Filecoin is a decentralized data storage network built by Protocol Labs that allows users to sell their excess storage on an open platform. It acts as the incentive and security layer for IPFS (InterPlanetary File System), a peer-to-peer network for storing and sharing data files.
Filecoin utilizes idle hard drive space and bandwidth to provide data storage and retrieval services in an open market, allowing anyone to participate as a storage provider and monetize spare hard drive capacity. Users pay storage providers in Filecoin's native token, $FIL, to store and distribute data on the network.
Filecoin is being developed by Protocol Labs, a development firm founded in 2014 by Juan Benet. Benet and crew constructed Filecoin and IPFS in tandem, raising a few Seed equity rounds to fund the process. In 2017, the team hosted a token sale to secure funds for Filecoin's development, which raised around $205 million in one of the largest token offerings at the time.
Protocol Labs seeks to build a fundamental layer for data infrastructure that can be used by both blockchain and traditional providers, like Amazon Web Services (AWS) and Microsoft Azure. The project plans to achieve this goal by creating a marketplace in which any user who has storage capacity can connect to the network, creating a supply of unused storage both in consumer hardware as well as data centers of existing businesses. The Filecoin team believes this will reduce the price of storage in a way similar to how sharing economy companies like Airbnb reduced the price of short-term rentals in marketplaces traditionally dominated by large players with large capital requirements.
The Filecoin network comes with built-in Ethereum integration allowing developers to access data on Ethereum’s blockchain and interact with its smart contracts. It also has a built-in self-healing process where faulty storage nodes are detected and their stored files are redistributed to reliable nodes.
Filecoin uses two proof systems to verify secure data storage:
- Proof-of-Replication (PoRep): To verify that storage nodes have stored data on their hard drives.
- Proof-of-Spacetime (PoSt): To prove that the storage nodes are able to authenticate the sequential PoRep over a period of time.
Current known investors of Filecoin include Ausum Ventures, Blockchain Capital, BlueYard Capital, Boost VC, Coefficient Ventures, Continue Capital, Digital Currency Group, Galaxy Digital, Genblock Capital, Kosmos Capital, Nirvana Capital, Notation Capital, Pantera Capital, Placeholder VC, Polychain Capital, Union Square Ventures, Winklevoss Capital Management, LLC, Y Combinator, a16z Crypto, and zk Capital.