Anyone following the cryptocurrency market is likely to have heard of Filecoin, a decentralized storage system that aims to “store humanity’s most important information.” It came onto the scene in 2017 after raising $206 million in its ICO – one of the largest ever – in addition to $52 million in venture funding. And after officially launching in October 2020, Filecoin’s network storage power surpassed 1 EiB (exibyte), or over 1.1 million TB (terabyte) in less than a month – that is, enough storage to store 290 million HD movies.
Since then, it has been generating all sorts of buzz. In fact, earlier this month, Filecoin increased in value by 24.53 percent, trading at $116.36 – the storage token’s highest since June 4 of this year, when it traded at $87.87.
Given the cryptocurrency market’s reputation for volatility, it’s not surprising that investors are questioning whether Filecoin is a worthy, long-term investment. However, Filecoin is unique for several reasons – and we don’t see it falling off the radar anytime soon.
To understand Filecoin’s significance, we first have to go back to the blockchain. Over the past several years, there have been a handful of blockchain projects attempting to solve the problem of storing data in a decentralized manner. Filecoin, however, presents a unique set of challenges when compared to other blockchains.
Blockchains are a distributed ledger (i.e. record of accounts) stored on every node of the network. Because each node stores an identical copy of the blockchain, the idea of storing files on the chain does not hold much weight. Accordingly, a mechanism needed to be created that allowed data to be stored off the chain, but verifiable on the chain.
Filecoin is the first storage blockchain to implement what is known as Proof-Of-Replication and Proof-Of-Spacetime. Essentially, a storage miner needs to be able to prove to the rest of the network that a) they are able to replicate the data they claim to be storing, and b) they are continuing to store that data for the length of the contract.
The developers of Filecoin – Protocol Labs – are also the same developers of InterPlanetary File System (IPFS), which is a peer-to-peer file sharing protocol that works hand in hand with Filecoin. This acts as the foundation upon which actual applications and systems will be developed. It’s worth noting that Filecoin was founded by Juan Benet, an American computer scientist who studied at Stanford University and founded Protocol Labs in May 2014.
To date, Filecoin currently has over 3,000 storage providers and over 10,000 developers building applications on its network, generating over $1.4 billion in protocol revenue. As The Motley Fool noted, “Right now, hundreds of Filecoin nodes are providing 12 exabytes (or 12 billion gigabytes) worth of data storage, which is roughly equivalent to the entire storage space of Alphabet's Google Cloud in 2017.”
Given the growing interest in consumer privacy when it comes to storing data, Filecoin is part of a greater movement toward decentralization, which is the foundation of Web 3.0. As Jonathan Victor, product manager and business developer at Protocol Labs, recently explained:
“During the past year, we’ve seen many folks bemoan the problems with centralized tech platforms. Much of this opaqueness is required based on the architecture of the web as it exists today where applications must host data on centralized servers. Peer-to-peer technologies can be incredibly exciting as they offer an alternative for how applications can be built, and in turn how the internet can evolve. Decentralized technologies allow developers to build applications decoupled from their data: empowering developers to build open applications where data can be stored on open networks.”
Unlike other cloud storage companies, such as Amazon Web Services (AWS) or Google, Filecoin ultimately enables people to be custodians of their own data, guaranteeing total privacy, and making it one of the most relevant real-world applications in the cryptocurrency industry. Needless to say, we think Filecoin is here to stay.