What is Filecoin? How to Buy FIL (2021)

By Daniel Phillips and Matt Hussey

Would you rent out your house on Airbnb? How about just renting out some space on your computer?

Filecoin wants to let you do just that.

What is Filecoin?

Filecoin is a decentralized protocol which enables anyone to rent out spare storage space on their computer. Likewise, anyone can buy storage on the network.

By allowing anyone in the world to join the network, it can create a huge source of data storage. As more and more systems become computerized, it will be needed to satisfy the increase in demand.

It is being created by Protocol Labs, spearheaded by Juan Benet, a computer scientist and engineer.

What are the advantages of using Filecoin?

Filecoin promises a number of advantages over centralized data storage solutions. They include:

• 💰 Cost - By creating a larger free market for data storage, this should drive the price down.
• 📈 Scale - Bringing millions of computers around the world together will create a huge storage network.
• 🌍 Economy - Instead of building new storage computers, Filecoin makes use of existing resources.
• 🔒 Safety - While Dropbox and iCloud have been hacked, a decentralized network means there is no single point of attack, making it harder to compromise.

Are there any disadvantages to Filecoin?

Some potential issues with Filecoin are:

• 🚗 Speed - Instead of accessing one server, it needs to access multiple servers to piece together documents when required. This depends on servers being online and Internet speeds.
• 📵 Dapp - By processing transactions using the Filecoin cryptocurrency, it creates a barrier to entry, as someone has to buy another coin and exchange it to use the service.

Is Filecoin safe?

Saving your documents on someone else’s computer is risky. However, Filecoin splits up data, a bit like shredding it, so nobody can piece it together. However, it knows how the data fits together and rearranges it when it’s requested.

This means the host cannot simply hack the document on their computer and gain access to the user’s files. If they tried to hack it, they would find just a stream of meaningless data.

"There’s a ton of storage in the world that’s not getting used. Think of it like Airbnb. You had people with rooms weren’t being used; Airbnb built a marketplace for them."

Juan Benet

Does Filecoin have any competitors?

Filecoin isn't the only company tackling decentralized file storage; a number of others have started to get the ball rolling.

• Siacoin already has more than 360 storage providers with a capacity of 2.3 petabytes, or 2,340 terabytes. It’s cryptocurrency is currently tradable on crypto exchanges.
• Storj launched its Tardigrade decentralized cloud storage service in March 2020,  and as of October 2020, claimed 80 petabytes of storage capacity across its network. Its cryptocurrency STORJ is also live.

How to Mine Filecoin

Filecoin miners come in three different stripes. There are storage miners, who are responsible for storing data on the Filecoin network; retrieval miners, who are responsible for retrieving files; and repair miners, who are yet to be implemented. 

Storage miners earn Filecoin by storing client data, and providing proof of this storage over time. Retrieval miners, conversely, earn Filecoin by bidding and mining fees for a particular file, determined by market value.

How to buy FIL

Since Filecoin launched its mainnet in October 2020, the FIL token has been listed on a variety of popular exchange platforms. Right now, the most liquid of these are Coinbase, Huobi Global, and Binance; it's also available on exchanges such as OKEx, Upbit, and DigiFinex.

As a result, getting your hands on some FIL is now easier than ever, and should take just minutes in most cases.

With that in mind, we're going to take a look at how to use Binance to purchase FIL using another cryptocurrency, such as Bitcoin (BTC) or Tether (USDT).

Step 1: To begin, you're going to need to create an account on Binance and then log in.

Step 2: Once you're in, head over to the deposit page where you'll find a list of supported cryptocurrencies.

Here, you'll need to find your Bitcoin (BTC), Tether (USDT), Binance Coin (BNB), or Binance USD (BUSD) deposit address—depending on which asset you want to exchange for Filecoin (FIL).

Image: Binance

Top up your account using the selected asset and then wait for it to be credited.

Step 3: Next, it's time to load the trading interface. Click the 'Trade' button in the header and select the 'Classic' option from the drop-down menu.

Image: Binance

Step 4: With this loaded, search for the available FIL trading pairs using the search field on the right. From the list that appears below, select the market you wish to trade.

In our example, we'll select the FIL/USDT market.

Image: Binance

Step 5: This will pull up the respective trading interface.

Below the chart, you'll find the order options. Select the 'Market' tab and enter the amount you want to spend on FIL. Here, we've put $500.

You can also choose exactly how much FIL to purchase by clicking the 'Total' button and changing it to 'Amount'.

Once you're happy with the order, press the 'Buy FIL' button to execute it at the best available price. This FIL will then be accessible from your Binance wallet.

Image: Binance

That's it! If you followed all of the above steps correctly, you should have just bought FIL.

Recent developments

The Filecoin mainnet launched in October 2020 and since then, the amount of storage available on the platform has grown exponentially—recently passing the 2.5 billion gigabytes (2.5EiB) threshold—enough space to hold more than 10,000 copies of Wikipedia.

The FIL token has also seen trading volume gradually climb since launch, as a result of major exchange listings and increasing integration into the Ethereum DeFi landscape via a Wrapped Filecoin token.

In early February 2021, the Filecoin Frontier Accelerator—an initiative created by LongHash Ventures and backed by Filecoin—unveiled 11 startups that will take part in a 12-week accelerator program and receive $20,000 in grant funding. They include:

• 🎮 OPgames - a set of tools for multiplayer competitions in single-player video games.
• 🩺 Sinso Technology - a medical imaging data aggregator for telemedicine and AI diagnosis.
• 🏫 Huddle101 - an online remote classroom platform.
• 🗃️ Filbox - a platform that helps users monetize their data.
• 🤖 Vera AI - an AI-powered background check service.

Pricing for Filecoin’s storage services is set based on free competition, and changes in supply and demand, but is generally considered to be competitive with centralized cloud storage offerings.

The future of Filecoin

Cloud storage providers like Amazon and Google rake in a lot of money. This demonstrates that there is big demand in the market.

If customers decide to trust decentralized services they could find themselves saving a lot of money. This money would also go straight back into the economy as it would go to individuals and small businesses, which could have a significant positive impact on people’s lives.

For more on the current state of Filecoin and future developments, check out our exclusive talk with the Filecoin team.

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