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Understanding Filecoin Cryptocurrency

Mitch dives into the world of cryptocurrency! This video gives an overview of the history of Filecoin, what components make up the network, and how you can leverage a Storinator to host your own storage network for mining.

Hey guys, Mitch, back with another weekly tech tip. I know it's been a few weeks since you saw my face. I've been off doing some other projects, but I'm happy to be back and talking about cryptocurrency (or one cryptocurrency in particular). Filecoin is the name. And we've been getting a whole lot of interest in it lately. So, I'm going to go through what it is, how you might be able to use a Storinator to take part in the network and then also some of the history on it as well.

All right, so today I'm going to start with a small run through on the history of Filecoin, then we're going to talk about how actually the Filecoin network works and how you can leverage your own Storinator to take part in the Filecoin network as a miner.

So just to give a quick background, back in 2017, when the big cryptocurrency craze was going on, a big part of that was due to the ICO boom. What ICOs are “initial coin offering”. So back then what happened was, let's say a company or a group of people had a novel idea or product that they thought was really important. What they would do is crowdfund with an ICO. They would create a cryptocurrency and sell that to people. Those people would buy in with either Ethereum or Bitcoin or even possibly cash in some scenarios. And once they sell that cryptocurrency to that, those people that's tied to that company. Now, from there, the idea was that as the company grew and got better and bigger and the product became a feasible product, the price of that cryptocurrency would increase.

The problem with all this was that it was very heavily unregulated and opportunists with absolutely no real product or plan were able to hold their own ICO. And the growing FOMO or fear of missing out, caused many of these projects, with not much more than an idea, have millions of dollars thrown at them.

So Filecoin was actually one of these ICOs. Now, not every project was vaporware. And in my opinion, and obviously many of the venture capitalists in California, Filecoin wasn't vaporware either. So actually, in turn, what ended up happening was Filecoin with the largest ever ICO on record. I think they raised something like two hundred and fifty-seven million dollars. So I talked a little bit about ICOs and where the company came from.

Now let's talk about exactly what Filecoin as a company is trying to solve. So one of, if not the most core tenet of cryptocurrency is the concept of decentralization. So what Filecoin is trying to capitalize on is the exponential need for data storage. So right now, if you want to use cloud storage, you'll have to go to one of the big companies and data storage such as Amazon, Google, etc.. So what Filecoin claims to do is truly decentralized the world of data storage, where any one person or small business wants to become a cloud storage provider, be able to do it with very little start-up costs and all through a decentralized peer-to-peer network.

So for clients who want to have their data stored, they will be able to choose the perfect contract for them based on: the location of the miner, the miners track record, the speed, the redundancy, and possibly most importantly, the cost. So one of the big novel features of the Filecoin network is the ability for clients and miners to essentially set the price of what data storage should cost by having supply and demand dictate storage prices.

So now that you understand the concept of the Filecoin network, let's talk at a high level of the components or what makes up the Filecoin network. So first of the clients who are looking to have their data stored on the network and are going to pay to do so. They will log on to the network and either bid on contracts that miners have already placed and have up and running, or they can place in order for their specific stores that they're looking to store and any other features that they want to have on their project. Once the client finds a contract that they're happy with, they will pay the miner in Filecoin to store their data. So all that's left for the client then is to take their data and use the Filecoin software to encrypt their data and then send it off to the miner.

So next up are the storage miners themselves. The storage miners will first advertise exactly how much storage they have available for the clients and they will advertise that on the network. Now, miners will actually get rewarded, not as much, mind you, but they will be rewarded just for having storage available on the network, even if it's not being used. This is a way to incentivize miners to have this storage up and available 24/7, 100% of the time.

However, once a miner accepts a contract and begins storing that data, the miner then must continuously provide proofs within strict time frames to the network that the data is up and available to be accessed. There's absolutely no way to fake this, and it requires probing the sealed data from their contracts to ensure it's always available.

If a miner ever does miss one of these proofs, first they will be penalized Filecoin for not having the storage available at all times. But possibly even more damaging than that, the clients will actually be notified that this storage miner has missed the proof. And so the reliability rating will decrease. If a storage miner misses some of these proofs more and more over time, they will be seen as unreliable and no one will want to purchase storage for them.

So the final big component to this are the retrieval miners. The retrieval miners are actually what's going to pull the data back down for the client in the event that they want to download their data. These retrieval miners are actually paid micropayment for this, the same way that if you know traditional cryptocurrency, you will have fees if you want to send cryptocurrency, very, very small amounts. A retrieval miner can actually also be a storage miner as well, but it's just another component to the network.

One final component that I want to talk about that isn't actually live yet, but it will be once the main net goes live and it really starts to take off is the self healing nodes. So these will be nodes on the network that will do check-summing and making sure that there's no bit-rot on the network. It will self heal and repair the data over time.

One final thing to note is Filecoin is actually still in the test net. They are planning to launch their main net very, very soon, however, probably in the coming weeks. So checkout for that if you're interested. All right.

So we've talked all about Filecoin, but what does that mean for us here at 45 Drives? And more importantly, what does that mean for you as a customer if you're interested in something like this? Well, our Storinator and really our company philosophy as a whole are a perfect fit for a project like this. We embrace and love open source. And from the operating system you will run, to the software needed to take part in the following network — It's all open source and purpose built to give a person or a small business the ability to become a data storage provider. So one of the biggest bonuses of all this is not having to pay any very steep licensing fees and not having to bow down to our cloud storage overlords such as Amazon or Google or any other ones out there that you can name.

As you may know, if you watch a lot of our content or if you're a customer of ours or maybe just doing a whole lot about us, we provide some of the lowest cost per terabyte in the market today. And if you want to take part in something like this, you may be able to do storage binder and retrieval minor all from the same server just by putting a high-end GPU into that node. So this is something you might want to learn more about or you're interested in configuring your own Storinator for your Filecoin project. Get in touch with us. We'd be happy to talk with you about it. So that's the end of this video. I hope you guys learn something. Hope you enjoyed it. See you on the next Tech Tip.

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