What is Filecoin
Filecoin is a decentralized protocol that allows users to rent out their free space on computers for data storage.
In other words, Filecoin is a functional Web3 alternative to leading Web2 cloud service providers such as Google Cloud, Amazon Web Services and Microsoft Azure.
FIL is the web’s native cryptocurrency that is used to log or access storage plugged into the web.
The token powers the entire Filecoin network, and customers pay into FIL to store their files on the network, and nodes that have committed space on the network are rewarded in FIL. FIL also acts as a governance token that you can use to vote on key project decisions.
Juan Bennett published the project’s white paper, named “Filecoin: A Cryptocurrency Operated File Storage Network” in 2014. It describes a Bitcoin-like blockchain network in which nodes (nodes) in the network can store data guaranteed by a Proof-of-Retrievability (PRO) component. Filecoin is being developed by Protocol Labs.
In 2017, Filecoin raised over $250 million in its ICO, which was a record at the time. The underlying network was subsequently launched in October 2020.
How does Filecoin work?
Users can choose their preferences in terms of trade-off costs, storage speed and space redundancy, and Filecoin’s suite of applications can help negotiate storage with different providers on the network without implementing a different API for each provider – unlike centralised storage systems.
Filecoin’s network is based on the proof-of-work (PoW) consensus mechanism, and FIL cryptocurrency is mined through the mining process.
Filecoin uses two models of PoW to prove that work is complete. These are proof-of-replication, which allows the network to confirm replication of data in a unique location, and proof-of-time, which confirms that data is stored for a certain period of time.
Thus, by combining the two models, large-scale storage networks spanning multiple independent countries are formed. This eliminates the possibility of network tampering while increasing the rewards for mining.
Miners offer their own available computer storage space in exchange for FIL. This enables users and miners to arrange storage in a live marketplace where issues of space requirements, timing and costs are confirmed and bound within an algorithmic contract.
As well as having a large range of storage providers, Filecoin’s blockchain framework allows users to verify that their files are being stored correctly by reviewing available evidence for higher levels of security. Also, files that are actually stored on someone else’s computer cannot be accessed by whoever is operating it.
How does the Filecoin market work?
Choosing a provider: If you want to store your files using Filecoin, the first step is to choose a Filecoin-based decentralized application, such as ChainSafe Files or Estuary. These apps provide a quick and easy interface through which you can upload your files, choose a provider, and define the terms of the agreement.
Contract Negotiation: Once you have selected a provider based on your specific needs, you can proceed to negotiate the price in FIL tokens for storing your data. Once an agreement is reached, you pay the provider to store your tokens. The transaction and agreement contract is then recorded in the Filecoin blockchain.
Data mining: Once you submit the request, the network assigns “mining” miners tasked with retrieving your data as quickly as possible. Naturally, this service comes at a cost to FIL. If you take your time, the extraction will cost you next to nothing. However, if you need it within a few seconds, you’ll need to fork out a significant amount to FIL in order for them to prioritize your transaction.
How do I buy FIL?
1. Choose a crypto exchange
There are numerous cryptocurrency exchanges and exchanges that range from easy to use systems to complex dashboards for advanced traders.
Because FIL is so popular, you’ll be able to purchase the token on most cryptocurrency exchanges, but it’s advisable to stick to a few of the more popular exchanges like Binance, Kraken, Coinbase, etc. Different platforms come with different fees, security measures, and may include other features, so it’s a good idea to do your research before signing up.
2. Create an account and confirm it
Start with account registration, which is completely free on the aforementioned platforms. For added security, 2FA – two-factor authentication – is also enabled. This way, you and your device are the only ones who can grant access to the account.
You are then taken through a KYC process, which is providing personal information – ID card/passport/driving license details, proof of address (e.g. bank statement or utility bill).
After completing these steps, you are ready to buy, sell and trade Filecoin (FIL), as well as take advantage of various services such as steaming.
3. Fund your account
Once your account has been registered and verified, you need to fund the account so you can start taking advantage of the platform’s buying and trading services.
The main deposit options are:
- Credit/Debit Card
- Bank deposit
- Peer-to-peer (P2P)
Where to buy FIL?
