All About the Filecoin Token

Filecoin (FIL) is a cryptocurrency that powers the Filecoin network, a decentralized peer-to-peer file storage network that aims to let anyone store, retrieve, and host digital information.

Working to the Filecoin Token

Filecoin aims to provide a faster, cheaper, and more reliable distributed infrastructure for storing and retrieving data. It functions as a marketplace where developers can rent storage space — similar to traditional cloud storage. But instead of trusting one provider with your files, they’re split up and served by a globally distributed network of computers.

The Filecoin network uses two types of miners — storage miners, who store the data, and retrieval miners, who supply the bandwidth used to retrieve the files. The communication between clients and the network happens via two types of “deals”: storage and retrieval deals. 

In a storage deal, the client chooses a miner to store their data and locks up the funds necessary to pay for storage. Once the agreement is accepted, the file is transferred and stored by the miner. The miner provides continuous proof of storage to the chain in order to receive rewards from the funds locked up by a client. If they fail to provide proof (or if a proof is delayed) the miner gets penalized.

In a retrieval deal, the client makes a payment to a retrieval miner to extract the data from the network. (Retrieval miners can also be storage miners, but they don’t have to be.) These deals are executed “off-chain” — using micropayment channels to reward miners for data retrieval.

How Is the Filecoin Network Secured?

Filecoin is secured through proof-of-replication and proof-of-spacetime. In the Filecoin network, nodes that are also known as retrieval miners are in competition to serve clients with data as quickly as they can. They are then rewarded with FIL fees, which encourages a network of nodes that want to replicate and preserve files.

What’s coming up next?

So far, they have implemented the “fastest” replication algorithm, however there is quite some room for improvement both in software and in hardware.

Software-wise, there are several areas still to be improved: better parallelization, and exploiting space/time tradeoffs.

They have set up the replication game where you can run your algorithm on your hardware and show up on the leaderboard.

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