How long can the Filecoin "fire" burn?

"Where the 'wealth effect' gathers, it is often full of lies and scams, and you will step on landmines if you are not careful." Sister Yang talked about the entanglement with IPFS & Filecoin mining machines, and every word she said was reasonable and heartbreaking.

In June 2018, the venue of a hotel outside the North Fifth Ring Road was packed with people, and even many people stood in the aisles. Sister Yang, who is in her 50s, was introduced by a friend to attend the lecture, but after two days she was still skeptical. "But it's a good thing to have two buffet meals a day and eat as much as you want," she said.

On the third day, at the instigation of her friends and the encouragement of her teacher, Yang bought three mining machines at a very low price of 2,980 yuan each. Although she still doesn't understand what "mining" is, the dream of getting rich from mining has been deeply rooted in her heart.

However, things did not go as planned. Not long after, the friend who introduced her to the class and the staff of the mining machine manufacturer lost contact one after another. Sister Yang had a bad feeling, but she was helpless. In this way, the three mining machines were placed under Sister Yang's bed for two years.

"Last month, by chance, I learned that the Filecoin mainnet would be launched soon." Sister Yang was lucky enough to think that she had finally waited for the opportunity. However, bad news struck again. The mining machine she bought did not meet the mining configuration requirements and eventually became useless.

Now, Yang, who has just woken up from her dream, can't help but wonder how long the Filecoin "fire" can burn? What worries her even more is how many people can make money in this wave of mud and sand.

Storage demand boosts project explosion

"The development of human civilization today has been mapped from the traditional physical world to a huge and infinite digital world, that is, the digital age." Chen Hongdao, CEO of Boundless Cloud Chain Technology, said that massive data can increasingly exist as an independent entity and have its own value.

According to the main research results of the white paper "IDC: China will have the world's largest data circle in 2025", the global data circle will increase from 33ZB in 2018 to 175ZB in 2025. By then, China will become the world's largest data circle.

Chen Hongdao believes that the storage of digital information mainly includes two methods: centralized storage and distributed storage. Among them, the distributed storage method can be further divided into "centralized distributed storage", "multi-centralized distributed storage" and "decentralized distributed storage" from the perspective of data control.

Currently, the main decentralized distributed storage solutions include Storj, Sia, Arweave, IPFS&Filecoin, etc. The current hot spot is the IPFS&Filecoin project.

He said that the Inter-Planetary File System (IPFS) is a global, peer-to-peer distributed version of the file system, whose goal is to achieve autonomous interconnected Web3.0, to supplement or even replace the Hypertext Transfer Protocol (HTTP) that currently dominates the Internet, and to connect all computing devices with the same file system together. Filecoin is a blockchain incentive layer based on IPFS, which mainly solves the problem of data storage.

As for IPFS, Chen Hongdao believes that, first, IPFS realizes decentralized nodes without differentiation, ensuring the decentralized characteristics of the network; second, the anonymity of nodes ensures the anti-censorship of its peer-to-peer network; third, based on content addressing, it makes web pages safer, faster, more robust and more durable. This has, to a certain extent, built a primary network that realizes the free interconnection of information.

"However, this is only the first step in realizing Web 3.0," he said, because what data creators want to achieve on the Internet is not only the free exchange of information, but also the clarification of digital rights and the realization of value.

"In view of this, the Value Internet Lab has created a digital ownership network called 'EMSC', or 'Infinite Autonomous Storage Computing Network'. It is based on decentralized distributed storage and couples the blockchain system to build a network infrastructure for data security, digital rights autonomy, and concurrent realization of digital value, thereby achieving a leap from storage freedom to digital rights autonomy," he said.

On the other hand, IPFS, since its official launch in May 2015, has adopted a distributed and decentralized approach, which means that the system incentives are insufficient and there is no centralized organization to provide incentives. Therefore, the IPFS team developed an incentive mechanism based on IPFS - Filecoin, which uses blockchain incentives to promote the wider implementation of IPFS.

It is understood that Filecoin adopts a network benchmark reward model and a penalty mechanism for staking FIL. At the same time, in order to improve efficiency, the Filecoin network also adopts a committed capacity mechanism and a verification database mechanism.

According to data, Filecoin raised $205 million through ICO in September 2017. Prior to that, it had raised $52 million through private placements from well-known investment institutions such as Sequoia, Andreessen Horowitz, and Union Square Ventures.

Chen Hongdao believes that the reason why IPFS & Filecoin have attracted so much attention is that the logic behind it is the market prospects of "decentralized storage".

The market is experiencing a “herd effect”

Due to information asymmetry, the "herd effect" in the cryptocurrency circle is obvious, and many projects can often "receive a hundred responses".

According to media reports, since the successful financing of Filecoin in 2017, there have been hundreds of service providers in the market under the banner of IPFS & Filecoin mining. It can be said that fakes are everywhere and Ponzi schemes are rampant.

Chen Hongdao clearly remembers that when the news of Filecoin's successful financing spread like wildfire, there was a lot of discussion in the domestic market. At the same time, scams under the banner of IPFS & Filecoin also emerged.

In view of this, in August 2018, the Filecoin project team reminded investors in an announcement that before the official mining rules are released, please do not blindly purchase IPFS & Filecoin mining machines.

It seems that what Yang encountered was a carefully packaged mining machine scam. However, no matter what kind of Filecoin mining machine investors bought, they were all in a dilemma of having no coins to mine. And when the mining machine manufacturer "disappeared", all they were left with was a pile of useless scrap metal.

Since the end of last year, the "trial operation" of the Filecoin test network, which lasted for more than half a year, has always teased investors' fragile nerves from time to time. An industry insider who did not want to be named believed that due to the optimistic expectations of many industry insiders for Filecoin, investors flocked to it.

According to the Filecoin official blog, the Filecoin testnet was officially launched on December 12, 2019. The purpose of this testnet is to evaluate Filecoin on a meaningful scale before launching the mainnet and to resolve any problems that may arise.

As a result, the mining market began to stir. According to media reports, in the first half of this year, domestic companies such as Golden Computing Cloud, Mars Cloud Mining, Hufu, Fengxue, HomiEx, BKEX, HyperPay, and Cloud Management Computing Power entered the market, which has become an arms race for Filecoin mining machines.

On May 15, the second phase of Filecoin’s testnet was launched. It is worth noting that this testnet also has 1 million FIL rewards, which has led to an extremely hot mining market. Since then, reports such as “Filecoin’s mainnet is about to be launched, and the first mining bonus is about to start” have appeared frequently in the newspapers.

On June 10, Filecoin announced that it would release the Filecoin testnet rewards program, inviting miners from all over the world to compete for global and regional rewards totaling 4 million Filecoin tokens. The testnet rewards program is said to be a collaborative competition designed to stress test the network, encourage global participation, and help miners prepare to run the world's largest distributed storage network.

The hype about the Filecoin testnet has continued to increase market interest. The WeChat search index shows that since June 18, the search index for IPFS has surpassed that for BTC and remains high.

At the same time, Filecoin token FIL has also attracted attention from the secondary market, and dozens of exchanges such as Gate.io and BiKi have launched FIL futures. According to Feixiaohao data, as of 6:00 on August 17, FIL has risen by 504% this year.

The above-mentioned industry insiders believe that, in a sense, this is due to the "herd effect". Currently, IPFS & Filecoin have not yet achieved their expected goals, and it is difficult to measure the value of FIL.

The industry's "high fever" needs to be cooled down

"Although people are full of endless imagination about IPFS & Filecoin, they are not worthy of their reputation." An analyst who wishes to remain anonymous believes that in the frenzy of pursuit, the voices of a few people will always be drowned out, but this should alert people.

"It's finally going online." Veteran player Fan Yiwei has lost count of how many times he has posted such a message. He told Nuclear Finance APP that he made a lot of money doing FIL futures this year, and his patience is almost worn out while waiting for the Filecoin mainnet to go online.

In the original plan, the launch time of Filecoin mainnet was June 2018. Since then, the launch time of Filecoin mainnet has been delayed many times.

Filecoin once again updated its mainnet launch schedule on July 14. Its official blog shows that the Filecoin mainnet launch window has been updated to "August 31 to September 21."

"Filecoin is a bit like 'blossoming abroad and popular in China'. It is crazily sought after in China, but has been lukewarm abroad." Chen Hongdao spoke the truth.

According to 1475ipfs data, as of 7:00 on August 17, among the top 10 miners in the Filecoin miner TOP list, 5 are from China. According to Deepchain’s report on July 6, according to data from the filcount.io platform, there are currently about 806 Filecoin nodes worldwide. Among them, according to statistics from Filecoin.cn initiator Xie Dapao, there are as many as 203 nodes from China, accounting for about a quarter.

Fan Yiwei pessimistically believes that IPFS&Filecoin may become the next EOS. Although the goal is ambitious, the prospects are not optimistic.

According to the IPFS official website, there are nearly a hundred ecological applications based on the IPFS protocol, including text, audio, video, pictures, maps, data, etc., which can all be stored or called using the IPFS network.

However, its performance has been criticized. "IPFS's performance is too poor. It can't even store pictures, let alone short films." Jiang Zhuoer, CEO of Litecoin Mining Pool, said on his Weibo that if IPFS's performance is too poor to store short films, then it has no value.

In addition, behind the high rise of FIL, its rise is facing challenges. On July 5, Bao Erye kindly reminded on his Weibo that FIL was speculated too high and the risk was too great.

Recently, Zhong Gengfa, founder and CEO of ChainUP, talked about the investment value of IPFS and pointed out that the value should be viewed from two perspectives. From the perspective of investors, Filecoin is currently a hot project that can bring short-term value, but it requires cautious investment.

On August 16, IPFS100.com CEO Tong Yang said at an industry event that if the guests on stage cannot even tell the difference between IPFS and Filecoin, then the current industry is very dangerous. She also pointed out that investors need to rationally distinguish between the real and the fake. (Nuclear Finance)