The Filecoin network is a decentralized data storage marketplace. Users can store and retrieve their data on the network. The storage space is provided by storage provided on the network.
Traditionally, online storage providers and protocols save data on centralized servers using IP addresses. This is why Protocol Labs developed the InterPlanetary File System (IPFS) as a peer-to-peer file transfer system. IPFS is a peer-to-peer network that enables storing and sharing data files. IPFS uses hash-addresses content structures to store data instead of centralized servers. This reduces the redundancy and improves the efficiency of the traditional system. In order to achieve this, IPFS needs a market place which is provided by the Filecoin network. What Filecoin does is pretty similar to the Ankr network. Ankr decentralizes cloud processing power whereas Filecoin decentralizes local storage space.
What is the Filecoin network?
The Filecoin network is a decentralized data storage network. It has been developed by Protocol Labs, an open source R&D lab. Filecoin allows its users to sell their excess storage space on an open platform. It acts as an incentive and security layer for IPFS. Filecoin enables the IPFS storage system to act as an algorithmic market. Using this market users can interact with storage providers. Users pay using Filecoin’s native token, FIL, in exchange for storing and distributing data on the network. In short, IPFS is the backbone and Filecoin network is the surface market layer.
How does the Filecoin network work?
The Filecoin network works on a proof-of-work model. Unlike Bitcoin, Filecoin’s POW is related to storage of data. The work done proves that a miner has stored data for a certain time period. Filecoin uses two types of proof-of-work proofs to prove the work done: proof-of-replication (PoRep) and proof-of-spacetime (PoSt). Proof-of-replication allows the network to confirm replication of data to a unique location. Whereas, Proof-of-spacetime allows the network to verify that the data is stored for a specific duration of time.
Combining the two, Filecoin manages large scale storage networks with multiple independent parties. Therefore, removing the possibility of forgery of data storage records to increase mining rewards. Filecoin’s competitors like Storj ($STORJ) and Siacoin ($SC) lack this functionality.
The minor proofs used to create a network are based on three methods put, get and manage. Put and get methods are used for storing and accessing data in storage on client’s request. The manage method is used for managing the marketplace by matching buy and sell orders on the platform. Filecoin has two marketplaces. One is for storage and the other one is for retrieval. Storage miners receive put requests and are responsible for storage of data. In order to keep the data say storage miners are required to pledge collateral proportional to the data stored. Retrieval miners receive requests and are responsible for fetching the client’s data. Both the miners receive rewards in terms of the network’s native coin, FIL.
The Filecoin token, FIL
FIL is the native crypto token of the Filecoin network. In order to participate in the storage and retrieval mining process users require FIL token. In exchange for their proof-of-work, they can earn rewards in terms of FIL. Users can also use FIL token to participate and transact on the Filecoin network. Users can pay miners in FIL to store their data or to retrieve it. Storage provides also use FIL as collateral in case of invalid or missing proofs.
The Filecoin network provides us with an evolved version of storage. It can help us move away from centralized storage providers. This will enable more competition among the storage providers. Not just that, our data will be more secure due to replication and storage mechanisms used on the network.