What is Filecoin mining on IPFS?

In the previous article " IPFS will replace HTTP " , Camel mentioned the incentive layer of IPFS:

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In order to provide better incentives, IPFS added a Filecoin token. In this network, those who provide content to other users will receive corresponding tokens.

With such benefits, more users can be encouraged to join the network.

Today, I will explain to you what is Filecoin mining of IPFS? Why is mining so profitable? How to participate in mining?

First of all, in the BT era, everyone has used Thunder or Qvod. In this network, many people only download data and do not want to upload data, so they cannot get any practical benefits.

Many people have experienced the situation where a file cannot be downloaded after 99% of downloading. In fact, the file has been downloaded completely, but the reason why it does not allow you to leave is that it needs to serve as a data source for other users.

The emergence of Filecoin is equivalent to establishing a bidding market in the IPFS protocol network. Every user who provides storage and retrieval (commonly known as miners) can benefit, and miners who participate in mining in the early stage will get multiple profits because of your vision.

The income from Filecoin mining is mainly block rewards, storage income and retrieval income. This is actually the same as the early mining of Bitcoin B.

Take BitB as an example. BitB is the first blockchain project to be successfully applied.

Its application scenario is as a medium of value exchange, that is, currency. To implement this application scenario, there must be an "immutable accounting mechanism", that is, a distributed ledger written in the block.

Since bookkeeping is very important, objective rewards should be given to those who successfully keep books. Therefore, many people will want to compete for the right to keep books.

These people will invest in equipment to increase the computing power of the entire network and strengthen the entire accounting network.

If market factors are not taken into account, according to the above logic, a cycle will be formed in which miners join, the accounting network is strengthened, the currency value rises, the mining returns increase, and more miners are encouraged to join, until the mining income and expenditure are basically balanced.

Therefore, mining has high incentives and high returns because it can guarantee the value of the project.

There are three ways to benefit from Filecoin mining:

1. Provide storage space to help customers who need to store content to keep content fragmented. You will get storage fees;

2. Provide retrieval services and bandwidth, and quickly provide the content required by customers to earn retrieval fees;

3. After I packaged the blocks, the network gave me a reward for each confirmed block.

In such a network, the basic application value is realized through two behaviors: storage and retrieval, and this process is also accompanied by the transfer of tokens.

In addition, there is the block packaging behavior, which can protect the financial value of the entire network and also record key information in the application value behavior.

The above are three ways to earn revenue in the Filecoin network. To win the right to package blocks, you need to store as much data as possible. The efficiency of this behavior is affected by multiple factors such as bandwidth, hard disk, network location, and bidding strategy.

We will briefly analyze the three mining modes based on the way of obtaining revenue through block packaging.

1. Buy a mining machine and place it at home: It is difficult to gain advantages in terms of hardware and environment, and the bidding strategy is also difficult to adjust due to human factors (it is difficult for most ordinary people to understand the bidding situation in real time and adjust the strategy accordingly ).

2. Purchase mining machine hosting: The hardware and environment can be prepared relatively well, but it is also difficult for users to adjust the bidding strategy in real time.

3. Purchase a mining pool cloud node: the hardware and environment can be done better, and you can also have a clustered, customized, automated, and real-time strategy adjustment mechanism.

Therefore, mining pool cloud nodes are the easiest way to obtain block packaging rights.

Does that mean that home mining has no benefits? Not really, because the above analysis mainly focuses on the mining method of block packaging. We will share the analysis of the two benefits of storage and retrieval in future sharing.

In addition, no matter what, cost is an important factor affecting the payback period. When purchasing a home mining machine, you can focus on this aspect.