summary: Filecoin is a decentralized storage network powered by blockchain technology allowing users to earn incentives for providing storage space, where FIL is its nat...
content: Filecoin (founded in May 2014) is an open-source, decentralized storage network and marketplace powered by blockchain technology. It is an incentive layer for the peer-to-peer storage network known as InterPlanetary File System (IPFS) and it enables anyone to earn incentives for renting out storage space on their computer. FIL is a native currency of the Filecoin network and used for transactions. Filecoin Network aims to “store humanity’s most important information". Filecoin is a decentralized storage network based on the Interplanetary File Storage (IPFS) protocol. It is designed to utilize unused storage globally into an efficient storage market for users to pay for low-cost storage. The objective is to ensure file storage is permanent and distributed across the web. Contrast this with centralized cloud storage solutions such as Amazon Web Services, Google Cloud, or Dropbox, where data are stored in servers owned by these private corporations. Filecoin (FIL or ⨎) is also the currency of the decentralized storage network. Customers wanting to access storage will have to pay for storage in Filecoin. Nodes that provide storage to the network will in turn be paid in Filecoin for their service. Company Filecoin was created by California-based open-source research, development, and deployment laboratory, Protocol Labs. It was founded in 2014 by American computer scientist, Juan Benet. Apart from Filecoin, The organization is also known for its projects, including IPFS, libp2p, and many others. It has a headquarter situated in San Francisco Bay Area, California, United States,, and around 51-200 employees working across the globe. Juan Benet and his team constructed Filecoin and IPFS in tandem they seek to build a fundamental layer for data infrastructure that can be used by both blockchain and traditional providers, like Amazon Web Services (AWS) and Microsoft Azure. Team | Name | Designation | | ---- | ----------- | | Juan Benet | Founder and CEO | | Friedel Ziegelmayer | Senior Software Engineer | | Evan Miyazono | Research Scientist | | Jeromy Johnson | Software Engineer | | Karola Kirsanow | Research Program Manager | | Jakub Sztandera | Distributed Software Engineer | | David Dias | Research Engineer | | Nicola Greco | Research Lead | | Jesse Clayburgh | Operations Manager | | Hector Sanjuan | Software Engineer | | Chris Brocoum | Head of Finance | | Colin Evran | Biz Dev & Operations | Fundraising Protocol Labs has raised a total of 3.1 million USD in funding over 3 rounds from 2014 to 2017. The first seed round raised a total of $120K USD from start-up accelerator, Y Combinator. The venture round was held in 2016 and raised 3 million USD from major investment firms and individual investors, including Techammer, Stanford StartX, Naval Ravikant, Haystack, FundersClub, Fred Ehrsam, Digital Currency Group, DHVC, Boost VC, and Ben Davenport. In 2017, they raised undisclosed funds in a venture round backed by BlueYard Capital. Presale and Initial Coin Offering In August 2017, Filecoin held their Initial Coin Offering (ICO) round on Coinlist, where they raised more than $252 Million USD by selling FIL tokens. Filecoin fully incentivized early participation during the ICO. Although most token offerings set a standard price/coin, Filecoin set the initial coins at $1 USD, increasing with each subsequent investment, which drove investors to want to get in early. Within hours, the crowd-sale raised $190 million USD, causing the price to reach $4.58 USD. Filecoin also did a presale of its coins to Sequoia Capital, Andreessen Horowitz, and Union Square Ventures. Overview Filecoin is a decentralized storage network (DSN) and marketplace built on a blockchain. It turns cloud storage into an algorithmic market. It is a distributed, peer-to-peer network based on InterPlanetary File System (IPFS) technology with built-in economic incentives to ensure files are stored reliably over time. Anyone who wants to store their files or get paid for storing other users’ files can be part of the Filecoin network. The users/clients pay to store their files on storage miners. Storage miners are computers responsible for storing files and proving they have stored the files correctly and securely over time. This storage network is a blockchain-based decentralized network and so available storage, and the price of that storage is not controlled by any single company. Instead, Filecoin facilitates open markets for storing and retrieving files that anyone can participate in. The FIL is the native cryptocurrency of the Filecoin network and it is used to pay miners and for transaction purposes. All the transactions along with proofs from miners that they are storing files correctly are recorded on the Filecoin blockchain. Filecoin benefits both users and storage providers. It allows users to store their files at aggressive prices and verify that their files are being stored correctly. They can have many options to choose the miner whose storage offer is best suited for their needs. Applications that implement Filecoin can negotiate storage with any miner on the network. which is not possible with centralized storage systems. It also eliminates the need to implement a different API for each provider. The users can verify that their files are being stored correctly by looking at proofs on Filecoin’s blockchain explorer anytime they want. The storage providers can easily sell their storage on an open market and they run miners to earn FIL tokens. Filecoin’s blockchain rewards miners for contributing useful storage to the internet as compared to high energy-consuming proof-of-work computations. The Filecoin initial release occurred in July 2014 and its Mainnet was launched on October 15, 2020. Tech Filecoin's operation depends majorly on three components, The Filecoin network, Nodes, and Miners. Miners execute deals and submit proofs that are verified by clients and other miners so that block is validated and gets added to the chain. Filecoin Network The Filecoin network utilizes InterPlanetary File System (IPFS) technology. It is distributed peer-to-peer network formed by Filecoin peers who participate in different ways. These peers communicate over secure channels that they use to distribute information to the network, transfer data among themselves, and discover other peers, maintaining a well-connected cluster in which information like blocks and messages flows swiftly even when many thousands of peers participate. The network represents all full nodes that validate the actions of clients and miners. These nodes count the available storage, check the storage proofs, and repair data faults. Filecoin Nodes or Clients Filecoin Nodes or Filecoin Clients are peers that sync the Filecoin blockchain and validate the messages in every block, which, once applied, provide a global state. Nodes manage Filecoin wallets and receive FIL on them. These nodes have the ability to publish different types of messages to the network by broadcasting them. For example, a client can publish a message to send FIL from one address to a different one. Nodes can propose storage and retrieval deals to Filecoin miners and pay for them as the deals are executed correctly. Clients pay to store and retrieve data. They can choose from the available service providers. If they want to store private data, they need to encrypt it before submitting it to the providers. Anyone can run a Filecoin Node as it is a low-level task that usually needs a program to run 24/7. There are several types of Filecoin Node implementations available, including advanced such as Lotus. Filecoin Miners Filecoin Miners have two types Storage Miners and Retrieval Miners. The user requires technical knowledge and also needs to fulfill hardware requirements in order to become a miner. The Lotus Miner is the most advanced implementation of a Filecoin miner to this day. Storage Miners The Filecoin miners provide services to the network by executing different types of deals and adding new blocks to the Filecoin blockchain (every 30 seconds). They receive FIL tokens as rewards for these tasks. The miners store client’s data for the reward. They decide how much space they want to provide for storage. Once the client and storage miner agree on the deal, the miner is obliged to continuously provide proofs that he/she stores the data. Anyone can look at the proofs and make sure that the storage miner is reliable. Retrieval Miners The retrieval miners provide client’s data at their request. They can get the data either from clients or storage miners. Retrieval miners and clients exchange data and coins using micropayments: the data is split into pieces and clients pay a small number of coins for each piece. A retrieval miner can also work as a storage miner. Deals and Proofs When Miners execute deals, they need to provide proof of storing the data and Deals and Proof incorporate many details. Deals As there are two types of miners, there are two types of deals Storage Deals and Retrieval deals. | Storage Deal | Retrieval Deal | | ------------ | -------------- | | These are agreements between client and storage miners to store data in the network | These are agreements between clients and retrieval miners (which may or may not be storage miners) to extract data that is already stored on the network. | | These are executed on-chain and repeatedly prove to the blockchain that it is still storing the data as per agreements so that mines can collect rewards. | Unlike Storage deals, these are executed off-chain using payment channels to pay incrementally for data received. | Proofs Storage miners must prove that they are st