Filecoin (FIL) is a decentralized protocol that works as a cloud-based storage system operated by its users, rather than a central owner. It was designed by Protocol Labs and its mainnet launched in October of 2020.

Essentially, Filecoin allows users to rent out spare computer storage space to users, or users to buy storage on the network. Anyone in the world can join the network, potentially creating a huge source of data storage.

What are FIL key features and how does it work?

Filecoin works by splitting up data and storing it on multiple computers. Users willing to store data will be offered several storage options by various other users known as miners, who compete on price and speed. The client then selects their preferred miner and sends their data to be stored.

Filecoin improves upon centralized storage solutions in several ways. Firstly, the protocol makes use of existing resources and has the potential to bring millions of computers together from around the world. This simultaneously reduces the need for new storage computers to be made whilst creating a scalable storage network.

Secondly, as the protocol is creating a larger market for data storage, prices in the sector should theoretically decrease making cloud storage cheaper than at present.

Thirdly, due to the decentralized manner of the network and data being stored on multiple computers, there is a very small chance of data being compromised. A host cannot simply hack the document on their computer and access a user’s files. In comparison, centralized cloud storage solutions, such as DropBox and iCloud have been subject to hacks.

How can Filecoin be mined?

Miners can earn block rewards and receive the fees for messages included in blocks that they mine.

There are different ways Filecoin can be mined. As such, different types of miners exist on the Filecoin network. These are storage miners, retrieval miners, and repair miners.

Storage miners lie at the core of the network by storing data, as well as providing proof of storage. The chance of earning block rewards and transaction fees correlates to the storage amount contributed to the network, rather than hashing power.

As the name suggests, retrieval miners are responsible for retrieving files. Filecoin is earned by bidding and mining the fees for a specific file. Bandwidth and initial response time by retrieval miners are factors that determine its chances of securing retrieval deals and earning block rewards. The amount of deals a retrieval miner can make is linked to the maximum bandwidth.

Repair miners are yet to be implemented on the network.

Also, miners must submit storage proofs regularly to the chain. This allows them to earn storage fees from clients that have made deals with them.

Where can you buy FIL?

The FIL token is listed on a variety of popular exchange platforms.

At present, the most liquid of these include Coinbase, Huobi Global, and Binance; it's also available on exchanges such as OKEx, Bitforex, and DigiFinex.