All you need to know about Filecoin

DuangDuangDuang ~~ Your little cutie suddenly appeared! In the last issue of popular science, we talked about the IPFS project. In fact, Filecoin is closely related to IPFS. The two are complementary projects. In this issue, we will talk about what Filecoin is.

The relationship between them is: IPFS is mainly responsible for content value search and content transmission in P2P networks, while Filecoin is the incentive layer for permanent content storage. Filecoin was born to promote the development of IPFS through an economic incentive mechanism, and the Filecoin network also needs IPFS to provide strong ecological support for the development of its market.

The more the IPFS network is used, the greater the demand for Filecoin; the more Filecoin miners there are, the greater the support for the IPFS network. Filecoin was born to support the development of IPFS, and IPFS also needs Filecoin to enrich its ecology. Therefore, IPFS and Filecoin have formed a symbiotic relationship.

1. What is Filecoin?
Filecoin is a token on IPFS, and Filecoin is a way to reward miners by contributing idle hard drives. Filecoin uses a brand new algorithm (Proof-of-Storage). Simply put, the larger the hard drive capacity you have, the more Filecoin rewards you will get. The IPFS data structure is very simple, but it can be very powerful. It is an immutable data storage, very much like a blockchain. Use Filecoin to store and retrieve data. Filecoin is a powerful and active distributed cloud storage network and the only incentive layer of IPFS.

Filecoin is also a decentralized storage network (DSN). Based on the IPFS protocol, Filecoin builds a decentralized storage trading market for cloud storage, including two markets: "storage" and "retrieval". The Filecoin project implements its protocol.

2. How to obtain and spend Filecoin
Filecoin is a decentralized storage network that turns cloud storage into an algorithmic market. This market runs on a blockchain with a native protocol token (also called "Filecoin").

Miners earn tokens (also called "Filecoin") by providing data storage or retrieval. Conversely, clients pay miners tokens to store or distribute data and retrieve it. This market runs on a blockchain with a native protocol token (FIL), and miners can earn FIL by providing storage for clients; conversely, clients can hire miners to store or distribute data by spending FIL.

Like Bitcoin, Filecoin miners compete to mine blocks for huge rewards, but Filecoin's mining efficiency is proportional to storage activity, directly providing useful services to customers.

This creates a strong incentive for miners to aggregate as much storage space as possible and rent it out to clients. The Filecoin protocol weaves these aggregated resources into a self-healing storage network that anyone in the world can rely on.

3. The Filecoin protocol consists of four new components
1. Decentralized Storage Network (DSN): An abstract concept of a network of independent service providers for storage and retrieval services. The Filecoin protocol is built as an incentivized, auditable, and verifiable DSN.

2. New Proof-of-Spacetime: We propose two new Proof-of-Spacetime schemes: (1) Proof-of-Replication allows a storage provider to prove that data has been copied to his own unique physical storage device. Enforcing a unique physical copy enables the verifier to check whether the prover has not copied multiple copies of the data to the same storage space.
(2) “Proof-of-Spacetime” allows storage providers to prove that certain data was stored for a specified period of time.

3. Verifiable Markets: Model storage requests and retrieval demands as orders in two decentralized verifiable markets operated by the Filecoin network. Verified markets ensure that payments are executed when a service is provided correctly. We introduce storage markets and retrieval markets where clients and miners can submit storage and retrieval orders, respectively.

4. Effective Proof-of-Work: How to build effective Proof-of-Work based on "Proof-of-Spacetime" to apply to consensus protocols. Miners do not need to spend unnecessary computations to mine, but instead must store data in the network.

3. What is the Filecoin architecture?
We can simplify Filecoin into two layers. One is the blockchain, which mainly records the status of the entire network (a decentralized state machine), including all wallet accounts and balances, and market order matching records. The other is the storage solution, which mainly includes copy strategies (erasure coding, multiple copies), end-to-end encryption, storage time and renewal strategies, storage market matching, etc.
It mainly includes 4 roles:
1. Storage miners: They use their own disks to provide storage services, similar to the object storage of cloud vendors. They earn Filecoin by storing data for customers. The probability of obtaining block rewards and transaction fees is proportional to the amount of storage the miners have for the Filecoin network.
2. Retrieval miners: They can help users quickly retrieve content. The bandwidth and transaction response time of retrieval miners will determine their ability to close retrieval transactions on the network.
3. Storage clients: can upload content to Filecoin, similar to object storage upload clients.
4. Retrieval clients: can retrieve content from Filecin, similar to object storage download clients. Providing a way to retrieve can store popular data (non-storage miners) to provide better services.
One thing that needs to be explained is that any node can choose to play one or more of the four roles mentioned above at the same time.

4. The significance and advantages of Filecoin In the future world, improving efficiency will still be the mainstream. Filecoin, which is based on IPFS technology, can greatly improve the storage and sharing of network data. This is the significance and value of Filecoin.
Filecoin has five main advantages:
1. Optimize global storage: The IPFS network provides redundancy and backup, greatly saving storage space.
2. Optimize the global network: By unblocking the network, 60% of bandwidth can be saved, which means 60% more data storage. Filecoin is combined with the peer-to-peer distributed network protocol IPFS to form a more efficient and secure network that does not need to be controlled by enterprises.
3. Optimal allocation of resources: IPFS fundamentally improves social efficiency and is a true sharing economy.
4. Highly competitive storage prices: The Filecoin network will allow anyone to become a storage provider and achieve economies of scale in a way that competes for business.
5. Provable security and authenticity: Content addressing and cryptographic storage proofs ensure that data is stored securely and correctly over a long period of time.

5. Filecoin Ecosystem The number of Filecoin ecosystem practitioners has doubled compared to 2019, including cross-industry entrants, veteran miners, and centralized storage. However, these practitioners are inseparable from four areas:
1. Miners: Miners in this ecosystem are divided into storage miners and retrieval miners, who provide storage services in the storage market and retrieval services in the retrieval market respectively. Of course, they can also take both into account;
2. Users: They are concerned about the cost of the required services. This cost will be higher than centralized storage in the early stage, but as the network grows, the cost of providing storage or retrieval services will be much lower than the current cloud services.
3. Coin holders: Paying attention to the fluctuation of coin prices is a major boost to price increases;
4. Developers: Developers pay more attention to tools, software development kits, software libraries, developer incentive programs, specification documents, and DEMOs.

They are compatible with each other, promote each other, and their multiple identities make the relationship more complex. More and more community of interests make this ecosystem more robust.

In the Filecoin network storage market, miners have the ability to sign contracts with clients to store their data for an agreed period of time in exchange for FIL. These nodes will periodically gain the ability to expand the Filecoin blockchain with blocks they create, that is, to produce blocks; when a new block is created, storage miners will receive new FIL rewards and can receive storage service fees, which are paid by the client.

Miners can also participate in retrieval contracts to provide clients with designated files in exchange for FIL. This part will promote the participation of nodes with high throughput, high bandwidth connections and reasonable locations in the network, thereby promoting the widespread and rapid distribution of files, especially those with high requirements for hot data. This part of the value is the landing value that storage projects provide to the Internet. At the same time, according to market development, when storage reaches a certain amount in the later stage, retrieval miners will play the most important role.

As participants, in addition to being simple coin holders and customers, we can also become mining pool operators and technology enthusiasts. Looking upstream, we can become software and hardware suppliers and application layer service providers. In the entire data circulation chain, it is easy to find a service demand, but what is not easy is the realization of the service.

6. Future use cases for Filecoin
1. Cloud Storage: Filecoin will build a powerful distributed dynamic cloud storage service platform.
2. Distributed: Filecoin is distributed and trustless, which helps avoid relying on trusted parties or being tied to the vendor who stores your data.
3. Algorithmic storage market: Filecoin reduces storage prices by encouraging competition among all storage space providers, including potential online storage brought by new entrants.
4. Smart contract storage: automatic and secure storage for user hosting, auctions, insurance, games, financial institutions, etc.
5. Algorithmic CDN: Filecoin optimizes content delivery through its incentives, automatic scaling, and global CDN.
6. Data trading: Users can sell data on the Internet to promote data trading and market development.
7. Human Data: Filecoin will store vital public data such as encyclopedias, open scientific papers, creative commons datasets, historical archives, and literary works.
8. Standard blockchain use cases: storing distributed ledgers and applications, supply chains, etc.
9. Payment: Filecoin tokens can be used for payment of products or services and transfers between users.
10. Timestamp: By storing large amounts of data for a long period of time, Filecoin can provide final timestamp services.
11. Value storage: Filecoin is a distributed value storage tool supported by a real application - cloud storage service.

The above content is our popular science about Filecoin in this issue~ What do you want to see next time~~ Welcome to leave a message below~