Altcoins & TokensBeginner

What is Filecoin and what does FIL do?

Filecoin is a decentralized storage network where FIL pays providers to store and retrieve data. It launched its mainnet in 2020 after a 2017 token sale.

Vahe HakobyanEditor-in-chief Updated Oct 6, 20263 min readFact-checked

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What is Filecoin used for?How does Filecoin work?How is Filecoin different?Who created Filecoin and legal issues?FAQ

Short answer

Filecoin is a decentralized storage network. FIL pays providers to store and retrieve data. Clients make deals, and providers prove they still hold the data.

Filecoin is a blockchain project for buying and selling digital storage. It connects people who need space with operators who have spare drives. The token, FIL, pays those providers and helps secure the network. Protocol Labs launched the mainnet in October 2020 after a 2017 token sale.

What is Filecoin used for?

Filecoin is used to store data across many independent providers instead of one company's servers. Developers keep web3 files, dapp data and NFT media on the network. Groups archive records and large datasets. Filecoin says it aims to make storage like a commodity by separating hard-drive space from extra services.

Web3 and blockchain data, such as dapp files and metadata.
NFT images, videos and other media.
Archives, public records and large research datasets.
Backups that a person or company wants to spread across providers.

How does Filecoin work?

A client and a storage provider agree on a storage deal. The deal sets space, time and the FIL payment. The provider seals the data and submits proofs that it still has it. If it misses proofs or loses data, the network can penalize it and take collateral. Providers compete on reliability and price.

How is Filecoin different?

Filecoin compared with related storage projects
Network	Purpose	Incentive
IPFS	Addresses files by content.	No built-in storage payment.
Filecoin	Storage deals with proofs.	FIL pays providers.
Storj	Decentralized object storage.	Token pays node operators.
Arweave	Permanent archives.	One-time payment.
Sia	Storage marketplace.	Siacoin pays hosts.

Who created Filecoin and legal issues?

Protocol Labs created Filecoin, and Juan Benet founded Protocol Labs. The team raised money in a 2017 token sale, and the mainnet launched in October 2020. In June 2023, the SEC named FIL in lawsuits against Binance and Coinbase and alleged it was sold as a security.

Frequently asked questions

No. IPFS is a protocol for finding files by content, while Filecoin adds payments, deals and proofs. Not all IPFS data is on Filecoin.

The project says any person anywhere can work as a storage provider. In practice you need hardware, a FIL stake and to meet network rules.

The network notices missed proofs and can penalize the provider. Your data may be unavailable until another provider serves it or you use a copy.

Usually no. Deals have a set duration, so data remains only if the deal is renewed or a new deal is made.

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Written byVahe HakobyanVahe Hakobyan is the editor-in-chief of World-Crypt. He covers bitcoin, markets and regulation, and leads the newsroom that fact-checks every story before it goes live.