recent Video Interview

Main points of the interview:

• Filecoin's use of cryptoeconomic incentives to create a decentralized storage network.
• Filecoin's model of using incentive structures to organize people and resources efficiently.
• Applying similar incentive structures to other societal challenges like carbon fixing and increasing solar energy.
• Regrets about not allocating a portion of Filecoin's initial token supply to public goods funding.

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The Way Filecoin Works

The Filecoin system involves three key participants: clients, storage miners, and retrieval miners. These parties closely interact with each other, engaging in transactions, sharing information, and conducting micropayments using the $FIL currency.

Clients are responsible for paying for data storage or retrieval. They initiate orders on the online storage market, where they enter into deals with storage miners. Storage miners store the clients' data and receive rewards in return. They allocate files to available space on their hard drives, and all actions are recorded on the blockchain. Clients receive private keys for accessing their stored data.

Retrieval miners, on the other hand, fulfill client requests by extracting the requested data. Clients place trades on the off-chain Retrieval Market, and retrieval miners can also serve as storage miners.

Filecoin is built on the IPFS protocol, where all data is stored on a peer-to-peer blockchain. Users select miners to store their data and pay for the placement using FIL tokens. Miners execute trades, earning participation fees and FIL rewards. The more storage miners offer, the greater their chances of receiving rewards. Clients have the ability to verify the storage of their data during transactions, as proofs are recorded on the blockchain. The Filecoin network utilizes the Proof-of-Replication (PoRep) mechanism, while miners use the Proof-of-Spacetime (PoSt) method.

To ensure the safety of their data on the Filecoin network, clients must pay the miner's fee. The cost is determined by the open market and consists of various factors. In this competitive market, miners set their minimum prices for storage, resulting in hyper competition.

The Use of FIL

FIL, the native currency of Filecoin, serves as a utility token designed to incentivize and reward persistent storage on the Filecoin network. Storage providers have the opportunity to mine FIL by offering reliable storage services or committing storage capacity on the network. The maximum circulating supply of FIL is set at 2,000,000,000, ensuring that the total number of Filecoin in existence will not exceed 2 billion.

As a utility token, FIL is structured to align the interests of participants with the long-term development and expansion of the network. The issuance of Filecoin is directly linked to the proven utility of the network itself. The majority of the Filecoin supply will only be minted if the network achieves significant growth and meets predetermined utility targets at scale. This approach encourages sustainable growth and ensures that the issuance of FIL aligns with the network's overall success.

Filecoin Team Background

Juan Benet, the creator of the Interplanetary File System (IPFS), established Filecoin. Benet, an American computer scientist, pursued his studies at Stanford University. In May 2014, he founded Protocol Labs and later participated in Y Combinator during the summer of the same year. His purpose was to provide support for IPFS, Filecoin, and various other projects.

Filecoin Project Development

In addition to nv17, a set of successive protocol upgrades are being implemented to transfer system functionality from privileged space to user space. This will lead to a more streamlined and flexible base Filecoin protocol, where storage markets, deal-making, incentives, and other aspects can be extended, modularized, and highly customized through user-deployed actors. Furthermore, advanced programming features such as user-provided cron, asynchronous call patterns, and more will be developed during 2023.

By mid-2023, there will also be a new capability introduced on the mainnet: the ability to deploy Wasm actors. This means that developers will have the opportunity to deploy their own custom smart contracts, written in languages such as Rust, AssemblyScript, or Go, and compiled into WASM bytecode. To support this milestone, various resources such as SDKs, tutorials, and developer materials will be made widely accessible.

Filecoin Price Analysis

As of November 24 2024 Filecoin has a marketcap of $3.3B. This is {{percentagefromath}} from its all time high of $236.84. In terms of its tokenomics, there's a total supply of 2B with 31% currently outstanding. Keep in mind Filecoin has a fully diluted value of $11B which many investors might interpret as overvalued.

Of course, don’t trust price predictions alone, always check the Coinrotator token screener to follow the trending market.