FileCoin raised a record $257 million ICO in 2017. Early investors in FileCoin real mining include Sequoia Capital, technology legend Andreessen Horowitz, Union Square Ventures and Winklevoss Capital Management. Management) etc. Both FileCoin and IPFS are the ideas of Juan Benet, who founded Protocol Labs, who oversees both projects. The pedigree of financial supporters and founders should inform investors that all participants in the project see it as a revolution to share files via Internet.
Some recent developments have caused a sensation in FileCoin. Recently, Grayscale announced that they will be in addition to the popular Bitcoin (launching a variety of encrypted trusts OTC: GBTC) and Ethereum (OTCQX: e) trusts. These include Basic Attention Token (BAT-USD), Livepeer (LPT-USD), Chainlink (LINK-USD), Decentraland (MANA-USD) and FileCoin. This news made FileCoin real mining soar from approximately $60 to over $220 in the next two weeks. From the time of writing this article, FileCoin has fallen back to about $180.
In addition, Coin Telegraph reported on April 10 that FileCoin will cut production on April 15. Before April 15, the FileCoin agreement increased the supply of 648,000 FIL per day, but since the 15th, the daily output has been reduced to only 365,000, a 43.2% reduction. Reduced supply may cause prices to soar.
In addition, the FileCoin blog posted several news about IPFS and FileCoin real mining applications to the increasing community of decentralized applications "dApps". First, MetaMask will enable FileCoin developers to build Web3 websites that use FileCoin. In addition, FileCoin and Chainlink announced a partnership that enables a two-way connection between FileCoin and Ethereum-Chainlink is the leading decentralized Oracle. Finally, FileCoin, which is an open source market for buying and selling data sets to incentivize the storage and licensing of data sets in the IPFS network-imagine maintaining a data set that users can access with fees paid in FIL.
Finally, on April 15th, CoinDesk reported that a technology alliance called IPFS Union will spend US$1.3 billion to build a FileCoin real mining facility in China. According to the article, the IPFS Alliance has core members of companies such as Microsoft, Alibaba, SAP, Huawei, SNDA, Giant Network, AMD, Inventec, etc. It should be noted that, according to Coin Gecko, approximately 40% of daily trading volume comes from Huobi Global Exchange.
Filecoin (FIL) is one of the most outstanding coins in the field of cryptocurrency storage. In the past month, the price and market value of FIL have soared to new highs. On April 1, the token reached $238 and ranked among the top ten cryptocurrencies by market value.
Filecoin is a cloud-based decentralized data storage network made by Protocol Labs. Network users can get rewards by selling their excess storage on an open source platform.
Although FIL's tenure in the top ten is very short, it must be pointed out that the fully diluted market value of Filecoin has reached a high of $450 billion. This is almost half of the $1 trillion mark held by Bitcoin in the last ten consecutive days.
In the previous 30 days, Filecoin has achieved an unprecedented increase, from a trading price of about 42 US dollars to a range of 160 US dollars, an increase of about 380%. Even if the price has fallen from its historical high on April 1, the fact that the price has stabilized at three times the price before the spike is a remarkable feat in itself.
On March 17, FIL tokens were introduced to the market again. As a benchmark for institutions’ interest in cryptocurrencies, Grayscale Investments announced that it will invest in new funds in five cryptocurrencies. These tokens are Chainlink's LINK, Filecoin, Livepeer (LPT), Basic Attention Token (BAT) and Decentraland (MANA). As a result of this announcement, the price of FIL has risen by 40% within 48 hours, which shows that the community and the entire market have responded positively to the development.
When talking about the reasons why Filecoin has attracted the attention of institutions, Marie Tatibouet, the chief marketing officer of the cryptocurrency exchange Gate.io, said: \`\`Data is the most valuable commodity today, and a race is underway to find cheaper and more commodities. . Effective data storage methods.” Martin Gaspar, a research analyst at the digital asset exchange CrossTower, told Cointelegraph that the real impact of this announcement on the market is:
"As of April 5, 2021, Filecoin Trust has only $8.1 million in assets, according to Grayscale. Compared to the recent $2.4 billion transaction volume (CoinGecko), this is a small transaction, which indicates the price. There are other key drivers behind the rise."
Cameron Winklevoss, the co-founder of Gemini Exchange, pointed out that he was not surprised that the price of the tokens "exploded." He cited the core propositions brought about by the Filecoin project, such as "the amount of network storage capacity", which is the main driving force for this growth. Tatibouet further objected to this: "10 crypto index funds and Grayscale have both increased FIL, and The9 Limited and New Universal have both invested millions of dollars in Filecoin real mining."
However, there are many different factors at work here.
**The Chinese market plays a decisive role**
Wu Blockchain, a cryptocurrency reporter from China, pointed out on Twitter that on the day FIL reached its highest point in history, it saw a large number of transactions from Huobi, China's largest trading exchange, with a 24-hour trading volume of US$24.2 billion. The trading volume on the day was almost three times that of Ether (ETH) and Bitcoin (BTC).
Gaspar further mentioned: “Filecoin is very popular in China and is strongly interested by Chinese miners. They are required to pledge FIL tokens as collateral, which leads to demand for the tokens. In addition, due to the lack of BTC and ETH mining equipment, Filecoin mining seems to be an attractive option for these miners."
According to CoinGecko's data, Huobi accounts for nearly 40% of Filecoin's 24-hour transaction volume. The data supports the view that interest in Filecoin is mainly driven by retail investors and miners headquartered in China. In China, the hype around this token made the subway advertisement Filecoin even have posters.
This is similar to the phenomenon of posting bitcoin posters in London’s SoHo district. The difference is that Filecoin’s ads are clearly promoting retail investors to buy tokens.
Robbie Liu, a market analyst at OKEx Insights, a research team at the cryptocurrency exchange OKEx, told Cointelegraph: “Filecoin's market development in China is very strong, and Chinese miners account for more than 95% of Filecoin nodes.” As China has become a global cryptocurrency mining center, it is natural that the market is highly sensitive to mining economics. Tatibouet further stated that the reason for the high demand is that FIL mining is “much cheaper than Bitcoin and Ethereum mining”.
In August 2020, the Chinese government announced a new Internet infrastructure plan, which will focus on expanding innovations in 5G, artificial intelligence and the Internet of Things. This plan may have an impact on Filecoin's ecosystem, because decentralized cloud storage has become an agenda.
There are also unconfirmed reports that Chinese government officials are semi-officially encouraging Filecoin real mining because the decentralized cloud storage solution is fully in line with China's vision for local Internet infrastructure.
**The future of Filecoin and FIL Mining**
Another reason for the increased demand for Filecoin was the production cut on April 15. In the context of changes in the FIL mining supply and demand economy, Liu said: "The surge in FIL prices was mainly due to speculative activities before the production cut on April 15. The agreement currently releases 648,000 FIL per day, but after April 15, production will be reduced to daily 365,000 FIL."
Therefore, after the release of the "Simple Agreement for Future Tokens" on April 15th, the daily output of FIL will be reduced by 43.2%. This sharp decline in daily output may lead to a sense of token scarcity, which in turn will lead to retail investors and miners buying more tokens to cope with the upcoming FIL daily flow reduction plan.
Another interesting feature of FIL's token economics is that it has a built-in mechanism. Miners must purchase more FIL mining tokens to mine more cryptocurrencies. This also serves as a utility and governance token for the Filecoin ecosystem. This mechanism motivates token holders by providing token holders with more real mining capabilities, thereby preventing FIL mining from being given up in the open market.
The nature of Filecoin products makes it directly compete with technology giants such as Google, Amazon and Alibaba. Since Filecoin is an open network based on blockchain, data storage cannot be tampered with, and its accessible storage capacity is theoretically unlimited.
However, it must be pointed out that since cloud storage and computing began as a service, services from Amazon, Google and other technology giants have established a good foundation and have been meeting retail and institutional needs. Liu believes that it is too early to say whether Filecoin can compete with the giants. He added: "Although the prospects are still optimistic, institutional-level solutions rely on more than just storage space. Operational management and technical support are needed to improve its services are fully hosted on the cloud."
Gaspar also explained the factors that the Filecoin team needs to consider before actually starting to compete with industry leaders in the field: "Filecoin will need to ensure that its network remains online, securely store and access files, and the risks and costs of storing data. Lower data than centralized storage solutions."
Although it remains to be seen how the demand for FIL mining tokens can be maintained outside the scope of the scheduled production reduction, it is clear that due to the actual use case of Filecoin, the increase in price and market value corresponds to the growth period of the project and its products. Can compete for market leadership in companies with almost unlimited resources according to their own wishes.