Know Everything About Filecoin (FIL)

What is Filecoin (FIL)?

Filecoin (FIL)

The FilECOIN (fil) cryptocurrency and payment system is built on the blockchain. InterPlanetary File System is used by Protocol Labs and allows customers to rent out idle, hard drive space. The transactions are recorded using a blockchain system. Thus, humanity’s most vital information will be stored in a decentralized storage system. 

Users of Filecoin cryptocurrency can be their data custodians, making the web more accessible to people all around. It’s no secret that the Filecoin network encourages its users to act honestly and keep as much data as possible by rewarding those who participate in the network by mining and storing it.

Who created Filecoin?

Filecoin is an open-source software that was created by Protocol Labs, the same firm that created technologies like IPFS and Libp2p aimed at replacing existing internet protocols. 

For example, IPFS is a system that could replace the Web’s hypertext protocol, which specifies that web addresses must begin with the prefix http://. 

Protocol Labs was founded by Juan Benet, who co-founded a game developer called Loki Studios while studying computer science at Stanford. The company was acquired by Yahoo in 2013. Benet then participated in the Y Combinator startup accelerator to start Protocol Labs.

Protocol Labs has received funding from notable investors like Digital Currency Group, Stanford University’s startup accelerator StartX, Coinbase co-founder Fred Erhsam and AngelList founder Naval Ravikant. 

Filecoin’s initial coin offering, which ran from August to September 2017, further raised $257 million from a cast of noted venture capital firms like Sequoia Capital, Andreessen Horowitz and Union Square Ventures. The Filecoin offering was the largest of its kind at the time. 

Primary features of Filecoin

  • Cost: Anyone can rent out computer storage space with Filecoin, a decentralized technology.
  • Scale: An extensive storage network will be created by bringing together millions of computers throughout the world.
  • Economy: Uses existing resources instead of developing new storage computers with Filecoin’s help.
  • Safety: Decentralization makes it more difficult to hack, even though Dropbox and Apple’s iCloud have been compromised.

How does Filecoin work?

Filecoin is a little 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 one another to offer the lowest price for storage. Filecoin claims this market will be “hypercompetitive” and thus be cheaper than centralized data storage such as Amazon Web Services. 

Miners, in turn, have an incentive to provide storage because they stand a chance to receive rewards from the network in the form of Filecoin tokens. The more storage they offer the network, the better their chances of receiving a reward. 

But these rewards aren’t free. Miners must perform several computationally intensive processes (called proofs) to prove to the network that they are storing the data they claim to be storing, and that they’re doing so reliably over a period of time. 

If they do so reliably and provide enough storage, then they can create new blocks on the Filecoin blockchain and receive the network reward and the transaction fees.

Proof-of-Replication and Proof-of-Spacetime
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. 

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