In this educational guide, we’re going to explore the altcoin and blockchain named Filecoin (FIL). We’ll cover its fundamentals and planned roadmap, so you can use it to make your own price prediction.
Filecoin functions as a decentralized data storage network that allows users to sell their storage services on an open-access platform. This means that the native token FIL acts as the incentive and security layer for IPFS, which is a peer-to-peer network for storing and sharing data files.
Filecoin turns the IPFS storage system into an “algorithmic market,” so users can pay storage providers in the FIL token to store and distribute data on the network. Any party can use the Filecoin block explorer to ensure their data has not been tampered with and files are secure by seeing the immutable information on the ledger itself including verified edit history, timestamp, and image storage data.
As of the time of writing, FIL currently ranks in the #37 of top cryptocurrencies by market capitalization. Let’s explore the value, implementations, and price of Filecoin’s native FIL coin.
What is Filecoin and how does it work?
Filecoin was intended to provide an alternative to centralized, traditional online storage providers such as Amazon Web Services. Filecoin makes use of a peer-to-peer file system called IPFS, which stands for InterPlanetary File System. IPFS uses hash-addressed content structures to store data instead of centralized servers and IP addresses. This results in better permanence, efficiency, and reduced redundancy.
Filecoin works to incentivize this IPFS storage system by rewarding parties providing the storage as well as data retrievers for contributing their resources to the ecosystem. Though Filecoin is its own separate blockchain, it also comes with built-in Ethereum integration which allows developers to access data on Ethereum’s blockchain and thereby interact with Ethereum’s smart contracts.
Filecoin’s development is headed by a company called Protocol Labs which was founded in 2014. Both Filecoin the blockchain and its associated incentive system as well as IPFS the storage system were created in tandem. The goal of Protocol Labs is to build a fundamental layer for data infrastructure to be used by blockchain as well as traditional providers such as AWS via the facilitation of a marketplace with which any user who wishes to offer available storage capacity can connect to the network.
This is a form of a storage “sharing economy” similar to that of Airbnb in the short-term rentals market, but for data services that anybody can host and use. Since Filecoin is a decentralized service, there is no one party controlling access to the data or one single point of failure like there is with using traditional data services. This also makes data harder to censor and easier to access via anyone with internet access throughout the world.
The Filecoin blockchain uses two unique consensus mechanisms: proof of replication, and proof of spacetime. Proof of spacetime allows for the storage of information for a given amount of time, while proof of replication helps ensure that the same data is not replicated in the network.
There are two types of miners on the Filecoin network: storage miners and retrieval miners. Retrieval miners compete to serve users and clients with requested data as fast as possible and are rewarded with FIL tokens in turn for retrieving said data. Storage miners provide storage space to users for a specific time. Storage miners therefore are in competition to land contracts to offer storage in the marketplace of the Filecoin network, serving users seeking storage. The storage miner is the party that holds the user’s data and seals it, receiving FIL coins in turn for doing so.
FIL Coin
FIL is the native coin of the Filecoin blockchain and the coin is used to make payments on the Filecoin network for transactions. Those who wish to participate in the Filecoin network will need to hold and transact in the FIL token.
The FIL token is also used as a reward to storage providers and data retrievers. Storage providers are required to provide FIL as collateral as a guarantee of service which functions as a bond that can then be slashed in the event of the service provider’s lapse in service.
Token Distribution
Filecoin itself as a token was launched in 2017 with a token sale that raised $205 million in its offering. $52 million of this was in an advisor pre-sale, and $153 million was through a public offering through the CoinList platform.
A Simple Agreement for Future Tokens (SAFT) was used to raise their funds as a legal agreement which involves giving investors a token allocation upon network launch in return for an upfront investment in the project. The portion sold to advisors was sold at a cost basis of $0.75 per FIL and an additional discount of 0-30% with 1-3 year vesting terms. The remainder of the $153 million in FIL had a hard cap of 200 million FIL sold and the cost basis ranged from a price of $1 to $5 per FIL.
The max supply of the FIL token is 2 billion. As of April 2022, there are 188 million Filecoin in circulation. 600 million FIL were pre-allocated at genesis for the following allocations:
- 10.5% allocated to Protocol Labs with a 6-year linear vesting schedule
- 4.5% allocated to Protocol Labs team members and contributors with a 6-year linear vesting schedule
- 7.5% allocated to 2017 SAFT investors with a 6-month to 3-year linear vesting schedule
- 2.5% allocated to future fundraising or ecosystem development
- 5% allocated to the Filecoin Foundation with a 6-year linear vesting schedule
This leaves 70% of the total supply, which was allocated to Filecoin miners. This miner supply will be released over time to reward data providers, data retrievers and distributors, and is also used for maintenance of the blockchain and for running applications.
Filecoin (FIL) Price History & Technical Analysis
As of the time of writing, in April 2022, the price of FIL is at $21.67, with a market capitalization of $4.06 billion USD.
The total value of Filecoin’s network is meant to grow with more demand for and usage of the storage services that Filecoin facilitates, which would naturally lead to more demand and usage of the Filecoin blockchain network and its associated FIL token for payments on the blockchain to storage providers, parties retrieving data, and more.
Metcalfe’s Law states that the value of a network is directly related to the number of users of that network.
What Expert Analysts say about Filecoin:
- CRYPTOPOLITAN says, "The Filecoin blockchain network has a great potential for growth since it aims at solving one of the world’s perennial problems of file storage. By offering a decentralized data storage solution, people worldwide can easily store their data online without relinquishing the ownership of the data to a third party. In a nutshell, Filecoin participants retain data ownership.
If you take a look at some of the partnerships, developments, and proposed developments highlighted above, you will realize that the Filecoin token is poised to have a great future. The potential for growth is also there, and if more popularity is accrued as a result of the waves in the market, it is only a matter of time before the price skyrockets again. Filecoin had a very productive year in 2021. However, 2022 and beyond are set to be better.” - Coinpedia says, "If the altcoin hits positive highs by the year’s end, then 2022 may start with a bullish note, if it falls down, then the new year journey may resume on a bearish note with $107. As some of the upgrades are in the pipeline, if the network fails to introduce at the said time, then the price may plunge down to $72.23 by the end of 2022.
With successful upgrades the asset could moon to $142.56. However, with regular buying and selling pressures, we can see FIL price trading at an average value of $99.65 by the end of next year.” - DigitalCoinPrice notes, “As per the forecast data analysis for 2022, the price of FIL is expected to cross the level of $27.06. By the end of the year, Filecoin is expected to reach a minimum fee of $26.39. In addition, the FIL price is capable of getting a maximum level of $28.66.”
Filecoin Partnerships
The Filecoin network already sponsors data backup and distribution for scientists and other cloud data experts. This provides the foundation for the future of public access data such as scientific data, creative commons media, historical archives, and other uses. The network can also be used for podcast data, security data, personal files, contracts, company data, private and public datasets, video, dapp websites, and more.
As such, Filecoin has many partnerships. For example, in August of 2021, Filecoin launched a collaboration with NEAR Protocol to accelerate the growth of its Web3 stack. Filecoin also was integrated with the Flow blockchain to provide centralized storage for NFTs minted on Dapper Lab’s network.
A copy of Wikipedia’s database will be stored on the Filecoin network to ensure its preservation. The Filecoin network is also storing a copy of the human genome via gnomAD. Project Gutenberg also will be storing its literature collections of over 60,000 books on the Filecoin network. Other organizations storing data with Filecoin or using it include the USC Shoah Foundation, the Internet Archive, Slingshot, and others.
Filecoin Price Prediction: 2022-2026
After launch in 2017, Filecoin’s price was depressed below $30 until 2022. Filecoin’s price really skyrocketed with extreme market interest in the beginning of 2021, reaching a peak of above $200 with the cryptocurrency bull run. It then collapsed in May of 2021 and stayed below $200 for the rest of 2021. It did take off again in summer of 2021, hitting a peak of almost $120 in September.
Notably, since its spectacular performance in 2021, Filecoin’s price has returned back to the $20’s where it has found support. It is doubtful to see Filecoin’s price going far below $20 due to the growth and usage of its network and data services marketplace, but anything can happen.
It’s uncertain to say when investors can expect the previous all-time-high to be breached, or whether a greater economic contraction will occur that leads to overall losses in the cryptocurrency markets. If a contraction occurs and the FIL price loses the $20 area, we expect it to take even longer for a new high to be reached. Otherwise, we expect new highs to happen sometime before 2025, with investors and traders getting in as close to $20 to invest in FIL being the best off.
Filecoin Price Prediction 2022
With the price of FIL continuing to respect the previous low range of approximately $20, we expect to see continued growth in Filecoin’s use case and adoption as more individuals are drawn to decentralized data storage.
Most analysts do not predict that Filecoin will see above its previous all-time high during 2022 itself, but this is dependent on whenever the crypto market resumes its bullish price action or whether the “data storage” niche of coins takes off again.
Filecoin Price Prediction 2023
With the growing necessity for data storage, more and more users and investors alike may be drawn to using completely decentralized solutions like Filecoin. If this happens, this will surely contribute positively to the FIL price.
In this case, we expect to see the FIL price to reach above $100 again by 2023, provided the overall cryptocurrency markets and economy does not lose steam.
Filecoin Price Prediction 2024
The overall growth of the cryptocurrency markets may contribute to the protocol’s growth as well in addition to greater needs for data storage as humanity’s data needs continue to increase. Filecoin will also have even greater expanded partnerships by this time to aid this usage.
The market capitalization alone remains at only $4 billion in April 2022, and a reasonable 6-8x to reach $24-32 billion in market cap by 2024 would put the FIL price at $129-$172 price range or higher by 2024.
It’s not unreasonable to see Filecoin hit these prices by 2024 with continued data services usage growth and expansion. Of course, this is also provided the overall crypto market remains bullish and we can avoid an economic downturn and bear market overall.
Filecoin Price Prediction 2025
2025 is still far away at the time of this writing. The continued usage trends and developmental challenges in blockchain are uncertain to extrapolate that far out, however there is not expected to be any reduction for the needs for data storage done in a secure and decentralized manner, which Filecoin does provide.
We predict we will see Filecoin at $200 or above by 2025.
Filecoin Price Prediction 2026
The crypto market overall could be worth $10T or even as high as $15T in total market capitalization by 2026. Depending on regulations and the overall economic cycles of the economy, we may see Filecoin as high as $225-300 by 2026.
None of these predictions are financial advice, and are educated guesses as to where Filecoin’s price may be at each time interval. It should be noted that any major financial tampering of the data stored on the protocol, inability to render its data immutability, cease in development, or other black swan events could impact these predictions significantly.
Filecoin (FIL): Conclusion Price Prediction
Filecoin is a top blockchain investment choice for users and investors concerned with the growth of decentralized data storage marketplaces. Filecoin is an especially strong choice given its interplay with the IPFS storage system and competition with centralized data service providers such as AWS and Cloudflare.
It’s clear why FIL is a choice for any investor who believes that this need for data storage solutions will only increase as the risk of data censorship and centralization becomes more extreme over time in turn with the increasing amounts of corporate and personal data.
Some may be hesitant to commit their money into an asset for an extended period of time due to the extreme volatility and risk of the cryptocurrency markets. However, it’s very likely that Filecoin will continue to be a lasting cryptocurrency along with other classics and do well as an investment for years to come.
FAQs
How is Filecoin gaining traction?
Filecoin is gaining traction thanks to it being a strong data service provider. Filecoin uses the IPFS storage system and turns it into an algorithmic market to reward data storage providers and data retrievers, while allowing anyone across the world to store their data in a secure, decentralized manner.
Investors and market participants are interested in its coin, FIL, due to its unique advantages, consensus system, limited supply, and finally due to the overall trends of increasing data storage needs and needs for privacy.
Because the overall market believes in the technology Filecoin offers, the price continues to hold and increase over the long term thus far.
Where can I Buy Filecoin?
FIL, the coin, can be bought and traded only on many exchanges. FIL can be purchased on Binance, Voyager, FTX, Coinbase, and many other exchanges.
In comparison to other cryptocurrencies, how can Filecoin secure privacy?
Filecoin preserves the privacy of stored user data by allowing users to check and verify for tampering, access, and editing of their data on the blockchain ledger itself. However, it should be noted that it is not impossible for blockchain forensics to find who stored a certain dataset on the network based on the funding source of FIL tokens. Filecoin is optimized for the storage of public access data and doesn't yet support access controls. If storing private data, the user must ensure to encrypt it before storage to ensure it remains unreadable by anyone without the ability to decrypt it.
Is it possible to stake Filecoin?
Filecoin does not offer users traditional staking as other blockchains do.
Why is Filecoin on the rise?
FIL is on the rise thanks to its decentralized data storage marketplace of data storage users and data providers from around the world, and for its advantages over centralized and other decentralized blockchain competitors.
Is Filecoin completely anonymous?
No, it is not hard to track the source of funds and transaction activity on the blockchain, since it is a public ledger, and Filecoin is meant for the storage of public access data.
Is FIL considered a currency?
Yes, FIL is used to pay for transaction fees on the Filecoin network.
Is it possible to generate profits with Filecoin?
Yes, assuming the FIL token increases in price over time with the continued development of the Filecoin blockchain, usage of the data services on its marketplace, and expanded partnerships, the value of the network and its token in turn will increase.
However, this is not guaranteed due to other factors that can affect the investment and the overall cryptocurrency markets.
All investors must do their own research, due diligence, and ensure that they are comfortable with the amount of risk they are taking. All cryptocurrencies are extremely volatile and risky. Always proceed with caution.
Why do people believe in Filecoin?
Many analysts and investors believe that Filecoin is one of the most advanced decentralized data storage solutions out there today. The need and market for data storage will only become larger as technology becomes even more ubiquitous.
Is Filecoin supply limited?
Yes, the FIL supply is capped at 2 billion FIL tokens.
How does the Filecoin team investigate suspicious or fraudulent transactions?
It is not clear how the Filecoin development team at Protocol Labs investigates suspicious transactions, but it is noted on Filecoin’s website that the network verifies proofs and automatically takes corrective action when needed that involves slashing data providers. As for outright fraudulent transactions or illicit criminal activity, Protocol Labs may play a role in investigating with law enforcement.
DISCLAIMER
This is not financial advice, only observations and speculation. All investors should do their own research and due diligence. The crypto markets are extremely volatile and losing your investment is possible.
