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Filecoin logo

Filecoin

FIL

4.54

0.00

Market Cap

$2.595508B

24h Volume

$328.799M

Volume/Market Cap (24h)

12.67

Circulating Supply

572.291667M FIL

Total Supply

1.960104B FIL

Distributed Data Storage: Explaining the Filecoin Cryptocurrency

Data storage may not be blockchain's sexiest use case, but it's a noteworthy sector with significant untapped potential. Centralized cloud storage providers already command a market valued at $108 billion, and there's no sign of demand stalling anytime soon. 

With a decentralized file-sharing service, clients have an alternative to Big Tech's data server model, which may introduce many possible benefits, such as censorship resistance, 24/7 uptime, and lower expenses. 

Built on the InterPlanetary File System (IPFS), the Filecoin blockchain aims to create a crypto incentives structure and store the world's data on a peer-to-peer (P2P) network. 

Filecoin’s history

Before founding Filecoin, computer scientist Juan Benet launched the P2P file-sharing service IPFS through his company Protocol Labs. Each file on the IPFS uses a unique cryptographic hash value as an "ID" and helps computers (aka nodes) on the network identify and distribute data. In 2014, Benet introduced the idea of building a cryptocurrency-powered incentives layer on top of the IPFS known as "Filecoin." 

After years of early development, Protocol Labs published an official white paper for the Filecoin project in 2017. In the same year, the Filecoin team led its first initial coin offering (ICO) for its native cryptocurrency, FIL. 

Protocol Labs released the Filecoin mainnet on the IPFS in 2020, and the protocol continues to integrate with multiple clients and protocols. Crypto projects using Filecoin's storage system include the decentralized exchange (DEX) Sushi, the Brave web browser, and the non-fungible token (NFT) company Dapper Labs. Along with Protocol Labs, the nonprofit Filecoin Foundation oversees funding and development for the Filecoin blockchain. 

How does Filecoin work?

Think of Filecoin as a decentralized marketplace where providers (aka "storage miners") sell available space to anyone interested in storing data on their computers. People with available space on the IPFS can become storage miners by offering this disk space to clients for FIL coins. 

After negotiating the duration and price for storage space, clients send FIL coins to their storage miner, and the provider submits a cryptographically verified Proof-of-Replication (PoRep) to prove they have the space they advertised and put the client's data in the IPFS. Storage miners also frequently submit cryptographic Proof-of-Spacetime (PoSt) reports, which show the data remains in storage over the client's duration. When clients need to retrieve their data through Filecoin's blockchain, they submit a request with FIL coins to a "retrieval node" that routes the data to its final destination. 

Filecoin FAQs

What is the FIL coin? 

FIL is the native cryptocurrency on Filecoin's blockchain, and it plays a vital role in negotiating terms for storage space, requesting data retrieval services, and paying network fees. Storage providers accept FIL coins as an incentive for renting out their storage space, and clients need FIL to request their data on the network. Crypto traders find the latest Filecoin price on crypto exchanges or price aggregators offering a real-time Filecoin price chart. 

Why use Filecoin? 

Filecoin's P2P file-sharing protocol offers the unique advantages of blockchain technology compared to centrally controlled data storage providers, including tamper resistance, transparency, and zero counterparty risks. Filecoin's distributed nature aims to reduce the risk of a central point of failure or network downtime, allowing for unique security advantages over other file-sharing solutions. From a storage provider's perspective, Filecoin provides a way to generate passive income from unused disk space.  

What is the Filecoin Virtual Machine (FVM)?

Launched in 2023, the FVM introduces automated commands called "smart contracts" to the Filecoin blockchain, opening the door to more complex computations and innovative use cases in the Filecoin ecosystem. For maximum flexibility, Filecoin uses WebAssembly (WASM) as its basis and supports multiple programming languages, making it easier for third-party developers to code and deploy applications using the FVM's infrastructure.

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