# CRYPTO 101

Filecoin (FIL): The Future of Decentralized Storage

Filecoin (FIL)


  • Filecoin's decentralized storage model offers enhanced security, cost-effectiveness, and scalability compared to traditional cloud services.
  • Filecoin's innovative features like the Filecoin Virtual Machine (FVM), Filecoin Plus (FIL+), and the Interplanetary Consensus (IPC) upgrade are set to drive positive economic impacts for FIL token holders.
  • Filecoin empowers users by reducing their dependence on centralized storage providers, providing a more transparent and reliable data storage solution.


Filecoin offers a decentralized storage solution that leverages blockchain and IPFS for enhanced security, cost-effectiveness, and scalability in data storage.






  • Filecoin: The Future of Decentralized Storage


Filecoin is a decentralized storage network that redefines how we think about cloud storage. Unlike traditional services such as Google Drive, Dropbox, and Amazon AWS, Filecoin leverages blockchain technology and the InterPlanetary File System (IPFS) to provide a more secure and transparent storage solution.


  • Advantages of Decentralization


In traditional cloud storage services, user data is stored on the service provider’s servers, giving these companies ownership of the data. In contrast, Filecoin uses IPFS and the transparent, permissionless nature of blockchain technology to enable anyone to rent or purchase storage space. This means that data can be split and stored by different Filecoin miners, reducing the risk of data loss or damage from relying on a single company.


For NFT projects, storing files on centralized cloud services means that the service providers have the right to modify or delete files. Filecoin‘s decentralized network prevents this. NFT projects can use Filecoin‘s storage system to securely and permanently store digital assets like images and audio on the blockchain, rather than on a single centralized platform, ensuring greater peace of mind for asset holders.


  • Three Major Advantages of Filecoin


  1. Security: Blockchain technology ensures the immutability of all transactions and agreements, providing robust security for data.
  2. Cost-Effectiveness: As more participants join the network, the cost of data storage decreases over time.
  3. Scalability: Anyone meeting simple hardware requirements can join the Filecoin network, allowing it to scale to a massive level.


  • Functions and Potential Value of FIL


Filecoin (FIL) is the native cryptocurrency of the Filecoin network and serves several key functions within the system:


  1. Storage Payment: Users pay for storing their data on the Filecoin network using FIL, similar to renting cloud space.
  2. Retrieval Payment: When users need to retrieve their data from the Filecoin network, they use FIL to pay for the service.
  3. Miner Rewards: Miners in the Filecoin network are responsible for verifying and creating new blocks and are rewarded with FIL (Gas Fee).
  4. Governance Participation: FIL holders can vote on the future development direction of the Filecoin network.


The total supply of FIL is 2 billion coins, with 359.8 million currently in circulation. During its Initial Coin Offering (ICO) in 2017, Filecoin raised $257 million. The ICO was conducted in two phases:


  1. Initial Token Offering (ITO) or Pre-sale: This phase was open only to qualified investors, selling a total of 200 million FIL at a price of $0.75 per coin.
  2. Public Auction: Open to all investors, the public auction was conducted in a Dutch auction format, starting at $1 per coin and decreasing over time.


Filecoin‘s decentralized storage model offers a new paradigm for data storage, enhancing security and transparency while providing a more reliable solution for future digital asset storage.


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IPFS (InterPlanetary File System) is a decentralized network protocol for persistent and distributed storage and access of data, such as files, web pages, and applications.


IPFS can be imagined as a “big hard drive” composed of computers around the world. When you upload a file to IPFS, the file is divided into multiple small pieces and distributed across various nodes (computers) on the network. When you need to access the file, IPFS will automatically retrieve these pieces from the nearest nodes and reassemble them into the complete file.


This decentralized design brings three major advantages:


  1. Persistence: Even if some nodes fail, you can still access your data, as it is stored in multiple places.
  2. Efficiency: When multiple users access the same file, they can retrieve it from the closest nodes, significantly improving transfer speeds.
  3. Security: Data is stored in a distributed manner, preventing data loss due to a single node failure.


Compared to traditional centralized storage, IPFS offers much lower storage costs. Studies show that the average cost of decentralized storage is only about 1/4 of centralized storage. For example, the leading enterprise cloud storage solution Amazon S3 charges around $23 per month for 1TB, while decentralized storage solutions like Filecoin only cost $0.19 per month, demonstrating the significant cost advantage. This makes IPFS a more viable choice for future data storage.


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In the Filecoin ecosystem, there will be continuous improvements in user programmability, data onboarding, data retrievability, scalability, and computation over the next three quarters. These upgrades should have a positive impact on FIL token holders by supporting client demands, unlocking various network use cases, and ultimately driving FIL token utilization. Let’s dive deeper into a few key improvements and their potential economic implications.


1. Filecoin Virtual Machine (FVM)


The introduction of the FVM unlocks endless possibilities, from programmable storage primitives to cross-chain interoperability bridges, and even data-centric decentralized autonomous organizations (DAOs) and Layer 2 solutions. This means smart contract and user programmability will be brought into the Filecoin network. Expected to launch in the first half of 2023, this network upgrade should positively impact FIL holders, as it may increase the use cases for FIL and affect the “burn” component of the token supply equation.


2. FVM and Token Supply Outflows


As operations and applications increase on the network, FIL tokens will be consumed (burned) to compensate for the computational and storage resources used. The introduction of smart contract functionality may increase the demand for block space, leading to higher FIL burn rates. Additionally, the FVM protocol upgrade could increase the amount of FIL locked in the network, as new DeFi protocols can leverage Filecoin‘s Proof-of-Work chain.


3. Filecoin Plus (FIL+) and Data Onboarding


Filecoin Plus is an incentive solution to encourage efficient use of the Filecoin network. Through a social trust layer, verified clients are granted a DataCap resource, allowing them to enter into more favorable storage deals with Storage Providers (SPs). To receive these additional rewards, SPs need to lock up more FIL tokens as collateral. This continues to drive the increase of FIL tokens locked in the network, while also promoting the utilization of valuable data on the Filecoin network.


4. Interplanetary Consensus (IPC) Upgrade


The upcoming IPC upgrade aims to improve Filecoin‘s scalability, throughput, and finality. Through horizontal scaling with sharding, IPC may further impact the FIL economics:

  • Increased scalability and FVM utilization, reducing user gas fees
  • More FIL locked as collateral to secure the sharded chains
  • Increased FIL consumption demands to support custom, sharded applications


Filecoin offers an excellent solution to the global problem of inefficient file storage and retrieval. It also empowers customers by reducing their dependence on contracts with large corporations.


With a live mainnet and a comprehensive set of tools, Filecoin has already made a significant impact. The success of the Filecoin ecosystem will depend not only on its adoption within the cryptocurrency community but also on its ability to attract new users to the world of Web 3.0.


In summary, Filecoin‘s future technical upgrades, particularly the FVM, FIL+, and IPC, are set to have a positive economic impact on the FIL token, increasing its utility and the amount locked. For long-term investors, FIL appears to be a cryptocurrency worth keeping an eye on.


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  • What is Filecoin (FIL) ?

Filecoin is a decentralized, blockchain-based cloud storage platform, and FIL is its native token.



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