What is Filecoin? The cryptocurrency that wants to solve one of the main problems of the internet

There are different forms of cryptocurrency. If you are wonder what is Filecoin then read this article. There is a new cryptocurrency that is growing in the market at a frenetic rate and whose initial objective has little to do with the other cryptocurrencies. Do you know what FIL and Filecoin are? We tell you.

In recent months, the value of the FIL cryptocurrency has grown by 300% to enter the Top 10 of cryptocurrencies with Bitcoin and Ethereum on April 1. This success is partly due to the furor it is generating in countries like China, but what does this cryptocurrency have that the others do not?

FIL is the native cryptocurrency used in Filecoin, a blockchain network that is at the same time a peer-to-peer network for long-term and secure file storage. That is, Filecoin offers users the possibility of renting storage space on the computers of the miners of this network, which obtain financial rewards for storing this data and strengthening their cybersecurity.

The founder of this new cryptocurrency is also responsible for IPFS (InterPlanetary File System). Juan Benet created this network with the intention of transforming the way in which all the data that we generate on the internet is stored, and this objective has been extended in Filecoin. For example, the Filecoin Foundation announced in early April the donation of 50,000 of its FIL tokens, worth more than $ 10 million (at the time) to the Internet Archive, to enhance its library of content. 

The idea is to go from a system run by large companies that charge a subscription to store and protect that data or that get the benefits of advertising, to achieve a decentralized system where all the connected computers form a large data center. 

In this way, Filecoin and IPFS are complementary protocols for storing and sharing data in this distributed network. Both systems are open source. The fact that it is free software allows adding encryption functions and improving cybersecurity that protects data, being in constant development.

Thus we find several protagonists: 

  • Users : 

They choose the miner that is best for them, based on storage space, service and price and reach an agreement with it. For the duration of the agreement they must pay what are known as storage fees so that the miner continues to save and protect that data.

  • Storage miners : 

Filecoin mining works quite differently from other cryptocurrencies. Instead of providing computational power, miners provide storage capacity where they store the data of the clients with whom they have reached an agreement. 

These miners charge the storage fee they have agreed to with their clients each time they periodically send a cryptographic test to verify the long-term storage of that data.

On the other hand, miners can get more money thanks to the rewards generated by the blockchain network itself by creating a new block in the chain, thus printing a new token. These rewards are directly proportional to the amount of storage space that is being contributed to the network at that time.

  • Recovery miners : 

They represent the veins of this large distributed storage network. They are paid to offer caching or computing power to speed up data transfers. The bandwidth of these miners, and their latency and proximity to customers, determine their ability to close recovery deals on the network and charge the recovery fee.

To reinforce the security and efficiency of the network, those miners that do not offer a good service, are late in the delivery of verification tests or commit any infraction may receive penalties.

What is Filecoin: A new decentralized system and away from mainly American companies

What is Filecoin
Filecoin

In this storage system you can save all kinds of files and data, even the NFTs that are so fashionable right now. It is not surprising that Filecoin is having so much success right now, its proposal tries to solve one of the main problems of the internet, the lack of storage space for the enormous amount of data that is generated on the network every year.

This was explained by Marie Tatibouethead of marketing at Gate.io, a cryptocurrency exchange to CoinTelegraph: “Data is the most valuable commodity today, and there is a race to discover cheaper and more efficient methods of storing it.”

Still, much of the success comes from the Chinese market where posters have been seen in the subway advertising Filecoin. There are also rumors that Chinese government officials are almost officially encouraging Filecoin mining, as a decentralized cloud storage solution would fit in with the Communist Government’s plans to create its own Internet infrastructure. 

Even the most popular social network in the country, WeChat, would allow payments to be made with this cryptocurrency. According to data from CoinGecko, as of April 9, Huobi accounted for nearly 40% of the 24-hour trading volume of Filecoin, a cryptocurrency exchange company founded in China with offices on both sides of the Pacific Ocean.

The result is the creation of a highly competitive market in which miners fight to offer the best storage and cybersecurity services in exchange for this token or cryptocurrency that, if the network is successful, will have more value every day. Gone would be, possibly, services like Google Drive, Dropbox, Apple Cloud… or maybe both ecosystems coexist together.

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