Filecoin (FIL) is a decentralized storage network that allows anyone to rent storage space. Likewise, individuals can purchase storage space on the network. Instead of relying on just one company with important information, it can be shared and stored on computers around the world.
Filecoin was first introduced to the digital currency market in 2014 when Juan Bennett released White Paper. Filecoin is a file storage network with digital currencies. Offering a blockchain network is similar to bitcoin, but where network nodes can store data, which is guaranteed by a backup proof. Protocol Labs make Filecoin.
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Filecoin is sometimes called an incentive layer on top of IPFS. It just means that users will be motivated to rent their storage space by paying for FIL tokens. Unlike HTTP or HTTPS, it does not rely on centralized servers to store data. Filecoin raised more than $250 million at ICO 2017, a record at the time. The main Filecoin network was subsequently launched in October 2020.
What is Filecoin (FIL)?
Filecoin is a blockchain-based project that aims to improve data storage by decentralizing it. The digital currency used in this blockchain network is called the FIL currency code. The Protocol Labs Foundation developed this project. Juan Benet, a 32-year-old Mexican-American computer scientist, founded the Labs Protocol in 2014. Benet, a Stanford University graduate, can be considered the mastermind of the Filecoin project.
Simply put, Filecoin is an environment for buying and selling data storage, but this network is very different from traditional systems. The most important difference is the decentralization of the Filecoin network due to the use of Blockchain technology. Unlike centralized systems where a few companies sell storage space to users, in Filecoin the vendors are the same network users.
Imagine you have a terabyte of memory that you do not use. You can easily provide your memory to the network using Filecoin. The Filecoin network also allocates this memory to the applicants and in return receives an amount in the form of FIL currency code from the applicant and gives it to the memory provider. This amount goes directly to the provider of the amount of memory you have. Thus, Filecoin can be considered a decentralized blockchain network consisting of users who intend to sell or purchase memory for data storage. This memory can be used to securely store personal files, store a database related to a website, and so on. This was the simplest definition for a Filecoin.
Why is Filecoin so important?
Over the past few decades, the way data is stored and accessed has changed. In business, this is from on-site storage, where companies have many server rooms. It has changed to remote data warehouses and cloud storage space all over the world. Most businesses today use a combination of all of these. Likewise, the storage of user information has changed with increasing trust and a greater desire for cloud storage.
Filecoin creates the superpowers of the cloud storage market such as AWS, HPE and Dell. Business customers usually choose a provider and they stay with it for years, which hinders competition. Filecoin allows customers who want to buy storage space to make the best deals. It does not matter who the storage provider is. This could potentially create a more competitive market for cloud storage.
How does Filecoin work?
In general, users in the Filecoin network are divided into three categories: Clients, Storage Miners, and Retrieval Miners. Customers are looking to store their information on the Filecoin blockchain and pay for it. They can choose from the memory providers, options they want. If the information is intended to be kept confidential, they must encrypt it before sending it to memory providers.
Storage miners are the same memory providers who are rewarded for storing customer information. Each storage miner is able to change the amount of storage space in the Filecoin network. After the agreement between the customer and the storage miner, the miner must continuously provide proof of data storage. Everyone can ensure the reliability of the storage by looking at the evidence provided by Miner.
Retrieval miners provide information to the customer upon request. They can get information from both customers and storage miners. A customer’s data can be split into small sections between recovery miners. Recovery miners can also act as storage miners in the Filecoin network.
Finally, the Filecoin network represents all valid nodes consisting of clients and miners. These nodes interact and exchange with each other, count existing storage space, examine storage proofs, and correct data errors.
In addition to the three basic components mentioned above in the Filecoin Network, here are some other terms of this network and their function:
A “piece” is a piece of data that the client stores in the Filecoin network in a decentralized manner. For example, a file can be split into 10 “pieces” and each piece can be stored separately in the memory of a number of storage miners.
A “sector” is the part of disk space that a storage miner provides to the network. The sector can be thought of as a unique identifier associated with a specific part of a storage miner’s disk space. Miners store their customers’ “parts” in various sectors and receive an FIL currency code in return. Currently, each sector is equivalent to 32 GB.
The allocation table contains information about parts and sectors. In other words, using the allocation table, it is possible to find out which part is stored in which sectors. In practice, the assignment table has the same functionality as the DNS and allows for a quick check when confirming a proof.
An order is a request to save or provide storage memory to the Filecoin network. Customers must place an order in order to request service to store their data on the blockchain and miners in order to provide storage memory.
The order book contains a set of orders. Filecoin has a separate order office for storage miners and recovery miners.
Collateral is a commitment to provide storage space in the form of a sector to the network. Storage miners must provide collateral in the form of FIL currency code for the number of sectors that want to offer Filecoin in the blockchain network before accepting customer orders.
Users can place an order on the Filecoin network according to their request. In order to provide the memory needed for storage, customers record their orders, including their desired price. Miners, on the other hand, place orders by announcing the asking price for their memory in the form of sectors. As in other markets, when orders are matched on both sides, a transaction takes place and the customer stores their data in the miner’s memory. Existence of orders in Filecoin network leads to the formation of Storage Market and Retrieval Market. It should be noted that, as mentioned, the announcement of the price and payment of an order is based on the FIL currency code.
The emerging technology of the blockchain is in its infancy, and its innovations can help to further expand and globalize this technology. Filecoin (FIL) is exactly one of those innovations on the Blockchain platform. Issues with information storage in the current system have highlighted the need for a project to decentralize and transform the field. This cryptocurrency tries to solve its problems by using its advanced technology and using IPFS technology.
Filecoin was one of the most successful initial coin offerings (ICOs) in the history of digital currencies, raising $257 million. The main network of this project, three years after the initial release, was finally launched in October 2020 (October 99) and the FIL currency code was traded at a price several times higher than its initial release.
Although the Filecoin project is technically very powerful and unique, you have to be careful about investing in it. At the time of the start of trading Filecoin (FIL) in digital currency exchanges, only 0.5% of the total FIL cryptocurrency reserves were in circulation. High inflation of this digital currency in the coming years and the entry of other FIL currencies into the trading cycle could lead to a possible sharp drop in the price of this cryptocurrency.