The speed at which technology moves makes it tricky to notice the significant developments from the rest. Most technology developments offer quantitative advantages; faster loading times, more memory, better connectivity. However, the essential developments provide qualitative as well as quantitative improvements – enabling new kinds of activity and not just improving existing operations. Significant developments like this are called “foundational technologies.”
Blockchain technology is very much in this category. Before the decentralized and trustless features of the blockchain, many business use-cases were not possible. All of a sudden, a new range of business options has opened up, and companies like Filecoin are taking advantage. Filecoin is aiming to completely disrupt the data storage market by turning the resource structure of the industry on its head.
Consider that many have described the importance of data as “the new oil” regarding resources. The amount of data generated in the past two years is more than the rest of human history combined, and this is accelerating. On the back of this revolution, offerings like Dropbox and Google Drive have made millions.
But the fact is that massive amounts of storage space on hard-drives around the world is left unused. The transparency and flexibility of blockchain technology are what Filecoin are going to use to make renting storage space on someone else’s hosted infrastructure easy.
Unused storage space: a resource without a market
As of now, it is highly unfeasible to rent out storage space in a peer-to-peer system. While the cloud storage providers might seem to offer good deals, in reality, this price is inflated by the lack of a decentralized market.
With conventional technology, this is understandable. Firstly, the issue of shared storage is a minefield concerning security. Without a central actor in place to coordinate the exchange, fraud problems with payment or faulty products offered are impossible to remedy. The chance for opportunism is too high, and that is not to mention the risk of data security breaches.
Secondly, there is the issue of payment. Data storage usage can be tricky to calculate, and once this is achieved the payment for the service is similarly complex.
Finally, there is the simple problem of no market for exchange in the first place. There needs to be a critical mass for a platform to start up, and building such a platform is difficult with conventional technology.
All these issues made peer-to-peer file storage difficult at best until now, but Filecoin has developed a solution that leverages blockchain technology.
Putting your ROM on the market
Filecoin’s solution is pretty simple: you create an account and get paid to host files. This works similarly to seeding via the BitTorrent protocol, but the big difference is the apparent incentives; while users of a torrent site have no extrinsic motivation to keep seeding the file for other users, they will be paid to do so on the Filecoin platform. This is all enabled by Filecoin’s sophisticated design, which allocates and prioritizes storage based on what the customer wants to pay. This also solves the issue of critical mass, since rates on the platform will change flexibly in response to supply and demand.
Also, since blockchains give a high degree of secure transparency, Filecoin can guarantee a higher level of trust. Users are asked to encrypt files before storing them through the platform. And since it is all logged on a blockchain, any security issues can be traced quickly.
Geared up to compete with incumbents
Filecoin had already raised over $50 million from VC’s like Andreesen Horowitz before they launched their ICO, which raised just over $200 million. The fact that they had previous VC backing went down well with prospective investors.
The token allocation was also in line with most ICOs: 70% went to miners, with the rest being split up between Protocol labs, their investors, and the team.
Here are some stats on the ICO:
- Token Sale Dates: 10-August to 7-September 2017
- Total Supply Sale Cap: 200,000,000 Filecoin
- Team Protocol Labs is headed by founder and CEO Juan Benet along with a professional, experienced core team and many contributors.
- Location: San Francisco, California, USA
- Blockchain: Ethereum
- Project Code N/A, but there is a repository for IPFS (and also for libp2p, which is used by IPFS).
- Prototype N/A
- Token Rights Trading in the storage and retrieval of data on the network.