As time goes by, more files will be made and more storage will be needed. When we need more storage, what do we do? Typically, we buy it on a platform like Google Drive or Dropbox. They seem pretty secure, and the pricing isn’t too bad. That being said, it does seem quite dangerous to store our files on a centralised network, and since they’re a borderline monopoly, is what we’re paying really what the storage is worth?

Is there an alternative?

Introducing Filecoin: a decentralised storage solution that aims to “store humanity’s most important information.”

Decentralised storage solutions share storage responsibilities across many independent operators, which together form a single storage network.

For a simile, look at a company like Airbnb. You had millions of people around the world with rooms that weren’t being used. Airbnb made a marketplace for it, and look at the impact that has had on the world.

This is what Filecoin is doing. It’s a marketplace for storage. There are a lot of people out there with excess storage space that can be used. Filecoin is connecting people looking for storage to those with storage. It’s like a decentralised alternative to Google Drive and Dropbox.

What makes Filecoin better than its alternatives?

The hyper-competitive market means the prices for storage are fairer compared to those offered by centralised alternatives.

What does ‘centralised’ mean? One point. A centralised point means there’s a clear, single point of attack. So a decentralised alternative is more secure and less likely to be taken down or hacked.

If Google or Dropbox wanted to make more room for storage, they would have to spend lots of money on space and machinery. Whereas, with something like Filecoin, all the storage in the world that isn’t being used can now be put to use, instead of making new storage. This makes it very resourceful.

Worse of all, as centralised entities, companies like Google and DropBox have the right to delete, withhold, or share your files. Imagine you have a file with secret information, and the company shares it without your permission. This links to the greater issue of centralisation and censorship but we can get into that another time. Filecoin on the other hand, is censorship resistant, meaning you’ll never be in a position where your files are held without your consent, or you’re unable to access them.

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How does it work?

Users browse for storage types and locations. Then, miners bid for the storage contract. Clients select the winning miners and then the data is sent, encrypted, segmented, and stored by the miner.

What does FIL do?

First, let’s list the use cases of the FIL token. The FIL token is used by clients to pay for storage on the network.

It is also used to reward miners for executing tasks such as storing data, securing the network, and paying transaction fees.

You don’t have to be a Filecoin user to take part in the ecosystem. Holding the token will help provide liquidity to the network, and anyone can do so.

How is Filecoin secured?

In the Filecoin network, nodes, also called retrieval miners, compete to serve clients with data as quickly as they can. They are then rewarded with FIL as rewards (like BTC on bitcoin), which encourages people to become miners and secure the network.

These nodes are in constant competition for contracts to provide storage to clients. The two factors that go into it are the amount of storage needed, and how long storage is needed. When a miner and client agree on a deal, the storage miner holds the client’s data in a sector and “seals” it to create a unique copy of that sector’s data. Storage miners are rewarded with FIL by clients as deal fees, and miners can also mine blocks and receive block rewards.

For Cryptonary's transparent opinion on Filecoin, check out the Ratings Guide here.

Disclaimer: NOT FINANCIAL NOR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make, and only you are accountable for the results.