Filecoin is a decentralized storage network that allows users to pay for and provide storage space. It includes a blockchain and a native cryptocurrency, FIL, which storage providers earn by providing storage. Unlike traditional storage systems, Filecoin offers hypercompetitive prices, verifiable proof of storage, and a decentralized ecosystem of independent storage providers.
Filecoin was created in 2014 by Juan Benet, the founder of Protocol Labs. The team raised over $200 million in an initial coin offering (ICO) in 2017 to fund the project’s development. Filecoin’s objective is to create a decentralized, more secure, and efficient data storage network, without any central authority or point of control.
What is Filecoin?
In Filecoin, users pay to store their files on storage providers, who are responsible for storing files and proving they have stored them correctly over time. The available storage and its price are determined by an open market where anyone can participate.
Filecoin offers users the flexibility to choose their preferred trade-off between cost, redundancy, and speed by selecting the storage provider whose storage offer best fits their needs. Filecoin-enabled applications can negotiate storage with any storage provider on the network, without the need to implement a different API for each provider.
Filecoin’s blockchain records transactions to send and receive FIL, along with proofs from storage providers that they are storing their files correctly. At any time, users can verify that their files are being stored correctly by looking at proofs on Filecoin’s blockchain.
FIL is the native cryptocurrency of Filecoin’s network, used to pay for storage and retrieve files. Storage providers earn FIL tokens for storing files and appending new blocks to the chain every 30 seconds. The amount of FIL earned depends on the amount of useful storage provided to the network, not on proof-of-work computations.
Executing messages on Filecoin’s network consumes both computation and storage resources, measured in Gas. The gas consumed by a message directly affects the cost the sender must pay for it to be included in a new block. A dynamic BaseFee value determines the amount of fees burned in the network, which is automatically adjusted according to the network congestion parameters. Users can obtain the current value from one of the block explorers or by inspecting the current head of the chain.
Wrapped tokens are becoming an increasingly popular way to utilize the functionality of one blockchain’s assets on another. For those familiar with Filecoin, you may know that FIL tokens cannot be directly used on Ethereum or other networks due to different standards. Wrapped FIL tokens offer a solution to this issue by allowing FIL to be used 1:1 within other blockchain networks, including Ethereum.
Wrapped FIL is available in different networks, including Ethereum, Binance Smart Chain, Celo, and more, and users can choose between custodial or non-custodial wrapping solutions. Non-custodial designs, such as vFIL, are governed by on-chain, immutable smart contracts, while custodial designs, such as wFIL, BFIL, eFIL, and HFIL, are managed by a single third party.
To wrap FIL, users can use web-based applications that require a web or mobile wallet to connect, choose the wrapped FIL type depending on the target network, choose the amount, and confirm the transaction. There may be different fee structures and waiting times depending on the network and application.
Filecoin Nodes and Storage Providers
Filecoin nodes are peers that sync the Filecoin blockchain and validate the messages in every block to provide a global state of the network. Nodes can broadcast different types of messages to the network, including proposals for storage and retrieval deals.
Storage providers execute different types of deals and append new blocks to the chain every 30 seconds, earning FIL rewards. They must prove that they are storing the data following the terms of the storage deal using cryptographic proofs, such as Proof of Replication (PoRep) and Proof of Spacetime (PoSt).
Running a Filecoin node or storage provider is a highly technical task with strong hardware requirements. Several Filecoin node implementations are in the works, with Lotus being the most advanced implementation of a Filecoin storage provider.
Filecoin vs Amazon S3 vs Google Cloud Storage
Filecoin is a unique file storage and distribution system that operates on an open, peer-to-peer network while providing economic incentives and proofs to ensure files are being stored correctly. This sets it apart from other technologies that share similar properties.
One such comparison can be made between Filecoin and Amazon S3 or Google Cloud Storage. The main use case of Filecoin is to store files at hypercompetitive prices, while Amazon S3 and Google Cloud Storage are more focused on providing a familiar and widely-supported service for file storage. Filecoin’s pricing is determined by a hypercompetitive open market, whereas the pricing of Amazon S3 and Google Cloud Storage is set by corporate pricing departments.
In terms of centralization, Filecoin has many small, independent storage providers, while Amazon S3 and Google Cloud Storage are dominated by a handful of large companies. Reliability stats for Filecoin are independently checked by the network and publicly verifiable, whereas companies self-report their own stats in the case of Amazon S3 and Google Cloud Storage.
One advantage of Filecoin is that applications can access all storage providers using the Filecoin protocol, whereas applications must implement a different API for each storage provider in the case of Amazon S3 and Google Cloud Storage. Filecoin also offers a competitive market for retrieving files, while retrieving files in Amazon S3 and Google Cloud Storage is typically more expensive than storing files to lock users in.
If a file is lost, the user is refunded automatically by the network in Filecoin, whereas companies can offer users credit if files are lost or unavailable in Amazon S3 and Google Cloud Storage. In terms of support, the Filecoin protocol determines what happens without human intervention in Filecoin, whereas users contact the support help desk to seek resolution in Amazon S3 and Google Cloud Storage.
In addition, Filecoin miners can be located anywhere in the world, while providers of Amazon S3 and Google Cloud Storage are limited to where their data centers are located. Becoming a storage provider on Filecoin has a low barrier to entry, only requiring a computer, hard drive, and internet connection, whereas becoming a storage provider on Amazon S3 and Google Cloud Storage has a high barrier to entry due to legal agreements, marketing, and support staff.
All in all, Filecoin is a groundbreaking decentralized storage network that utilizes economic incentives and cryptographic proofs to incentivize users to store and share files on a global network of storage providers. By using a peer-to-peer architecture, Filecoin allows for decentralized storage that is secure, reliable, and cost-effective.
Compared to other file storage and distribution systems, Filecoin offers unique advantages such as a competitive market for storing and retrieving files, independently checked reliability statistics, a low barrier to entry for storage providers, and the ability to use wrapped FIL tokens on other blockchain networks. As the Filecoin network continues to mature and more applications are built on top of it, it has the potential to revolutionize the way we store and share data in a secure and decentralized manner.