Filecoin (FIL) Things You Need To Know Before Investing

Riya KapoorMay 19, 2022

2 minutes read

Table of Contents

What Is Filecoin (FIL)?

Filecoin (FIL) is a decentralized storage system that aims to “store humanity’s most important information.” The project raised $205 million in an initial coin offering (ICO) in 2017 and initially planned launch date for mid-2019. However, the launch date for the FIL mainnet was pushed back until block 148,888, which is expected in mid-October 2020.

The project was first described in 2014 as an incentive layer for the Interplanetary File System (IPFS), a peer-to-peer storage network. FIL is an open protocol backed by a blockchain that records commitments made by the network’s participants, with transactions made using FIL, the blockchain’s native currency. The blockchain is based on both proof-of-replication and proof-of-spacetime.

Who Are the Founders of Filecoin?

Filecoin was founded by Juan Benet, who also created the Interplanetary File System. Benet is an American computer scientist who studied at Stanford University. After founding Protocol Labs in May 2014, he attended Y Combinator in the summer of 2014, intending to support both IPFS and FIL and other projects.

What Makes Filecoin Unique?

Filecoin aims to store data in a decentralized manner. Unlike cloud-storage companies like Amazon Web Services or Cloudflare, prone to centralization problems, FIL leverages its decentralized nature to protect the integrity of a data’s location, making it easily retrievable and hard to censor.

Decentralized storage systems like FIL allow people to be the custodians of their data and make the web more accessible to people worldwide. Since mining and storing in the FIL network is directly related to winning more block rewards, Filecoin incentives participants to act honestly and store as much data as possible.

How Many Filecoin (FIL) Coins Are There in Circulation?

Protocol Labs describes FIL tokenomics, or economic model, as a “market for data” where users can sell their storage space to other users looking to rent. Five stakeholders will be able to trade tokens: developers, clients, miners, token holders and ecosystem partners. According to Protocol Labs, there will also be three FIL markets: file storage, file retrieval, and on-exchange token trading.

In fall 2020, 400 miners participated in the “Space Race” testnet phase, increasing FIL network data capacity by over 325 pebibytes; approximately 3.5 million FIL tokens will be released to the Space Race participants.

How Is the Filecoin Network Secured?

Filecoin is secured through proof-of-replication and proof-of-spacetime. In the FIL network, nodes known as retrieval miners compete to serve clients with data as quickly as possible. They are then rewarded with FIL fees, which encourage a network of nodes that want to replicate and preserve files.

Storage miner nodes are constantly competing for contracts to provide storage to clients for a specific length of time. When a storage miner and their client agree on a deal, they hold the client’s data in a sector and “seal” it to create a unique copy of that sector’s data. Storage miners are rewarded with FIL by clients as deal fees, and these miners can also mine blocks and receive a block reward.