April 18, 2021


24/7 crypto news, cryptocurrency meaning, guides, learning, #cryptohelpschildren

What is Filecoin (FIL) and Why Does it Matter?

4 min read

What is Filecoin (FIL) and Why Does it Matter?

Would you rent out your house on Airbnb? How about just renting out some space on your computer?

Filecoin wants to let you do just that.

What is Filecoin?

Filecoin is a decentralized protocol which enables anyone to rent out spare storage space on their computer. Likewise, anyone can buy storage on the network.

Filecoin’s ICO raised $257 million in 2017.

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.

It is being created by Protocol Labs, spearheaded by Juan Benet, a computer scientist and engineer.

What are the advantages of using Filecoin?

Filecoin has 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.
In 2012, Dropbox was hacked and 68 million user passwords were leaked on the internet.

Are there any disadvantages to Filecoin?

Some potential issues with Filecoin are:

  • 🚗 Speed – Instead of accessing one server, it needs to access multiple servers to piece together documents when required. This depends on servers being online and Internet speeds.
  • 📵 Dapp – By processing transactions using the Filecoin cryptocurrency, it creates a barrier to entry, as someone has to buy another coin and exchange it to use the service.

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.

“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.”

Does Filecoin have any competitors?

Filecoin isn’t the only company tackling decentralized file storage; a number of others have started to get the ball rolling.

  • Siacoin already has more than 500 storage providers with a capacity of 3.9 petabytes, or 3,900 terabytes. It’s cryptocurrency is currently tradable on crypto exchanges.
  • Storj has launched a private alpha of its decentralized storage platform which is set to launch in early 2019. Its cryptocurrency STORJ is also live.

How to Mine Filecoin

Filecoin miners come in three different stripes. There are storage miners, who are responsible for storing data on the Filecoin network; retrieval miners, who are responsible for retrieving files; and repair miners, who are yet to be implemented. 

Storage miners will earn Filecoin by storing client data, and providing proof of this storage over time. Retrieval miners, conversely, will earn Filecoin by bidding and mining fees for a particular file, determined by market value.

Where to buy Filecoin

The Filecoin mainnet went live in October 2020. Following the launch, several exchanges have committed to listing Filecoin. Binance has announced that it will list Filecoin with FIL/BTC, FIL/BNB, FIL/BUSD and FIL/USDT trading pairs. Other exchanges listing FIL include Gemini, Kraken, KuCoin and Huobi.

The Filecoin mainnet is brand new, so at the time of writing, there isn’t an established price.  Ahead of the launch, 19 cryptocurrency exchanges and marketplaces including Poloniex, BKEX, Bitforex and Bione allowed users to trade in Filecoin IOUs, a pre-launch token.

Until price discovery has taken place, it’s impossible to determine how much Filecoin will cost to purchase.

The future of Filecoin

Cloud storage providers like Amazon and Google rake in a lot of money. This demonstrates that there is big demand in the market.

If customers decide to trust decentralized services they could find themselves saving a lot of money. This money would also go straight back into the economy as it would go to individuals and small businesses, which could have a significant positive impact on people’s lives.


Leave a Reply

Your email address will not be published.