A decentralized storage solution is Filecoin. Your documents can be divided up and saved globally on different computers rather than being entrusted to one organization.

The network can become a massive source of data storage by allowing anyone in the world to join. It will be necessary to meet the rise in demand as more systems become computerized. What potential does Filecoin have in Web3, though, and how does it operate? Let’s explore Filecoin’s potential in more detail.

What is Filecoin?

We must take a quick step back and examine IPFS, the Filecoin blockchain’s underlying storage system, in order to comprehend what the Filecoin blockchain has to offer.

The IPFS blockchain, which we have covered extensively at Ledger Academy, serves as the foundation for Filecoin’s blockchain. In summary, IPFS is a decentralized peer-to-peer file storage system that allows users to manage their own nodes and store files secretly.

Millions of us looking for decentralized digital storage space could benefit from this platform, but up until now, there was no way to entice individual IPFS nodes to allow others to use their space. There was simply no system in place to link buyers and sellers.

Where is All This Data Being Stored?

Even though these figures seem to depict an internet that is unfathomably large, in reality, only a small number of companies—including Google, Amazon, Facebook, and IBM, to name a few—provide all of the storage. This is not ideal for a number of reasons, all of which revolve around our nefarious old friend, centralization.

Server Outages Mean Unreliable Storage

Let’s talk about outages, to begin with. Web2 frequently experiences interruptions. If you were to Google “social media outages and why they happen”, you’ll be greeted with a variety of reasons ranging from technical changes to hacker attacks. Even minor mistakes can result in a service interruption. For instance, a recent well-intentioned engineer command temporarily cut off Facebook’s 3.5 billion users for more than six hours. Well, that’s what happens when so much data is under the control of a single authority — minor errors can have a big impact on millions of users and businesses.

Centralized Structures Can Be Censored

In addition to the problem of censorship, outages aren’t enough. If a website talks about something controversial that people with big wallets don’t want others to talk about, it can be promptly “dealt” with by the provider, in other words – switched off. Since everyone is aware of where a website’s data is stored, both governments AND hackers can easily target such websites.

Digital Storage is a Commodity

The fundamental problem of supply and demand is the last one on the list. As more and more things become digital, the demand for internet storage is growing, which will likely drive up the cost of data storage. Do you think that won’t happen for a while? The price hike for Google Cloud suggests the opposite.

On the other hand, what if the businesses in charge of your data decide it is no longer profitable to maintain their service online? What would then happen to your data? Even worse, what happens if third parties receive the data you have stored without your permission?

In conclusion, the centralized nature of our internet servers has significant implications for users like you and me, regardless of how you view data storage—from the perspectives of cost, control, privacy, or straightforward reliability. And for this reason, the new blockchain-based network Filecoin is crucial in providing us with a different option.

How Does Filecoin Work?

Everyone has access to a free market for data storage in the Filecoin ecosystem. Here’s a rundown of how Filecoin’s marketplace works:

Choosing a Provider

Let’s say you want to use Filecoin to store 1 TB of your vacation photos. Selecting a decentralized Filecoin-based application, such as ChainSafe Files or Estuary, is the first step. You can drag and drop your files, select a provider, and customize the agreement terms using the quick and simple interface provided by these applications.

Negotiating the Contract

Following your selection of a provider based on your unique requirements, you can discuss the cost of storing your data in FIL tokens. Once an agreement has been reached, you must pay the provider to store your tokens. The transaction and the agreement contract are then written to the FIL blockchain after that.

Retrieving the Data

You can quickly and easily retrieve information if you want to look back on old memories. When you make a request, the network assigns retrieval miners to get your data as soon as possible. Naturally, there is a FIL fee associated with this service. If you’re not in a rush, the retrieval will cost you almost nothing. To get them to give your transaction priority, you will need to pay a sizable amount in FIL if you need it right away.

The entire Filecoin network is powered by the FIL token. Clients use FIL to pay the network to store their files, and nodes that donate space are compensated with FIL. In addition to serving an essential purpose as a utility token for the Filecoin marketplace, FIL also serves as a governance token that you can use to cast your vote on the project’s most important decisions.

What Does Filecoin Do?

As a proof-of-work token, FIL allows the Filecoin community to mine and receive additional coins as payment. In the Filecoin network, where users can pay miners to store or retrieve their data, FIL is also usable. In the event that the proofs are incomplete or invalid, the token may also be used as collateral.

When investors became excited about the Defi potential of the network in Q2 2021, the value of Filecoin’s native coin shot up to $236. Such a rise in value must be seen as an impressive accomplishment given the coin’s current circulating supply, which is just under 300 million. The need for data storage in Web3 is expected to increase, even though the coin has since undergone severe corrections in the months that followed. As a result, it might become a strong alternative coin investment option.

Can Filecoin Reach $1,000?

The market price of Filecoin reached an all-time high of $236.84 in April 2021, and it undoubtedly has the potential to rise to $1,000. But in actuality, such an accomplishment won’t be simple.

The coin will eventually be 100 times more common than Bitcoin due to its nearly two billion token supply, so in order to surpass it and reach a value of $1,000, it must outperform Bitcoin in its current state.

But as of right now, there are about 320 million FIL coins in circulation, which increases the coin’s scarcity and makes it a little bit simpler to acquire $1,000.

Despite this, Filecoin’s market value is unlikely to approach $1,000 without a seismic increase in adoption.

Who Runs Filecoin?

The Protocol Labs and Juan Benet team released Filecoin’s whitepaper in 2014. In order to integrate blockchain and cryptocurrency solutions into the Web3 environment, Protocol Labs is an open-source R&D facility.

Protocol Lab has a number of other projects, including IPFS, SourceCred, Testground, and Multiformats, despite the fact that Filecoin is its most well-known endeavor.

As the company’s founder and CEO, Juan Benet works closely on all of the organization’s projects that deal with cryptocurrencies.

Who Accepts Filecoin?

Over 300 companies around the world accept Filecoin payments for products and services. These businesses include Chipotle Mexican Grill, various electronics stores, and even a few non-profits.

Additionally, thanks to platforms like NOWPayments, which supports FIL transactions for outlets, a sizable number of additional businesses may eventually accept Filecoin.

Where to Stake Filecoin?

In this case, it’s crucial to keep in mind that Filecoin doesn’t directly support traditional staking or yield farming, so if you’re interested in staking your FIL, you will need to use a third party that supports Filecoin staking (hopefully with a high APY).

A little over 7% APY is reportedly offered for staking Filecoin on websites like Binance and Gemini. Users can also look to Filet, AAX, and YouHodler for more opportunities to stake Filecoin.

Which Wallets Support Filecoin?

Several wallets support Filecoin addresses, making it simple to send and receive FIL with ease, even though many exchanges function as perfectly acceptable options for investors to hold their FIL.

To better support, FIL holders as they spend and receive their coins, wallets like Achain, Freewallet, Carbon Wallet, and BitGo can create Filecoin addresses.

Summary: A Polished Set of Tools

Global file storage and retrieval inefficiencies have a great solution in Filecoin. Additionally, it gives the consumer more control because they are less likely to be constrained by agreements with major corporations.

Filecoin is already functioning in the real world thanks to a live mainnet and a polished set of tools. The success of the Filecoin ecosystem will depend on its adoption by the cryptocurrency community as well as its ability to draw new users into the Web 3.0 space.

FAQs