What is Filecoin (FIL)?

Decentralized Storage

Imagine a small business facing escalating storage costs and frequent data breaches with traditional cloud providers. Centralized storage services, like those provided by big tech companies, are sometimes susceptible to downtime, data loss, or even censorship, as they rely on centralized servers to store and manage vast amounts of informational data. These limitations make businesses and individuals more vulnerable to disruptions and high costs.

This is where Filecoin (FIL) comes in. Filecoin offers a decentralized storage marketplace that allows users to securely store and access data in a way that’s private, affordable, and resistant to censorship. Let's learn more about Filecoin (FIL) below!

Filecoin is a peer-to-peer (P2P) network that offers a decentralized way to store and retrieve digital information. Rather than relying on a single company to manage data storage, Filecoin enables a global network of users to buy and sell unused storage space, creating an open marketplace for data storage. This decentralized model can provide more flexibility, affordability, and security compared to centralized storage options like Amazon AWS or Google Cloud.

Filecoin was developed by Protocol Labs, the same team that created the InterPlanetary File System (IPFS), a peer-to-peer protocol designed to store and share files across a distributed network. In 2017, Protocol Labs held one of the industry’s most successful initial coin offerings (ICOs), raising $257 million to build Filecoin and establish it as a leader in the decentralized storage space.

How Does Filecoin Work?

Blockchain and Data Security

Filecoin uses blockchain and two cryptographic proofs to secure stored data:

Proof of Replication (PoRep) ensures that each storage provider holds a unique copy of users’ data.
Proof of Spacetime (PoSt) verifies that data remains stored over time, ensuring availability and trustworthiness.

These proofs build trust in the network, letting users rely on Filecoin to securely store their data.

Storage and Retrieval Providers

Filecoin’s marketplace relies on two types of providers:

Storage Providers (SPs) offer disk space, earning FIL for secure data storage.
Retrieval Providers (RPs) handle quick data access, enhancing user experience and earning FIL for speedy retrieval.

These providers support Filecoin’s storage and access needs, creating a robust dual marketplace structure.

Filecoin Tokenomics

FIL Supply and Allocation

With a capped supply of 1,959,904,671 FIL, Filecoin controls inflation. FIL is primarily distributed as mining rewards to incentivize network growth, with vesting periods designed to encourage long-term commitment from participants.

Vesting and Burn Mechanisms

To stabilize the network, Filecoin uses vesting schedules and token burn mechanisms. Mining rewards vest gradually, and penalties for misbehavior involve burning tokens, which helps maintain FIL scarcity and supports network integrity.

Buy and Sell FIL in a Tax-Advantaged Crypto IRA

If you’re interested in buying and selling Filecoin (FIL), you can do so in a tax-advantaged crypto IRA at iTrustCapital. A crypto IRA offers tax advantages* when buying or selling FIL. In a crypto IRA, investments could grow tax-deferred or tax-free, depending on the account type, making it an appealing option for long-term potential and portfolio diversification.

Click here to learn why people open a crypto IRA at iTrustCapital

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*Some taxes may apply.

DISCLAIMER

This article is for information purposes only. It does not constitute investment advice in any way. It does not constitute an offer to sell or a solicitation of an offer to buy or sell any cryptocurrency or security or to participate in any investment strategy.

iTrustCapital is a digital asset IRA software platform. It is not an exchange, funding portal, custodian, trust company, licensed broker, dealer, broker-dealer, investment advisor, investment manager, or adviser in the United States or elsewhere. iTrustCapital is not associated with and has no direct relationship with FIL. iTrustCapital is not affiliated with and does not endorse any particular digital asset, precious metal or investment strategy.

Cryptocurrencies are a speculative investment with risk of loss. Precious metals are a speculative investment with risk of loss. Cryptocurrency is not legal tender backed by the United States government, nor is it subject to Federal Deposit Insurance Corporation (“FDIC”) insurance or protections. Clients do not receive a choice of custody partner. The self-directed purchase and sale of cryptocurrency through a cryptocurrency IRA have not been endorsed by the IRS or any regulatory agency. Historical performance is no guarantee of future results.

Some taxes and conditions may apply depending on the type of IRA account. Investors assume the risk of all purchase and sale decisions. iTrustCapital makes no guarantee or representation regarding investors’ ability to profit from any transaction or the tax implications of any transaction. iTrustCapital does not provide legal, investment or tax advice. Consult a qualified legal, investment, or tax professional.

iTrustCapital makes no representation or warranty as to the accuracy or completeness of this information and shall not have any liability for any representations (expressed or implied) or omissions from the information contained herein. iTrustCapital disclaims any and all liability to any party for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising directly or indirectly from any use of this information, which is provided as is, without warranties.