This guide covers all ingredients according to Filecoin cryptocurrency. Also an answer to the question ‘Should I Invest in Filecoin’ and the best places to invest.
Before we invest in Filecoin, we should understand what blockchain technology is, how it works and the possibilities it provides to developers, individuals, and companies. Blockchain technology has been expanding all over the world in recent years. After the creation of Bitcoin (BTC), companies and projects started implementing distributed ledger technology to offer better products and services.
Blockchain Technology and Decentralization
The main benefit of blockchain technology is related to decentralization. The blockchain works as a system that allows parties to record information that becomes immutable and impossible to hack. While traditional ledgers can be changed or could be subject to modifications, blockchain networks make sure that the system protects the information stored.
Another advantage of blockchain technology is related to its decentralization. Usually, blockchain networks are distributed among a network of trusted users. They store the information in order to make it available to others. If one of them fails due to an attack or a hack, there are many others that would be ready to share the information needed. That’s why blockchain networks do not have a single point of failure.
Data storage is becoming an increasingly important issue nowadays. There are different ways to store data, in external servers such as Amazon Web Services or Cloudflare, or in our computers, pen drives and other devices.
However, the expansion of blockchain technology has allowed for new and more efficient ways to store data.
For example, the InterPlanetary file system (IPFS) is a protocol based on peer-to-peer networks to store and share data in a distributed way. Users can receive and also host content at the same time. This is a relatively new system that is allowing individuals to share and host data. One of the similar cases that have been released to the market includes BitTorrent.
Disclaimer: Before taking off, I want to mention that this article is written for educational purposes only and should not be considered investment advice.
What is Filecoin (FIL)?
Filecoin is a blockchain network that aims at becoming humanity’s most important information storage system in the world. The project was started back in 2017 as an Initial Coin Offering (ICO). Since then it worked as one of the most revolutionizing projects in the cryptocurrency market.
Filecoin was also initiated as a second and incentive layer for the previously mentioned Interplanetary File System. Network participants can use the FIL cryptocurrency in order to process transactions.
People can become their own custodians of the valuable data they have. When they use other third-party services, their data can be compromised and eventually get lost. Moreover, hackers could get access to users’ information, files and data.
This is similar to how the financial world works. Banks and financial institutions work as custodians of our funds. However, they could eventually become insolvent and never return the money to savers. This happened many times in the past and in different countries.
Data works in a similar way. In a moment in which data is becoming more important, the way in which it gets stored is also going to play a central role. Being the custodians of our funds and also our files and data is something that became possible thanks to the expansion of blockchain technology.
Investing in Filecoin should give users with the peace of mind they are placing their funds in a project that is working to make data available, secure and decentralized.
What is the current price of Filecoin(FIL)?
Below is the table that shares all actual data of the Filecoin cryptocurrency. First and foremost, it will give you the actual price(updated once every 24 hours), also it will give you some extra specifics about the network including total market cap and circulation supply of coins.
Actual FIL token price(24 hours)
|Total market cap||$8,264,316,176|
|Circulating supply of coins||70,758,773 FIL|
|Maximum supply of coins||0 FIL|
*CMC ranking: Ranking of the Filecoin project on Coinmarketcap website
What Problem Does Filecoin Solve?
Filecoin solves different problems. As we mentioned before, the world is currently relying on centralized data storage services and solutions. This is why decentralization becomes a key concept.
Filecoin is working so as to protect the integrity of the data’s location. This would make it easy for users while keeping it safe. Moreover, it will be also very difficult to censor. This becomes increasingly useful in a world where data is selectively shown by the media. Having secure and valuable sources place to store data without being censored is definitely a very important thing.
The network provides incentives in order for the data to be store for longer periods of times and in a reliable way. Users can easily pay to store files on storage miners. These storage miners work as computers that store files and make them available to the user when he will request them.
Thus, Filecoin facilitates open markets in order for users to enjoy a storage system that is not controlled by a single company. Anyone can participate and users can get access to a wide range of solutions to store files and information.
Furthermore, it is also possible for users to select miners that offer the best solutions to customers. Some of the things users can take into consideration include speed, redundancy, and cost, among other things.
If you are wondering: “should I invest in Filecoin”? then you should search the answer int the philosophy of this project. How is data centralization affecting you and your close environment? Is investing in Filecoin an option that would make yourself participant in the data decentralization process?
These are just some of the questions you should ask before you invest in Filecoin.
What is IPFS Mining?
Filecoin is currently working with a different consensus mechanism than most of the blockchain networks in the world. This could be one of the reasons why you could invest in Filecoin. Diversifying the networks were you place your funds could be a good thing to do.
Filecoin works with a Proof-of-Replication and Post Proof-of-Spacetime. The Proof-of-Replication (PoRep) allows servers to convince users that data is replicated on a unique physical and dedicated storage. This is useful to prevent Sybil and Generation Attacks.
In addition to it, with the Proof-of-Storage, users can check if the storage provider (miner) is storing the data at a specific time.
Furthermore, Filecoin and IPFS work as complementary protocols that store and share data through distributed systems. Filecoin nodes are also IPFS nodes that operate under the hood. Additionally, they can also connect to IPLD formatted data from other IPFS nodes through libp2p.
By using IPFS, users can store and transfer content data through peer-to-peer networks. They can share all the information desired through their own IPFS nodes, which is called pinning. By using incentives, it is possible to store data for other people. In this way, Filecoin creates the most important feature of its network, a distributed and decentralized storage marketplace for long-term storage.
Basically, that means that nodes will be able to rent their storage and capacity to other users. Individuals will pay them to keep their data and allow them to retrieve it at any moment.
How can I use the FIL Token Within This Blockchain Network?
There are different use cases for the FIL cryptocurrency. Firstly, it can be used as an incentive for miners. Additionally, it can also be used as collateral for miners and it can also be used to secure data.
With the FIL digital asset, miners are attracted to participate in the FIlecoin ecosystem. This would allow them to offer other users with the necessary storage space to save files and documents.
Moreover, the collateral for miners to participate in the Filecoin ecosystem is currently proportional to the storage space that miners share with users. The system is then divided into three different mechanisms that include the Initial Pledge Collateral, the Block Reward Collateral and the Storage Deal Collateral.
Through the Initial Pledge Collateral, is the fee that miners pay to participate in the economy. This collateral is slashed if miners act maliciously. The block reward collateral is another mechanism that would be used to slash the rewards for miners if there is a deal terminated before the natural expiration.
Furthermore, the storage deal collateral can be used by storage offerers in order to collateralize deals.
Is Filecoin Built on top of Ethereum (ETH)?
One of the questions that users ask when they want to invest in Filecoin is whether Filecoin is built on top of Ethereum. This is certainly a good question, considering not every single cryptocurrency runs on top of its own network.
There has been some ambiguity in Filecoin’s communication in the past. While they wanted to launch the network on top of Ethereum, they finally decided to use their own native blockchain. This is understandable. The team behind Filecoin has been working very hard in order to offer users with unique solutions and features that no other blockchain network is currently able to offer in the market.
Despite having its own native blockchain network, this does not mean that Ethereum developers would not find it easy to work with Filecoin. The official whitepaper explains that they offer Filecoin-in-Ethereum interface contracts and protocols. This makes it very easy to use by Ethereum developers and those developers that are used to work on the Ethereum network.
Nowadays, Ethereum’s blockchain network is one of the largest in the world. Having an easy-to-use interface that would be friendly with Ethereum’s solution can be a great way to attract developers and users that work on top of Ethereum.
How Do I Get Filecoin (FIL)?
There many different ways to get access to FIL. If you want to invest in Filecoin, the best thing you can do is buy it using exchange platforms. There are several exchanges that are offering users the possibility to buy, sell, and hold Filecoin.
Some of the exchanges that are currently allowing users to trade Filecoin include Binance, Ztheta Global, Huobi Global, Hotbit, Coinbase, and ZB.com. The exchange and platform you will use will highly depend on the region where you are located and the currency you want to use to invest in Filecoin.
Binance is perhaps one of the largest crypto exchanges in the market. This can be a great way to get access to FIL tokens and become a FIL investor. Furthermore, Binance has a wide range of solutions for users that make it easy for them to get access to a wide range of services in the crypto market.
Coinbase, one of the largest crypto exchanges on the globe and especially meant for US customers, is supporting the FIL cryptocurrency. This platform has expanded as one of the best for newcomers and also educates its users into the crypto industry. You can buy, sell and trade Filecoin using Coinbase. We are sure that you will have a pleasant experience using this platform as well.
Can I Stake Filecoin?
Filecoin has been built using a variation of the Proof-of-Space, as the team behind Filecoin explains. Although the system could be similar to Proof-of-Stale (PoS) it has some differences with it.
Nowadays, users can stake FIL using the Binance platform. This would allow you to earn rewards on the funds you hold using your FIL tokens. This can be a great way to generate extra income and also participate in the Filecoin ecosystem.
Staking is also a way to help the network remain secure and get rewarded for it. By using Binance trading platform, you will definitely be able to do so in just a few simple steps. Nevertheless, you should take into consideration that the interest rate (yield) tends to change over time.
Can Filecoin (FIL) be worth $1,000?
This is one of the questions that is attracting investors to invest in Filecoin. The cryptocurrency market is a very volatile space. We know it as we saw Bitcoin moving from $3,800 to $24,000 just in 2020.
In 2017, we have also seen how different digital assets released through Initial Exchange Offerings (ICOs) reached massively high prices and valuations. Filecoin seems to be a different virtual currency. The good thing about it is that it is far from the hype that surrounds other digital assets.
At the time of writing this post, FIL has a price of $25. FIL’s highest price was close to $70 and it allowed the virtual currency to attract some investors that didn’t know what FIL was all about. In recent weeks, we have seen how its market capitalization increased with its price being traded close to $30.
If FIL is massively adopted around the world, then the high demand for this asset could definitely push the price of this coin higher. Several virtual currencies experienced large price increases over time. FIL would have to surge by 4,900% in order for it to be traded at $1,000 per coin from current prices.
Nevertheless, this could also fail. There are risks involved in trading virtual currencies and investing in Filecoin. This is why you should never invest more than what you are able to lose.
Invest in Filecoin: Cryptocurrency wallets
As explained above, the Filecoin blockchain as a decentralized network is considered reliable and secure, however, it’s wise to take some additional measures to protect yourself. For instance, when you consider buying FIL on a cryptocurrency exchange don’t leave it there. Instead, withdraw the funds to your local wallet on a mobile app or desktop. How does this work?
The safest way to invest in Filecoin is by using a cryptocurrency software wallet. So why do is this important? First, let me explain what a crypto wallet exactly is. A software wallet can be used to store the private keys on your own device. Meaning you got full control over your cryptocurrencies and you are also responsible for securing this data.
The main benefit of keeping control over the data is that nobody else can interfere or blocking your funds from being used. Instead, you can use your Filecoin cryptocurrency at any moment at any place in the world which gives you power by being in full control.
Software wallets that support Filecoin (FIL)
Below is the list of some reliable software wallets you can install or download for free:
- Trust wallet – Software wallet that stores the private key on your phone and allows you to hold and stake 14 coins
- Atomic wallet – Software wallet that also stores the private key on your device and stores 300 coins and tokens
- imToken – A feature-rich digital wallet to securely manage Filecoin(FIL) and many other digital assets. It enables decentralized value exchange and DApp browsing in one place
How to Buy Filecoin (FIL) with USD
In general, the way buying cryptocurrency works is going to a cryptocurrency exchange sign up with your email account, and start investing. In my opinion, the most reliable cryptocurrency exchange is Binance mostly because of its high liquidity and easy global access. Also, it is very easy to sign up and for free. Moreover, if you use this Binance link to sign up, you will get an extra 10% discount on trading fees for life 😁
Step 1: Buy Bitcoin with a credit card
The quickest way to acquire Filecoin at Binance would be to purchase Bitcoin first. Therefore, you have to click on “Buy Crypto” and select “Credit/Debit card” in the menu.
After entering the amount of USD to buy and doing the actual purchase the Bitcoin will be sent to your online wallet immediately. Remember that buying Bitcoin with a credit card comes with a price: Visa charges you 4.9 – 5.9% for doing this purchase.
Step 2: Trade Bitcoin for Filecoin on Binance
Binance is very popular amongst cryptocurrency traders because they have a lot of different coins being traded on its platform. To buy FIL coin with Bitcoin can be done easily and the quickest way would be to perform a market buy order. Also, when doing this trade you only pay 0.1% on fees which is much cheaper than using a credit card for example.
Step 3: Withdraw Filecoin (FIL) from Binance
The last step is optional, however if you don’t intent to trade its very wise to withdraw FIL immediately from Binance. In particular, by doing this you make sure that the tokens are in full control and safe from bad actors.
Withdrawing cryptocurrency from Binance is very easy, where you go to your “Spot wallet” find your Filecoin wallet in the list and choose “withdraw”. Also, make sure that you insert the right public key address of your local wallet!
In this exclusive guide about Filecoin cryptocurrency, I tried to give you all aspects involved in this large-cap cryptocurrency. One of the most important uses cases; storing huge amounts of private data in a decentralized way will be tackled by this solution. As an investor, it’s hard to predict where prices will go in a year or a few years from now. However, this project has proved to add value to this young and rising blockchain industry.
The following articles might also be a good read for you:
Disclosure: This post could contain affiliate links. This means I may make a small commission if you make a purchase. This doesn’t cost you any more but it does help me to continue publishing cool and actual content about Bitcoin & Crypto – Thank you for your support!
Latest posts by Carlos Terenzi
- Stablecoin vs Bitcoin: What Difference do They Make? - December 19, 2020
- Exclusive: Ethereum Staking Explained - December 9, 2020
- Exclusive: Is Bitfinex Safe For Trading? - December 4, 2020