How Filecoin (FIL) Tech Democratizes Cloud Storage

Several challenges faced by cloud-based storage providers have become increasingly apparent in recent years. These difficulties include lack of trust, unreliable security, limited connectivity, poor scalability, and too much dependency on centralized providers. For example, system hacks as well as unintended data loss are both common problems in the existing cloud storage ecosystem. Filecoin proposes a solution to these problems, as a cloud-based decentralized storage network (DSN) built on the InterPlanetary File System (IPFS) to interact with the Ethereum blockchain and employ its unique utility token, FIL.

FIL is transacted by network participants for services within the Filecoin ecosystem. Customers spend tokens to store and retrieve data, while miners, in turn, earn tokens for storing and serving data. The Filecoin storage protocol is open-source, and is owned and built by all of the network’s participants, aiming to benefit everyone equally. There are three main attributes of the Filecoin platform that are designed to create value for the network’s participants and facilitate its operations on an ongoing basis:

1. Storage and retrieval of data on Filecoin

2. Filecoin consensus algorithms

3. Filecoin mining structure 

Filecoin Storage and Data Retrieval

Data storage is a truly valuable resource, but some feel that the global cloud storage market could benefit from a drastic overhaul. Filecoin’s goal is to build a network with a huge number of storage providers that can be adapted to meet the varying needs of different customers. Lower costs, increased retrieval speed, and data storage redundancy are a few of the modifications that may appeal to customers who choose to use Filecoin.

Smart contracts between storage miners, storage providers, and clients are enabled through blockchain technology and cryptographic proofs, designed to verify that file storage agreements are not abused or altered. Additionally, Filecoin can be used to store and retrieve almost any type of data:

• Private and personal data

• Application data and decentralized application (dApp) websites

• Company files and contract data

• Public datasets and security archives

• Video, podcast, and website data

Filecoin Consensus Algorithms

Filecoin claims to be built with state-of-the-art cryptographic storage proofs to ensure data is being stored securely and precisely for a specified time period. The network should also be able to resolve any discrepancies that may arise within the overall storage process. The Filecoin protocol employs three distinct proof-based mechanisms built into the Filecoin storage network’s consensus algorithm:

1. Proof of Spacetime (PoSt): Gives the Filecoin blockchain the capacity to cryptographically verify whether an entire file is being stored in an unaltered fashion for an agreed-upon time frame. Proof of Spacetime consists of two distinct mechanisms. The first is Window Proof of Spacetime (WindowPoSt), where commitments made by storage miners are audited in 24-hour increments, resulting in a zk-SNARK compressed proof being published to the blockchain. The second is Winning Proof of Spacetime (WinningPoSt), where miners are rewarded for their contributions to the network.

2. Proof of Replication (PoRep): Enables the Filecoin blockchain to cryptographically    verify the agreed-upon number of copies of a stored file.

3. Proof of Storage (PoSt): Allows the Filecoin blockchain to prove that network participants claiming to provide a specified amount of storage space are indeed doing so.

Filecoin Mining Structure Explained

Similarly to Bitcoin, Filecoin miners compete with each other to mine and create blocks. In contrast to Bitcoin, Filecoin mining power is directly correlated with active storage. The system is built to create an incentivized structure for miners to accumulate as much storage space as possible, so they can, in turn, rent that storage to customers. Storage and retrieval of data on the Filecoin protocol are linked directly to the mining mechanism of the entire system. Filecoin is built to accommodate a decentralized, verifiable market structure with two main components: a retrieval market and a storage market. The retrieval market exists off-chain, while the storage market is built on-chain.

The Filecoin protocol acts as a nerve center running an orderbook, allocation table, and transaction broadcasting system. This center serves both the on-chain and off-chain parts of the system by sending and receiving information for order matching and settlement. Miners and clients are able to then set their own prices for their services and submit orders to the marketplace. Throughout this process, the Filecoin network benefits three main groups of users:

1. Storage miners who receive tokens by providing storage

2. Retrieval miners who receive tokens by serving data

3. Clients who pay to store and retrieve data

Filecoin Distribution and Storage

Filecoin has built a highly sophisticated cloud-based solution for the storage and retrieval of data. The balance created by the Filecoin protocol operating on either side of the data storage market (through retrieval and storage of data) is paramount to ensure transparency and equal access. At the same time, the protocol provides users with incentives to receive FIL tokens based on a provider’s mining power in proportion to that miner’s active storage space.