Filecoin token (FIL) is the native digital token offered by Filecoin, a peer-to-peer, decentralized network for file storage. The token is offered as an economic incentive to ensure the reliability of file storage. Filecoin was built on top of the decentralized file sharing network InterPlanetary File System (IPFS), and brought the economic incentive system and marketplace functionality to IPFS.
FIL serves as the main component of Filecoin’s economic incentive system and community participation on the Filecoin network. Storage Providers receive FIL as payment for storing and distributing the user’s data on the Filecoin network.
FIL’s price jumped to an all-time high of $237.62 on April 21, 2021, from a record low of $19.95 on Dec. 30, 2020. It has a total circulating supply of $114.87 million with a max supply of $1.97 billion.
Filecoin aims to disrupt traditional, centralized data storage products and services like Amazon Web Services and Google Drive. Unlike the traditional data storage providers, it implements a publicly verifiable, trustless storage product that doesn’t rely on a single entity.
Filecoin users pay fees to storage miners for storing their files on the network. Storage miners are internet-connected computers responsible for storing files and offering proof of their continued storage. Users are able to customize their storage preferences for cost, redundancy and speed when selecting a miner. Once the user has selected a miner, they can store files and verify the storage by viewing the proofs on the Filecoin blockchain.
Storage providers are users who offer disk space on their storage miner system. Anyone can participate as a storage provider and receive the FIL rewards for offering their storage capabilities to others. Once a provider’s computer implements the Filecoin protocol, they gain access to an open market of storage users.
Network Security. Unlike proof-of-work (PoW) blockchains like Bitcoin, Filecoin ensures its data is verifiably stored through proof-of-replication (PoRep) and proof-of-spacetime (PoSt). Under PoRep, storage miners create a proof by showing that they have stored a unique copy of the data on their system, at the time when the data sector was sealed. PoRep only validates a proof once, making it a less intensive validation process compared to PoW.
Once PoRep is established, PoSt runs repeatedly to prove that the space being used by the storage provider has the user’s data. Storage miners are required to put up some collateral to enter the Filecoin ecosystem. The PoSt algorithm will penalize the miners if they fail to prove the continued storage of the data, ensuring good behavior from the participants.
The Filecoin ecosystem. The Filecoin protocol has been utilized by several layer 2 solutions, including Powergate and Textile Hub, to enable new functionalities on the Filecoin blockchain. Filecoin can also host IPFS apps.
Filecoin and IFPS were developed by Juan Benet and his team at Protocol Labs. In 2017, Protocol Labs raised over $250 million through a combination of a private and public sale. Protocol Labs would use 5% of the total for the development of the Filecoin Foundation, an independent organization dedicated to the development of Filecoin and related technology. Since Filecoin does not offer on-chain governance, Protocol Labs remained responsible for governance functionalities until the creation of the Filecoin Foundation.
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