I have become more and more interested in IPFS and Filecoin and found this article on Coincenter that simplifies what the technology is trying to achieve. I have summarized a quick example below. Filecoin is having its ICO on July 27th but unfortunately it is only open to accredited investors. I think this is unfortunate and goes against many of the tenants of cryptocurrency. One of the greatest advantages of an ICO from an organizations perspective is that it gets thousands of people who are incentivized to grow that network and Filecoin will miss out on that initial pop. Also one of the reasons cryptocurrency is so appealing to people globally is that anyone can participate not just elite investors. This seems like business as usual and cuts everyday people out.
But even still outside of Ethereum, Filecoin probably has the most innovation in the industry and is garnering large scale interest. I went to a technical meetup for IPFS and the auditorium was packed even before Filecoin has been released. These are developers and technical people who are genuinely interested in the technology and not just speculators looking for a get rich quick scenario. It is also backed by some high profile investors such as Fred Wilson and USV.
For a simplified scenario of how IPFS with Filecoin would work think of a bunch of students in a classroom. As part of an assignment the teacher wants the students to read an article posted on the internet. With Https, for each individual student to access the article on their laptop they have to enter in the typical https:// url. The server then retrieves the article and gives it to the student. There are a couple negatives to this scenario. First what if the article has moved? The url would be broken and not reachable. “A recent Harvard-led study found that 49% of all hyperlinks cited in US Supreme Court opinions are no longer working.” Second the amount of resources being wasted. Each individual student is requesting the information from a server which could be located thousands of miles away. This leads to high cost inefficiencies and also centralizes computing power.
Now consider IPFS. In this scenario one student could host the file on their computer. Instead of each student having to access a server far away they could get the article locally from the student who is sitting right next to them. This p2p system is much more efficient from a cost and resource perspective. It also solves the problem of data centralization. If for some reason the server is down, you can get the article from your neighbor or from anyone else in the network hosting the file.
Now you may be wondering how Filecoin fits into this scenario. In order to incentivize people to host files for others they are compensated in Filecoin. This can then be exchanged for Bitcoin, Ethereum, fiat, or held with the expectation it will appreciate in value as so many cryptocurrencies have recently. Many people have called it the Airbnb of data storage. IPFS is the protocol and Filecoin is the token that provides the economic incentive to participate.
Hopefully this simplified scenario showed one of the many potential uses cases of IPFS/Filecoin. Besides this simple scenario other more ambitious projects like Uport, District0x, and may others are leveraging IPFS. It is unfortunate we will not able to participate in the crowd sale but I still believe this is a great technology worth paying attention to. There will ultimately be many opportunities to be part of Filecoin as well as many other great projects yet to be created in the crypto space. Below I put a links to the Filecoin website where you can read the updated white paper.
If you have any questions/comments feel free to leave a message!
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