ELI5: What is Filecoin?

Okay, okay. Maybe not an ELI5, but I did my best to describe the protocol I have been working with these past 2 years in simple terms anyone can understand.

Filecoin is the world’s largest decentralized computer network. It is designed to deliver peer-to-peer storage and compute power as an alternative to centralized services like Amazon AWS and Google Cloud. Tapping the resources of 1,000s of global servers simultaneously has efficiency and cost benefits over centralized firms.

Coordination of this decentralized network is made possible through a unique L1 blockchain that both incentivizes sharing computer resources (through the distribution of the cryptocurrency FIL, ie. mining) and ensures that humanity’s data is reliably maintained.

Why is Filecoin necessary?

In 2015 a computer engineer named Juan Benet created a new filesystem called the InterPlanetary File System (IPFS). IPFS uses a radically different, and more efficient, method of storing and retrieving data than existing internet protocols like HTTP.??

With existing transfer protocols data is located with addresses. Maybe you want to visit CNN.com to see the latest news. The server with the IP address routed to CNN.com returns information to populate your browser. This system has served us well, but it has several issues.?

1. If data changes on the server you query, you will get a different file(s) in response. This server change could mean the NFT you spent good money to purchase changes to a picture of a rug. Or maybe someone inserted a virus into the program you were trying to download. Or perhaps AWS is down all together and you can’t access a site or file at all.
2. Servers become bottlenecks if many people access the same data from the same place. Even massive server farms can be taken offline by an influx in traffic. Remember when HBO suffered outages while everyone was trying to stream the Game of Thrones finale?
3. Server location affects speed. If you are a long way from your data it will take time to reach you. Wouldn’t it be faster to copy a file from your roommate’s computer than a server hundreds or even thousands of miles away??

IPFS was actually named the “InterPlanetary File System” because Juan Benet envisioned a future where we needed to communicate beyond our planet. – Always retrieving files from Earth when you lived on a Mars colony would be silly. – But the application of IPFS is also useful to us earthlings.

Instead of identifying data with server addresses, IPFS identifies data with content IDs (CIDs). Imagine going into a library and asking for the 3rd book on the back shelf. You hope your address is correct and you receive the Harry Potter book you want. But the library may have changed things and you could get the wrong book. With IPFS in this analogy you would broadcast that you want the CID corresponding to Harry Potter and the Cursed Child and you would retrieve the correct book from the nearest location. The book may even be retrieved from many locations at once, each serving a few pages simultaneously, so you get your Potter with maximum efficiency.

So IPFS works great for storing and transferring data, but how do we incentivize people to share their computer hard drives and compute power?

Growing a Decentralized Network

Filecoin is built on top of the IPFS protocol, so it is a peer-to-peer distributed storage network that leverages content addressing. However, Filecoin also includes an incentive layer to grow the network and ensure content is reliably stored.

Storage Providers (SPs) are the “miners” of the Filecoin Network. They provide access to servers and prove they are storing data in order to receive automated distributions of FIL. Bitcoin miners receive BTC for using computers to secure the Bitcoin network ledger, storage providers secure the Filecoin network while also providing usable resources in the form of storage and compute power. Developers, or regular token holders, can utilize these resources to store data, retrieve files, or even train AI models.?

With Filecoin, the price of storage is not controlled by any single company. Instead, Filecoin facilitates open markets for storing and retrieving files that anyone can participate in. These markets drastically reduce storage and compute costs when compared to centralized services. And a decentralized global structure ensures that neither an overreaching government nor a decision by Amazon or Google can unilaterally censor your data.

Why isn’t everyone using Filecoin?

Moving to a new filesystem takes time and coordination from a myriad of developers. For example, your Chrome browser was built to support HTTP because it was the dominant transfer protocol. It will take time to convince Google that IPFS and Filecoin are worth integrating.?

Fortunately, the size and growth of Filecoin has developers taking notice. Browsers like Brave have already launched IPFS support. And new apps that take advantage of the Filecoin network, like Huddle01 for video conferences or Lilypad for AI, are being launched daily. It may not be long before all the apps on your phone or PC are built on Filecoin and you don’t even know it. Because, nobody cares about the infrastructure that delivered their Harry Potter as long as that wizarding world remains magical.