Launched in August 2017, during the crazy ICO days, the Filecoin ICO brought in 200 million USD in 30 minutes. Protocol Labs and specifically Juan Benet, a Mexican-American ex-Stanford computer genius, came up with the InterPlanetary File System (IPFS), a protocol and peer-to-peer network that enables the storage and sharing of data thanks to a decentralized file system. It allows users to not only receive data but also offer it as a host. Anyone who has already heard or worked with BitTorrent may know the system. The Filecoin main network went live in October 2020.
Why Filecoin Can Be Important
Filecoin is built on top of that IPFS protocol and aims to be a blockchain technology-based alternative to the Amazons of this world. Not because of Amazon’s parcel delivery services, but because Amazon is the largest server and data storage provider in the world. Facebook, LinkedIn, Netflix, but also many American government services, including those of the intelligence services, are children at home.
Filecoin wants to store and make data accessible in a decentralized way thanks to the IPFS protocol. Because centralized storage always has the same drawbacks. Usually a single point of failure and a relatively easy target for people of ill will. For example, it would not be the first time that important websites go down because of a problem with the Amazon servers.
Large data centers are also scarce and poorly spread around the world. When an end user needs certain data, it does determine how far he or she is from the data center.Although you would not immediately think that, the physical distance between the data center and the end user does matter when that data is must be picked up and delivered.
What does Filecoin do?
Filecoin aspires to be a peer-to-peer decentralized cloud solution that will ultimately achieve a more favorable price for the consumer. People or companies that need storage space can find storage space providers in the Filecoin network. The files in the Filecoin network are encrypted end-to-end and the storage providers do not have access to the decryption keys. Moreover, due to the distributed nature of the system, the data is then securely stored in multiple locations.
Filecoin’s earnings and economic model
So if you are looking for storage space, you can find a provider in the Filecoin network and agree a price with that provider. You pay for the storage space in FIL. As a node or miner in the Filecoin network, you will be rewarded according to the amount of storage you make available. That is in contrast to, for example, the Bitcoin network where the node with the most computing power is rewarded with Bitcoin (BTC). In the Filecoin network, there are storage miners who receive FIL for the storage they provide and retrieval miners who receive FIL for the data they provide, albeit to a slightly lesser extent than the storage miners.
Filecoin has a maximum supply of 2 billion coins, 60 million of which are currently in circulation. The remaining amount of FIL is released depending on the need arising from the use of the network.