Filecoin Guide: Storage is the name of the Game

Filecoin Guide: Storage is the name of the Game

Blockchain is all about decentralization, it is about keeping what is yours, yours, by breaking it apart and giving it to various strangers around the world to hold onto. This sorta sounds like an Indiana Jones' adventure.

By decentralizing, you are keeping your data safer than if it were all stored in one central location. If the hackers breach security at Google, then your drive contents are going to be compromised.

If you cut your data up and disperse it, it will be a lot safer.

Filecoin Logo.
Filecoin strives to be an alternative to cloud-based storage solutions.

However, that comes with its own downside, if you lose your encryption keys or passwords, your bits of data are going to be lost forever, untraceable and unclaimable. with its 2017 ICO, Filecoin raised an insane $257 million!

In this article, you'll learn about the history and background of Filecoin, as well as learning more about the technology that drives and powers it. So let's jump right in with a short history lesson, to better explain the background and then we'll get into the tokenomics and technology.

Background

Filecoin is a project that was started by Protocol Labs, which has a mission to develop tools for the Internet.

Their belief is that the Internet is humankind's most important invention and their intention is to develop advanced tools to develop and assist society.

There are 15 core members of the team, too many to list here, and more than double the number of contributors working with Protocol Labs.

Filecoin was founded by Juan Benet, who also created the Interplanetary File System. We'll talk more about the IPFS, a bit later in the article. Benet is an American computer scientist who studied at Stanford University. After founding Protocol Labs in May 2014, he attended Y Combinator in the summer of 2014 with the intention of supporting both IPFS and Filecoin, as well as other projects. Which have now proved to be successful and used by many in the crypto currency world.

Tokenomics

Filecoin raised a staggering amount of funds, $257 million USD raised in 2017, during its ICO which ran from10 Aug 2017 to 7 September 2017. It had an initial funding goal of $40 million and its initial token price was $5 when it was introduced to the market. The token has done well, doubling to $10.67 which is an ROI of 113% if you bought it for a five spot. We'll go over the pricing in the next section.

There is a circulating supply of around 212.7 million Filecoin tokens with a market capitalization at $1.7 billion.

Historical Pricing Data

Graph showing the the historical price data for Filecoin from 2017 to 2022.
Use Atomic Wallet to store you Filecoins today. It's just one of more than 300 tokens on offer at Atomic Wallet! (Source: CoinMarketCap).

Filecoin started its journey at $5 when it first launched its ICO in August 2017. It more than doubled during that period. At the start of 2018, Filecoin was sitting pretty at around $27. But the highs would not last that long, as the Crypto Market at that time had already fallen during the big crypto crash of 2018. Just a month later, Filecoin would see most of its gains erased. By March 2018, the price had fallen to $8. There was a brief resurgence to $15 in April, but that was short-lived. By the time Summer 2018 got started, the price was back between $7 and $8 and then by September, the price had crashed down to $3. At this point it had lost everything that it had made. It was now below its entry point. It had looked as if Filecoin was going to be down and out. And it was for a few years, with the price floating between $2 and $4 until late May of 2020. The CoronaVirus Pandemic turned all the markets around as retail investors, flush with cash from working from home, cutting expenses and receiving stimulus checks had reinvigorated the market. The crypto currency market was no stranger and almost all tokens saw massive, massive gains. Filecoin, like many others, saw its all time high during the pandemic: $191 on 30 March 2021. It appeared as if Filecoin was back in business, like many other tokens, it was white hot like the entire market. However, a market that is that hot, can't stay hot forever and there was a cool down. After hitting great highs, Filecoin started to go through a sell off period. Losing between $20 to $30 here and there, until a big drop came, sending it from $164 to $65 in a matter of only a few days. The sell offs continued to $46. Then there was a quick resurgence, up to $116! Then the sell offs continued and compounded with yet another crypto market crash. The white hot market of the CoronaVirus Pandemic had come to an end and with it so did Filecoin; it's currently back at $8 at the start of June 2022.

Atomic Wallet is not offering any investment advice. Please make sure you do all your own research and understand what you are getting into before you invest in any assets, whether they be traditional ones, such as stocks and bonds, or digital ones such as crypto currencies or NFTs.

Technology

As you may know, many crypto currencies use either proof of work or proof of stake as a way to incentivise the main technology behind the token and the blockchain. File coin uses two unusual proof systems: The blockchain is based on both proof-of-replication (PoR) and proof-of-spacetime (PoSt). Because Filecoin uses storage as its main value generator, it also uses different proof mechanismes to drive its value chain. To learn more about PoR and PoSt, checkout the FAQ section at the end of the article.

IPFS as opposed to HTTPS

Perhaps you have not heard of the Interplanetary File System (IPFS), which is a developing technology to replace the current Hypertext Transfer Protocol Secure (HTTPS). Here is a quick lesson on what IPFS does when you add a file:

  • Each file and all of the blocks within it are given a unique fingerprint called a cryptographic hash.
  • IPFS removes duplicates across the network and tracks version history for every file.
  • Each network node stores only content it is interested in, and some indexing information that helps figure out who is storing what.
  • When looking up files, you're asking the network to find nodes storing the content behind a unique hash.
  • Every file can be found by human-readable names using a decentralized naming system called IPNS.

There is a lot of great technology in Filecoin that provides great benefits to its users. Let's bring this all together with the benefits spelled out.

5 Benefits of Filecoin

In this section, you'll get a better understanding of what each benefit of using Filecoin is, with more detail placed on each benefit to provide a better understanding.

1. Created To Provide Storage Space

One of the excellent characteristics of Filecoin is its provision of storage space. Filecoin is unrestricted. Anyone can join Filecoin. Many users of Filecoin remit payment to the network to get their information kept. This information stays on computers that keep files and have evidence of storage time. This is done by timestamping files as they are stored.

Filecoin allows users to store and get paid to keep peoples' information. It implies that no individual entity controls the amount and pricing of storage. Instead, Filecoin supports users seeking to collaborate in open markets to retrieve and keep data. Filecoin storage space keeps transactions for exchanging Filecoin. It also holds an authentication record from storage miners in charge of data.

The blockchain of Filecoin offers ultra-low fees. Filecoin grants users the option of choosing their chosen trade-off amongst redundancy, cost, and others. Furthermore, it allows verification of data stored per time and creates more negotiation space with any miner on the blockchain. The creation of storage space is a feature that differentiates Filecoin from other coins.

2. Durable and Safe Storage

Filecoin offers an acceptable reason for data to stay reachable over time. Filecoin's data storage is usually paid for; thus, its reason is to be available without any miss. Because of this, users save files on computers that ensure good internet bandwidth, safety, and dependability.

3. Open Source Code

Filecoin offers collaboration between clients and storage provided on open-source code. It means storage sellers do not have to establish their infrastructure application. Instead, it provides that and also respective enhancements.

4. Verification of Storage

Filecoin verifies storage. It has a well-structured method of surfing file history and cross checking its storage. It crosschecks storage over time to ensure everything is in place. The norm states that all storage providers provide files that are up to date within 24 hours a day.

Knowing this, users can go through the history to see if the provider appropriately stores their data.

5. A Storage Provider For NFTs

Filecoin commands the ability to keep digital assets of non-fungible tokens. Digital assets of non-fungible tokens are evidence of ownership. A blockchain has the limited storage capacity to store music, digital art, and videos. So, to serve as a better option, Filecoin's storage network stores actual assets.

It saves tangible assets, while art buyers receive and exchange ownership certificates. OpenSea.io, the most important exchange place for NFTs, uses the Filecoin Network, proof of its storage capacity and durability. It uses a Filecoin network to handle storage transactions and dependable file storage.

Bringing it all together

After careful review, you should really see the benefits of Filecoin and why during its ICO it raised so much money. Filecoin had the largest ICO in 2017. After looking at the technology and what it can do, it's obvious that Filecoin is a game changer. It will change the way we use the internet in terms of storage and with the IPFS should it catch on and become more widely used.

In this article, you got the entire low-down on Filecoin: who created it, the background behind its creation, its tokenomics, its historical pricing data, it's technology and all the benefits it can give you as a user. Do you still have more questions? That's great, because we have more answers. Please check out the FAQ and Resource sections below to learn more.

Atomic Filecoin Wallet

Atomic Wallet offers you a great place to store your Filecoin tokens. Besides just being a wallet for storing, sending, and receiving, you can do much, much more with an Atomic wallet. Atomic Wallet has some great features such as having a built-in decentralized exchange/swap where you can buy more than 300 crypto currencies and have them securely stored in your Atomic Wallet. What's more is that you can stake a number of tokens right in the Wallet! On top of that, for each transaction you make in Atomic Wallet, buying, selling, or swapping, you are eligible to get up to 1% back per transaction paid out in Atomic Wallet's native token, AWC.

FAQ

What is Proof of Replication (PoR)?

Proof-of-replication (PoR), often used in reference to Filecoin, is the way that a storage miner proves to the Filecoin (or other) network that they have an entirely unique copy of a piece of data held for the network.

Proof-of-replication acts as a proof-of-retrievability mechanism inside of a proof-of-space mechanism. What does that actually mean? It means that PoR allows a 'prover' to show that they are really and truly using space to store replicas of a piece of information or data. Not only that, but PoR means that the data that the prover is storing can easily be accessed, aka 'retrieved'.

In a proof-of-replication system, participants in the network want to join in as provers and store as much data as they can, because they get network rewards in exchange for their storage space.

Some critics of proof-of-replication systems argue that while the use of proof-of-replication by storage providers creates durability (aka provides the assurance that data will be available even in the case of node failures), PoR overlooks the fact that the replicated data must be transferred every time a new node is added to the redundancy pool - which can take up bandwidth.

What is Proof of Spacetime (PoSt)?

Proof-of-spacetime (PoSt), usually used in reference to Filecoin, is that way that a storage miner proves that they are continuing to store a unique piece of data for the network.

PoSt is similar to proof-of-capacity in several ways: they both require participants in the network to have a financial incentive to participate honestly in the network, and have no benefit gained by harming the network. However, PoSt differs in that it lets network participants show that they have been physically storing data over a certain period of time. This is proven as randomly chosen miners will be selected and have their data read for verifications.

According to the creators of proof-of-spacetime, Tal Moran and Ilan Orlov, this is called the ''Rational' Proofs of Space-Time because the true cost of storage is proportional to the product of storage capacity and the time that it is used'.

Will it be cheaper to store data on Filecoin rather than using traditional cloud storage services?

Filecoin creates a hyper-competitive market for data storage. There will be many storage providers offering many prices, rather than one fixed price on the network. Protocol Labs expect Filecoin's permissionless model and low barriers to entry to result in some very efficient operations and low-priced storage. While there are no actual costs that are published on the website, after some research on some online forums, it appears that GB costs around $0.022. That number is not 100% accurate as it was not from Filecoin, so it is not 100% but the number is there to give you an idea of how much it might cost to store data on Filecoin.

How can data be updated if it's immutable?

That is a great question. If you want to store data that can be retrieved for things such as a database with customer information, this might not be the best service for you. As for now, Filecoin is append only. So you can only add more data, you can't update it. So that could make database maintenance an issue. However, Filecoin states that there are some large areas for improvement and trying different things that depend on the trust levels, price sensitivity and the frequency of updates required by the customer. A word of warning, this is not your typical database storage system.

Will Filecoin mining pools lead to centralized storage?

No. Filecoin creates a decentralized storage network in part by massively decreasing the barrier to entry to becoming a storage provider. This means anyone with some extra storage space can join the network and host. Even if there were some large pools, anyone can join the network and provide storage with just a modest hardware purchase. Filecoin expects clients to store their files with many diverse storage providers.

Also, note that world location matters for mining: many clients will prefer storage providers in specific regions of the world, so this enables lots of storage providers to succeed across the world, where there is storage demand.

Resources

Atomic Wallet

Check out the latest wallets and cryptocurrencies on our website.

Atomic Wallet Academy

Learn about cryptocurrencies and Ethereum in our Academy.

Atomic Wallet FAQ

Learn more about using Atomic Wallet in our FAQ

Filecoin Website

Learn more about Filecoin on the official website.

Protocol Labs

Learn more about the other cool projects Protocol Labs is working on.

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