What Is Filecoin (FIL)?
The Filecoin Project is a world-wide marketplace for digital storage that's decentralized and uses blockchain technology. Essentially, it allows users to rent any unused hard disk space and receive tokens in return in the form of FIL tokens. It is based on the InterPlanetary File System (IPFS). The Filecoin initiative aims to disrupt the online storage market. Let's take a look at how it works.
Introduction
In the case of Filecoin, purchasing Amazon S3 buckets or DropBox space can offer an attractive alternative to being locked into cloud storage contracts or getting locked into Amazon S3 buckets. As long as the infrastructure is up and running, anyone can buy and sell storage on the Filecoin network while setting their own prices and establishing their own contracts, so long as the infrastructure is there. Let's take a look at how it works.
What is Filecoin (FIL)?
As part of the Filecoin decentralized network, users are able to lease out storage space to anyone in the world. There is no limit to the number of users who can purchase storage on the network. The benefit of splitting up the storage of important data can be that it can be stored on multiple computers across the world instead of having to trust only one company with it.
Juan Benet released a whitepaper entitled Filecoin: A Cryptocurrency Powered File Storage Network in 2014 which was the first introduction to Filecoin. As part of the proposal, a blockchain network is proposed, similar to Bitcoin, where nodes of the network will be able to store data, provided that a proof-of-retrievability is applied. A Filecoin prototype has been developed by Protocol Labs.
Sometimes Filecoin is considered to be an incentive layer on top of IPFS. Tokens issued by FIL are essentially a form of incentive, in the sense that users are rewarded for renting out their storage spaces by getting paid in FIL tokens for it. Do you think that you can send Christmas photos to Mars or Venus using Filecoin to transmit the photos? The answer is no. The IPFS protocol, which can be called peer-to-peer storage and retrieval, is built based on a more decentralized approach to data storage and retrieval. By comparison, it does not rely on centralized servers to store data, unlike HTTP or HTTPS.
At the time of the 2017 ICO, Filecoin raised over $250 million, which at the time was a record. In October 2020, Filecoin's mainnet went live.
How Filecoin (FIL) works
It is an infrastructure that is viewed as a distributed, peer-to-peer network that is primarily designed to provide organizations and individuals worldwide with a new way to store data. It is possible to become a storage miner, who stores data on the Filecoin network whenever you have free storage available to you. The storage mining network is essentially a storage pool. In exchange for storing and retrieving data, clients pay with FIL tokens.
A second class of participants can be identified as retrieval miners. In addition, which is what you might expect, they also receive a small amount of FIL for their services by facilitating the retrieval process between clients and storage miners. In Filecoin, data is encrypted all the way through and storage providers are not allowed to access the decryption keys. Files are kept in multiple locations because this is a distributed system, so data is kept safe.
How does Filecoin compare with its centralized competitors, since it can potentially be superior to them? As you must know, it provides businesses and consumers with a peer-to-peer cloud storage solution. Since there are multiple sellers offering the same item (storage) at different prices, the consumers may, in the end, benefit from the fact that they can choose from different sellers. Despite the fact that you might not be able to store all of your data on your hard drive all of the time, you may have excess storage that you should sell. That's what Filecoin has to offer.
Why Filecoin (FIL) is important
Since the beginning of the last century, the way we store and access data has changed radically. In recent years, businesses have shifted from on-site storage, where they keep servers and data in large rooms on site, to remote data storage warehouses as well as more diversified cloud storage across the globe. Currently, most companies use a mixture of these storage options. Also, the way in which consumer data is stored has evolved due to the increasing reliance on cloud-based storage.
Cloud storage market superpowers such as AWS, HPE, and Dell come to mind when the topic of cloud storage arises. Businesses usually choose one provider and stick with them for years, which drastically decreases the chances of competition. Customers who wish to buy storage can navigate the best deals on the fly using Filecoin, regardless of the provider of storage that they choose. The cloud storage industry may become more competitive as a result of this.
Filecoin (FIL) use cases
With Filecoin, consumers will not have to worry about locking into vendor contracts or paying high prices for on-demand storage. You can choose the best storage option for you. Those organisations and individuals that have extra storage space that is unused will be able to offer that extra space to those that are interested in using it. Those who share their storage space are rewarded in FIL in return. Creating DApps for storage, despite the fact that it might not be obvious at first glance, is also possible. There are a range of consumer storage apps, DeFi apps, decentralized video apps, and many more.
How to store Filecoin (FIL)
You'll need somewhere to store your tokens, whether you're spending FIL or making it with storage activities on the Filecoin network.
There are three wallets that are recommended by Filecoin for the use of FIL. Lotus, a service that can run Filecoin nodes, is compatible with Ledger, making it possible for it to be hooked up. If you don't want to run Lotus, you can use the Glif wallet, which is a web-based client that can also be linked to your Ledger. It is a web-based wallet in which you can keep your tokens when you use the Filfox Wallet.