How it works

Filecoin aims to provide a faster, cheaper, and more reliable distributed infrastructure for storing and retrieving data. It functions as a marketplace where developers can rent storage space — similar to a traditional cloud storage. But instead of trusting one provider with your files, they’re split up and served by a globally distributed network of computers.

The Filecoin network uses two types of miners — storage miners, who store the data, and retrieval miners, who supply the bandwidth used to retrieve the files. The communication between clients and the network happens via two types of “deals”: storage and retrieval deals. 

In a storage deal, the client chooses a miner to store their data and locks up the funds necessary to pay for storage. Once the agreement is accepted, the file is transferred and stored by the miner. The miner provides continuous proof of storage to the chain in order to receive rewards from the funds locked up by a client. If they fail to provide a proof (or if proof is delayed) the miner gets penalized.

In a retrieval deal, the client makes a payment to a retrieval miner to extract the data from the network. (Retrieval miners can also be storage miners, but they don’t have to be.) These deals are executed “off-chain” — using micropayment channels to reward miners for data retrieval.

Keep in mind

Anyone with a compatible computer can start mining FIL by becoming a storage provider, making their hard-drive space available for use by the network in return for rewards. Mining configurations can range from a single desktop computer to a large-scale server farm.

Released: October 2020