Why is it so important to participate in Filecoin?

What are IPFS and Filecoin

When you first come into contact with IPFS and Filecoin, everyone will have a question, that is, what are these two foreign things, and which one makes money? In fact, it is very simple, don’t be fooled by its name. Filecoin is a composite word, translated as "file coin", which is the token of IPFS technology.

Simply put, IPFS is a very powerful Internet technology. Through this technology, we can build a network where each of us can participate in data storage. As long as you want to trade on this storage network, the transaction medium must be filecoin.

Application scenarios of Filecoin

First of all, we need to know that any digital currency has its application scenario. The application scenario of Filecoin is aimed at the data storage of the Internet. The so-called Filecoin mining machine is actually a server that stores data, and the mining machine is just a figurative name given to it by people.

When it comes to data storage, we used centralized storage based on the HTTP protocol in the past. Simply put, everything is in its place. The data of the user will be centrally stored on the server of the platform that the user uses. Since the birth of the HTTP protocol in 1990, in the past 20 years, we have found that some problems of the Internet under centralized storage have never been solved, such as server downtime, the hacking of servers of many platforms leading to the privacy leakage of a large number of users, and the high cost of data storage, etc. A series of stubborn problems.

Tim Berners-Lee, the inventor of HTTP, once boldly predicted that the life of the Internet would not exceed 30 years. So what should we do?

What problems can IPFS and Filecoin solve?

We know that it is better to remove the firewood from under the cauldron than to try to stop the boiling water by adding more water to it. Therefore, we need to replace the underlying protocol HTTP with the IPFS protocol, and thus the IPFS distributed storage network was created.

Simply put, in a distributed storage network, data is not centrally managed by a centralized platform, but is stored in the miners' mining machines in a decentralized manner through a special encryption algorithm. Each miner stores a portion of the data, and of course these storage miners will receive filecoins as compensation. This is a bit like Didi Taxi, where each miner rents out the idle storage space of his mining machine and accepts orders in the network. Miners who receive storage orders will receive filecoins as compensation. In this way, a series of problems such as high concurrency, data security, and high storage costs can be effectively solved.

Filecoin’s token distribution mechanism

Let’s take a look at the token distribution mechanism of Filecoin. The total number of FIL is 2 billion, and it will never be increased, which avoids the risk of inflation.

Among them, 5% was given to the foundation, 10% was ICO, 15% was left to the development team, and the remaining 70% was left to the miners as block rewards, which was halved every six years and decayed by 0.7% per month.

It should be noted that Filecoin is not distributed in advance, all TOKENs are in the block and can only be obtained through mining. In addition, the 30% of the foundation, ICO, and development team have a lock-up period, which means that the supply on the market when the mainnet is launched is very small, and it only comes from miners who participated in the public beta in the early stage.

Why is this so important? It’s simple. Since there is no pre-mining, there is no dealer to dump the stock after the mainnet is launched, and there is no large-scale selling. Based on the supply and demand relationship, it is obvious that the price of FIL can only rise steadily after the mainnet is launched, which avoids the possibility of breaking the issue price.

Filecoin's economic model and price forecast

First, let's look at the market value of Filecoin. We know that there are 2 billion Filecoins in total, and the average price of private and public offerings is $3.5, so we can conclude that its market value is $7 billion. Let's look at the price estimate of Filecoin. This part does not constitute investment advice and is for reference only.

Regarding the price prediction of Filecoin, we need to grasp three points: the starting point of Filecoin price, the pessimistic price point, and the optimistic price point.

A: As mentioned before, the starting price is that the average price of Filecoin's private and public offerings is 3.5 USD, which is 21 RMB. That is to say, the original price of Filecoin after the mainnet launch is 21 RMB. If it is lower than this price, it will be underpriced. However, as we have analyzed before, there is no pre-mining, so there is no dealer. Based on the supply and demand relationship, we can know that the possibility of it underpriced is extremely small. Therefore, 21 RMB is the starting price of Filecoin.

B: We all know the pessimistic price. Nowadays, every project claims that it can increase 100 times or 1,000 times. Everyone is numb to this. So let's be conservative. Even for the king of ICO that year, let's only say 10 times. That is to say, next year, the most pessimistic price of a filecoin is 210 yuan per coin.

C: The optimistic price prediction model is the most common estimation method on the market, which you can refer to. The total value of the global storage market in 2018 was 210 billion. If the Filecoin network can occupy 10% in two years, the two are multiplied to get the total market value of Filecoin in two years, and then divided by the total circulation of Filecoin in two years, and finally multiplied by twice the bubble, the final price of a Filecoin is 1,800 yuan. So, at present, you know three reference points, the starting point of 21 yuan, the pessimistic point of 210 yuan, and the optimistic point of 1,800 yuan.

As for how much you think it will be worth in the future, that depends on the strength of your own consensus on it, and you should choose between 210 and 1,800 yuan.

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