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Web3 Tokens: Filecoin and the New Paradigm

Web3 Tokens: Filecoin and the New Paradigm


13 Nov 2020

No one knows what web 3.0 will look like exactly, but, according to Tim O’Reilly, the founder of O’Reilly Media and the person who basically popularized the term “web 2.0” in 2004, we will recognize it as soon as the internet is “qualitatively different”.

Over the coming few weeks, AAX is about to offer more and more ways to get exposure to new crypto token types that seem to meet the requirements of the web 3.0. So, let’s explore one of such tokens, Filecoin (FIL), and see if the time of the qualitatively different internet has already come.

How Filecoin became a part of a new Web 3.0 paradigm

Platforms really matter,” says Tim O’Reilly, “When we saw the web in 1991, we said this was important, because it was a fundamental platform technology, even though there were only a few websites. When you look at how the iPhone took over other smartphones, it was because it became a platform. Platforms really matter. And I think that blockchain is the next series of the killer apps.

No-one knows what Web 3.0 will look like exactly, but blockchain seems very much like a new technology platform. If you go to the homepage of the Web3 Foundation, you will see a few statements the members of the council believe in: (1) on the internet, users own their data, not the corporations; (2) on the internet, global digital transactions are secure; (3) one the internet, online the exchange of information and value is decentralized.

But these are all basic pillars of any permissionless blockchain project existing out there, and that’s why the talk of Juan Benet, the founder and CEO of Protocol Labs and subsequently Filecoin, is listed on the homepage of the Web3 Foundation, too.

With Filecoin, a cryptocurrency powered storage network, pieces of users’ data are stored by other users, secured by multiple storage providers and decentralized by developers writing open-source code.

Now that you know the context, let’s take a look at Filecoin (FIL) in detail.

What is Filecoin

Filecoin, basically, is a cryptocurrency powered storage network. According to Juan Bennet, the founder of the project, it’s the platform where miners earn Filecoin by providing open hard-drive space while users spend Filecoin to store their files encrypted in the decentralized way.

As the author of the project’s whitepaper says, “essentially, Filecoin is the Airbnb of data storage”.

He adds that it’s a peer-to-peer-based exchange that accepts asks and bids to settle decentralized data storage transactions on blockchain.

There are three user types on top of the Filecoin platform: clients, retrieval miners and storage miners.

Clients are those people who want to store and retrieve data using the hard-drive space of service providers. As of writing, the total raw byte storage power from 360 miners in the world is 230 PiB.

Retrieval miners provide clients’ data at those clients’ requests.

Storage miners store clients’ data for the reward in FIL tokens, and those of them who installed the FIP-004 upgrade now receive 25% of the block reward. That being said, over 40,000 FIL are released to miners in a day.

So now that you know what’s under the hood of the FIL token, you’re probably thinking if it’s worth investing.

Let’s see.

In October, 2020, after years of development, Filecoin’s $200-million ICO was brought to fruition. The network pivoted to mainnet, and FIL tokens began their distribution. With that in mind, we can now think of Filecoin as one of those rare utility tokens that can also be traded on crypto exchanges..

The only question left is to buy or not to buy?

Well, it’s always up to you to develop your own view on the market, but so far the statistics looks like this: the circulating supply is 32,900,886 FIL with the all-time low of $1.83 in August 2019 and the all-time high of $131.86 in October 2020. The current price of the token is $30.

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