FIL in a Nutshell

What is Filecoin? Filecoin (FIL) is a decentralized storage network and the incentive layer of Inter Planetary File System (IPFS). Leveraging a blockchain token system, it issues its native token, FIL.

Filecoin turns cloud storage into a decentralized storage network based on the IPFS protocol. The network has built-in financial incentives to ensure reliable file storage over time. Miners obtain rewards in FIL by offering storage space services to customers on idle hard drives.

FIL’s Inception

In 2014, Juan Benet and some of his close friends founded Protocol Labs. In January 2015, Protocol Labs released IPFS, with the goal of   developing a network protocol for storing and sharing data in a distributed file system. Its vision was to replace HTTP, making Internet browing and file downloading faster and more secure. IPFS protocol has quickly received lots of attention after its launch, but there was still no synergy between technology and business.

Benet then introduced the concept of Filecoin and published the whitepaper Filecoin: A Cryptocurrency Operated File Storage Network. The whitepaper stated that Filecoin was a blockchain network similar to Bitcoin, but  nodes could be used for data storage.

Principles of FIL

Filecoin uses cryptographic hashes to identify and distribute data stored in the network. The process of creating a storage service for clients is known as filecoin mining. Miners are incentivized to monetize free hard drive space on Filecoin's verifiable storage market and will be rewarded proportionally. The more data they store, the more FIL tokens they earn.

Filecoin turns cloud storage into a decentralized storage marketplace based on the IPFS protocol, including both storage market and retrieval market. There are three parties involved in the network: clients, storage miners, and retrieval miners. A storage transaction occurs when a user hires a storage miner to store personal data and pays handling fees in FIL. Once a transaction is initiated and the data is received by the storage miner, the storage protocol will repeatedly confirm to the chain that it is still storing the data  in accordance with the protocol. At the same time, the miner will receive the FIL rewards accordingly. A retrieval transaction is a protocol between the client and the retrieval miner intended to retrieve data stored in the network. Unlike storage transaction, retrieval transactions are completed off-chain.

How to mine Filecoin? Filecoin mining is the process of accepting orders for storing data and continuously storing the data on the network. The process converts the storage capacity of the miners into effective hashrate of the network, where miners receive FIL in return. Although the primary purpose of the Filecoin network is storage, it does not imply that the more hard drives and storage space a miner has, the more hashrate he contributes. Effective hashrate of miners needs to be verified by two mechanisms, the Proof-of-Replication (PoRep) and Proof-of-Spacetime (PoST).

Generating Proof-of-Replication is a process where the miner places each piece of the original file into a sector and seals it via hashing, proving that the client’s files have been stored in his hard disk space. Proof-of-Spacetime is executed repeatedly to convince other nodes in the network that the miner is continuing to dedicate storage space to the file over time. With Bitdeer‘s cloud hashrate plans, users can easily mine Filecoin with one click and get their FIL rewards.

Advantages of FIL

Commercially, people first used on-site storage, and the company required to have alarge server space. Then, remote data storage warehouses and various cloud storage services have been emerging around the world. At present, most commercial organizations integrate multiple storage methods, and personal data storage has been increasingly reliant  on cloud storage.

Filecoin has a number of advantages over centralized storage.

1. Reduced cost: save network bandwidth resources;
2. Increased r efficiency: faster transmission without the congestion caused by centralized access;
3. Improved security: resist a variety of attacks with no single point of failure;
4. Better content preservation: the content is still accessible even if the file is removed from the central server;     
5. Improved privacy protection: provide  privacy protection via asymmetric encryption.

In addition, users can create their own storage DApps on the Filecoin network.

Milestones

⬤ 2014: Juan Benet first introduced the concept of Filecoin.

⬤ 2017: Filecoin raised over $250 million in an ICO (initial coin offering).

⬤ October 2020: Filecoin mainnet went live.

⬤ April 15, 2021: The output of FIL, Filecoin’s native token, reduced for the first time.

⬤ July 1, 2021: The Filecoin mainnet was upgraded.

⬤ October 15, 2021: Output of FIL was reduced for the second time.

Answer the following questions to test your FIL knowledge:
1.   In which network does Filecoin serve as the incentive layer?
2.   What is the primary focus of Filecoin?    
3.   Who created Filecoin?