Filecoin

What is Filecoin?

Remember ripping movies off BitTorrent? No, of course not. You’re either too young or would never dream of Internet piracy. *Wink* 

Anyway, let’s say hypothetically you are merely familiar with how BitTorrent would distribute portions of files containing individual across a range of users, rather than hosting at a single source. Makes it pretty hard to stop people from sharing those files, right?

Now imagine that instead of a few movies (or video games or whole band discographies, etc.) someone did that for the whole internet. That’s the InterPlanetary File System (IPFS).

IPFS users the world over have made it possible to open up information and even overcome authoritarian government measures in Turkey and Catalan.

However, IPFS, like any traditional peer-to-peer network, ultimately runs on good will, and good will has a horizon where it meets the hard reality of expensive storage. This means limited utility for large-scale use like Amazon Web Services or Microsoft’s Azure.

That’s where Filecoin comes in.

Filecoin was developed by Protocol Labs, in turn originally established by Juan Benet at the Y Combinator startup accelerator. Its initial coin offering in August 2017 set records at the time for largest ICO to date, and it went live in October 2020.

Filecoin is a blockchain-based incentive structure created to compensate participants for using their own storage space as “nodes” on the IPFS network.

In other words, if you have space on your hard drive, Filecoin lets you monetize it, in the same way that if you have extra space in your home, AirBnB lets you monetize that.

That’s not the only way to get involved, though. There are three roles in the Filecoin ecosystem:

1. Storage Provider (what we’re talking about above)
2. Retrieval Provider: You will also be able to earn Filecoin by functioning as a Retrieval Provider, serving data to clients (see more in What’s Next, below)
3. Client: If you just want to save data on the network, you can pay a low fee to do so!

From the Client side, all those Storage Providers competing to hold your data means you’ll get a competitive price. All the ensuing activity means plenty of work and plenty of opportunities to earn for the Retrieval Providers.

Filecoin works on a “Proof of Space-Time” (PoSt) algorithm to reward contributors for offering up storage space. This is a step forward from Proof of Work, which can be expensive and energy consuming.

Where Proof of Work requires individual computers (nodes) on the blockchain to solve computational programs to verify entries, Proof of Space and Proof of Space-Time consensus requires nodes to simply demonstrate that they have available storage capacity. The only difference between the two is that Proof of Space-Time requires not just demonstration of digital storage space, but continual availability of that space. 

Filecoin also uses another consensus mechanism of its own design: Proof of Replication. This ensures that data is securely stored in a unique physical space on a drive. 

Read more about Filecoin’s consensus mechanisms here.

Filecoin is already in active use today, with total network storage power reaching 17.8 EiB, provided by 4,076 storage providers. 1 EiB = approximately 1M terabytes, so that’s enough to store roughly 500 billion HD movies, a.k.a. a lot of storage.

And it’s still not done.

400 organizations are currently building on the network, and with 1,460 new projects entering the ecosystem, Filecoin is making huge strides in scale and accessibility.

How to use Filecoin

Currently, use of the Filecoin network is primarily geared towards developers, but there are some straightforward solutions to get involved right away.

The main access point for Filecoin is Lotus, an application both Storage Providers and Clients use to find each other.

Lotus has pretty hefty hardware and knowledge requirements, but when you’re ready to dive in, this is the best place to get started. 

In the meantime, if you’re interested in storing data on the Filecoin network, you can use ChainSafe or Web3.Storage, much more straightforward interfaces (much like Dropbox).

In either case, once you create and verify your account, you just use conventional point-and-click or drag-and-drop methods to upload files and organize folders in your account.

What’s next for Filecoin?

The biggest next step for Filecoin is moving towards easier and more efficient retrieval. Right now, it’s mostly in use for very large data sets, but as the Retrieval market becomes more active, everyday use cases become more viable.

Recent developments include progress working out systems to incentivize Retrieval Providers. Multiple networks are currently exploring alternatives.

• Current status: https://filecoin.io/blog/posts/retrieval-markets-rollup-h1-2022/

Other major announcements and initiatives:

• Filgram: A new app built on Filecoin that further helps Clients find Storage Providers
• Permanent storage via Lighthouse: Since the network currently requires Clients to pay over time, some files could be lost if payment stops. Lighthouse would arrange for one-time initial payment to make sure storage remains permanent.
• Filecoin Green: Filecoin is working towards carbon neutrality at the node level

You can keep an eye on progress at the Filecoin Blog.

How to work with Filecoin

As with many large Web3 organizations, there are many ways to get involved in Filecoin. They spell many of them (Discord, etc.) here.

For careers specifically, visit: https://jobs.lever.co/filecoin

Further Reading

Filecoin: https://sp.filecoin.io/

Filecoin White Paper: https://filecoin.io/filecoin.pdf

Bybit Learn: https://learn.bybit.com/altcoins/what-is-filecoin-fil-token/