About Filecoin (FIL)
Filecoin is a cryptocurrency and blockchain platform that aims to provide a peer-to-peer file storage system.
Filecoin was first described in a white paper published by computer scientist Juan Benet in July, 2014. It was later described in an updated white paper published in July, 2017. Filecoin is the proposed incentivization layer for a new decentralized storage network that would allow users to pay for the peer-to-peer storage of their files. The Filecoin network is being developed by Protocol Labs, a U.S.-based company founded by Juan Benet and focused on building internet infrastructure technology. Filecoin runs on the InterPlanetary File System (IPFS) protocol, a peer-to-peer file storing and sharing protocol developed by Protocol Labs and launched in 2015.
Filecoin or FIL is the digital asset token of the Filecoin Network (similar to how bitcoin or BTC is the digital asset token of the Bitcoin network). All FIL balances and transactions are recorded on the Filecoin blockchain. A FIL is infinitely divisible, however, Gemini intends to limit decimal precision of FIL on the Gemini platform to eight decimal places or 10-8 (.00000001 FIL).
The supply of Filecoin is deterministic and fixed at 2 billion FIL. The supply schedule is embedded in the Filecoin protocol.
Bitcoin has demonstrated the power of a decentralized, permissionless, and immutable transaction ledger (i.e., blockchain). To achieve this, the Bitcoin Network’s consensus mechanism utilizes a proof of work algorithm, whereby miners engage in complex mathematical calculations in order to add a new “block” to the Bitcoin blockchain in return for a bitcoin reward. This process of “mining” verifies and archives new transactions, as well as audits existing transactions in the blockchain. Bitcoin’s PoW serves to secure its blockchain and network — it is not reusable work.
Ethereum’s consensus mechanism not only ensures the integrity of the Ethereum blockchain, but also requires miners to run smart contracts during the mining process, which results in a decentralized pool of computation resources (i.e., a decentralized, global computer). In other words, Ethereum’s consensus mechanism creates useful work beyond securing the Ethereum network.
Filecoin’s consensus mechanism utilizes a novel proof of storage algorithm. Miners must contribute file storage to the Filecoin network in return for a Filecoin reward. The more storage a miner brings to bear on the Filecoin network, the more likely she or he is to win the Filecoin reward. In addition to block rewards, users pay storage miners to store data and retrieval miners to deliver data. These transactions are enabled by an on-chain storage market that is embedded in the Filecoin Network protocol. Storage miners prove data has been replicated to dedicated physical storage via proof of storage and also prove that the same data has been stored for a specified time period via proof of spacetime. Both proofs are part of the Filecoin protocol’s new proof of storage scheme.
It is estimated that approximately half of the world’s file storage space is unused. Filecoin’s useful work consensus algorithm has the potential to offer trustless, decentralized cloud storage and unlock unused storage in computers around the world. In addition, the Filecoin Network enables smart contracts known as “File Contracts” that allow users to program conditions around storage services. Lastly, the Filecoin roadmap includes building a “Bridge” system into other digital asset networks including the Bitcoin, Ethereum, and Tezos networks so that these networks can leverage the storage and retrieval mechanism of the Filecoin Network.