Filecoin is a decentralized storage network that allows users to buy and sell storage space on a peer-to-peer basis. It is built on top of the InterPlanetary File System (IPFS), an open-source protocol for sharing and storing files on a distributed network.
Filecoin is one of the large P2P networks dedicated to the data storage sector that is changing the way we store our data on the internet. Filecoin, which already competes with Google or Amazon, has managed to create its own economy with the FIL token, which at press time is trading at $Â 5.75. This token is used by users to pay for storage services. Providers of such storage use it to earn FIL for saving such files.
Behind Filecoin is the company Protocol Labs, which is the same company that develops IPFS. Its direction falls on Juan Benet, a young Mexican who has been at the head of IPFS since 2015. In fact, Filecoin is the result of his work at IPFS. Filecoin is now preparing for the rollout of the Filecoin Virtual Machine (FVM), an upgrade that could completely change the reach of this network in the world.
What is Filecoin
Filecoin uses a native cryptocurrency called FIL, which is used to pay for the storage and retrieval of data on the network. Users who contribute storage space to the network are rewarded with FIL tokens, while those who want to store data on the network must pay with FIL. The network is designed to be self-sustaining, with the price of FIL being determined by supply and demand for storage space.
The project unites the best-decentralized technology dedicated to blockchain technology and data storage. The developers of Filecoin have managed to create a blockchain with tokenomics dedicated to maintaining and sustaining the storage services provided by the network while uniting the full potential of decentralized storage that InterPlanetary File System (IPFS) technology can offer.
In this way, Filecoin manages to create a P2P network of file storage, with economic incentives built in, to ensure that these files are stored reliably over time.
In Filecoin, users pay to store their files in storage providers that are responsible for maintaining this data in a cloud made up of thousands of computers that are distributed throughout the world. The data is protected by these storage providers, who, in addition to encrypting and keeping the information private, must demonstrate its storage correctly during the time the service was contracted.
Cryptographic technologies
To achieve this goal, Filecoin uses a series of cryptographic technologies and special consensus tests, which are what allow it to offer guarantees that the information stored is safe. That is, without the providers being able to read said information or intuit its content.
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To keep this whole system running and with the right incentives, Filecoin has created the FIL token. This utility token allows users to pay for storage services and storage providers to earn FIL for storing such files.
The Filecoin blockchain records the transactions to send and receive FIL, along with proof from storage providers that they are storing your files correctly. The proper functioning of all these operations guarantees providers a constant flow of payments for the storage services provided.
A storage network with great advantages
Everything that we have explained above means that the network works based on two P2P technologies with a high degree of decentralization. This means that the stored data is not in the hands of a technology giant that monitors our information in order to obtain data that it can then sell or use for other purposes.
Filecoin respects our privacy and that is one of its great advantages. The second great advantage is that the stored data is available at any time and place. Just a couple of clicks away to access them.
A third virtue is that data storage prices and traffic are very low. This allows you to compete and outbid Google or Amazon. Finally, another great advantage of Filecoin is that this network can be very easily integrated into both traditional applications. For example, it can function as a kind of Google Drive for our personal computers or it can be integrated into decentralized applications to keep our data safe at all times.
FVM, the next big step for Filecoin
Filecoin is attached to the development of the Filecoin Virtual Machine. Until now, the FVM has had limited functionality within the Filecoin network. Initially, its job is to allow the creation of simple smart contracts that control everything related to storage, storage proof control, payments, and other basic operations of the Filecoin network.
However, the Filecoin developers have decided to take this one step further. The FVM will allow unlocking important new capabilities of the network without requiring network upgrades, kernel deployment work, or any coordination between teams, helping to increase the speed of network iteration. However, it also adds more complexity to the protocol and needs a lot of design work to get it right.
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Smart contracts
The main objective of the FVM is to offer wide support for programming models, as well as to facilitate the incorporation of smart contracts and programs written for other environments so that they can take advantage of the storage capabilities of the Filecoin network.
To achieve all this as efficiently as possible, Filecoin developers have decided to create FVM with support for WebAssembly (WASM). So that any conceivable application written and compiled in WASM can be created. This will offer Filecoin enormous flexibility for the development of DApps and Web3 experiences, which can be natively integrated into the Filecoin network.
Another important point in the development of FVM is the SDK support to help the development of these applications. While programs can be written in WASM, the team has developed a much simpler and more efficient SDK that takes advantage of the capabilities of Rust, a general-purpose programming language that has been gaining traction in recent years.
EVM support via Ethereum Classic’s SputnikVM
A curious point of the project is that they hope to support the bytecode (the code generated for a VM) of the Ethereum Virtual Machine. Thus, it would be possible to create applications in Solidity, compile them to bytecode and transfer it to Filecoin for execution on the FVM.
This would facilitate the development of SDKs and frameworks that support the use of Solidity to develop apps for the FVM. All this is possible thanks to a little-known project: SputnikVM. It is a VM initially designed by the Ethereum Classic team, to take the EVM to a new level and has maintained its development in parallel.
Reasons for this development in Filecoin
Filecoin has very big reasons to start and accelerate the development of all of the above:
- First, to increase the proliferation of innovative solutions in the user space.
- Giving users the ability to program new behaviors on top of existing primitive solutions in Filecoin will unlock potential for innovation and compounding/stacking capability in DeFi.
- Less dependence on the evolution of the actors in the system.
- Unlocking of Layer2 solutions. Currently, Filecoin Layer2 solutions can only exist as sidechains.
- Accelerate the evolution of the protocol. Protocol updates can be applied only once. The deployment of FIPs (Filecoin Improvements Proposals) will no longer be a bottleneck to finishing the implementation among clients. Less coordination is needed between implementers.
- Start with creating a foundation for data computation. There are good reasons to believe that WASM-based virtual machines are a useful step in enabling this.
- Allow automatic governance-driven protocol updates. As more elements of the Filecoin protocol migrate to the WASM space, such as block validation or the fork election rule, it becomes possible to deploy protocol changes as WASM modules to all clients, conditional on on-chain voting.
Monetization
With everything described, Filecoin can become not only a huge storage network but also, under certain conditions, a gigantic data mining, data analysis, deep learning, machine learning, and artificial intelligence network. Being able to be driven by the enormous number of actors in the network, by the data that can be captured, and by the monetization that can be achieved in that sense. This is a unique situation that would fuel the growth of Filecoin.
When will the FVM be ready? If we take into account that it has been in development since 2021, the testing phase is expected to start in Q1 2023. If the roadmap is followed, Filecoin could become an even more interesting option for developers of decentralized applications.
Not only will they have enormous potential to create them, hand in hand with WASM and Rust, but they will also be able to integrate data storage services natively in them. All this, without leaving the same blockchain network on which they run. Without a doubt, it is an interesting technology with infinite possibilities. We can only wait for its deployment to see its real scope.
