What is Filecoin?

Filecoin is a cryptocurrency and decentralized storage network designed to “store humanity’s most important information”. At its most basic, Filecoin is a solution for problems relating to data storage. It is a peer-to-peer network that stores files, with built-in economic incentives to ensure files are stored reliably over time. In 2014, the project was first described as an incentive layer for the InterPlanetary File System (IPFS), a peer-to-peer storage network. Filecoin is an open protocol and backed by a blockchain that records commitments made by the network’s participants, with transactions made using FIL, the blockchain’s native currency. The blockchain is based on both proof-of-replication and proof-of-spacetime. The project raised $205 million in an initial coin offering in 2017, which showed investors’ faith in the technical potential of Filecoin.

What is IPFS (InterPlanetary File System)?

Filecoin is backed by IPFS, which is the technology used to build the Filecoin network. Without IPFS, Filecoin would not exist. That said, what is IPFS? The InterPlanetary File System is a protocol and peer-to-peer network for storing and sharing data in a distributed file system. IPFS uses content-addressing to uniquely identify each file in a global namespace connecting all computing devices. IPFS developers intend to replace HTTP with IPFS, thus bringing safer and faster user experiences. Moreover, they also have a clear plan on how the two systems can coexist peacefully, i.e. an independent and interdependent relationship between HTTP and IPFS. Filecoin stands to benefit from the success of IPFS.  

How does Filecoin work?

Filecoin aims to provide a faster, cheaper, and more reliable distributed infrastructure for storing and retrieving data. It functions as a marketplace where developers can rent storage space — similar to traditional cloud storage. However, instead of trusting one provider with your files, they’re split up and served by a globally distributed network of computers.

The Filecoin network uses two types of miners — storage miners, who store the data, and retrieval miners, who supply the bandwidth required to retrieve the files. The communication between clients and the network is completed via two types of “deals”: storage and retrieval deals. In a storage deal, the client chooses a miner to store their data and locks up the funds needed for storage payment, the amount of which is subject to an open market that offers the lowest storage price due to miner competition. Once the agreement is accepted, the file is transferred and stored by the miner. The miner provides continuous proof of storage for the chain to receive rewards from the funds locked up by a client. If the miner fails to provide proof (or if proof is delayed), he gets penalized. In a retrieval deal, the client makes a payment to a retrieval miner to extract the data from the network. (Retrieval miners can also be storage miners, but they don’t have to be.) These deals are executed “off-chain” — using micropayment channels to reward miners for data retrieval.  

How to get Filecoin?

You can get Filecoin through mining or buy Filecoin on a crypto exchange.

1. On the Filecoin network, there is one more type of miner known as Retrieval Miners and Services. Users pay these miners to retrieve data and perform services that speed up data transmission, such as caching or participating in a content delivery network as a node.

2. Filecoin is also available on many mainstream exchanges, such as Binance, KuCoin, Huobi Global, BKEX, OKEx, etc.