Filecoin (FIL) is an open-source cloud storage marketplace and cryptocurrency that supports secure digital storage of data on the blockchain and enables digital payments. Filecoin's decentralized design for data storage secures the integrity of data's location, eliminating a single point of failure or vulnerability that can be compromised. It also empowers its users to be their own custodians of the data they store on the network. 

Filecoin's blockchain uses proof-of-replication and proof-of-spacetime consensus mechanisms and records commitments made by network participants. FIL is the native token in use within the Filecoin blockchain. It offers users a secure form of cloud storage without worries of storing data at a faraway location. Filecoin incentivizes nodes within the network that mine and store data on the blockchain using the FIL token. 

Filecoin allows users to sell their extra, unused storage on an open platform, offering a P2P solution for data sharing and storage. Users can pay storage providers using the FIL for storing and distributing data on the network. 

Filecoin Breakdown

Filecoin is the incentive and security layer for InterPlanetary File System (IPFS), built by Protocol Labs. The blockchain converts IPFS's storage system into an algorithm-based market for users to pay storage providers for storing and handling their data within the network. The IPFS uses hash-addressed content structures to decentralize data storage with an aim to bring down redundancy and make the system more permanent and efficient. 

Protocol Labs' initiative aims to work as a fundamental layer for data infrastructure that can work on blockchain as well as traditional cloud providers such as AWS and Microsoft Azure by creating a marketplace for any user with excess storage space to sell this on the Filecoin network. The ultimate goal will not only bring down data storage costs immensely but also challenge the dominance of the more established, centralized cloud storage providers. 

Stakeholders within the Filecoin network can trade FIL, including developers, clients, miners, token holders and ecosystem partners over three markets, file storage, file retrieval and on-exchange token trading. FIL is listed across leading crypto exchanges and is a Web 3.0 focused cryptocurrency with interesting potential for growth in the future. 

Filecoin History

Filecoin's origins can be traced back to 2014 when it was first envisioned as an incentive layer for IPFS. Protocol Labs, the firm behind the development of the blockchain, was founded in May 2014 by Juan Benet - the creator of IPFS and a former Stanford graduate. The project raised over $200 million via an ICO back in 2017 and had plans to launch by mid-2019. Filecoin's devnet was launched in March 2019, followed by internet testnet three months later. The Alphanet launch took place in September 2019 and then in December of the year, the developers rolled out the first phase of the public testnet. The second phase of the public testnet was launched in May 2020. 

Filecoin's mainnet went live in October 2020, giving users the ability to mine rewards by providing storage resources. Following this, the blockchain also started distributing rewards in FIL tokens to crowdsale investors who were part of the 2017 ICO. The blockchain has had a busy year since then, announcing several collaborations, the latest of which sees an entry into DeFi, NFT and even the gaming Metaverse, offering cross-chain integration via bridges and Filecoin Virtual Machine. 

Filecoin Price Factors

The Filecoin price can experience fluctuations based on the adoption rates of the blockchain's technology by projects and users. An uptick in demand for DeFi, NFT and other dApps on Filecoin's blockchain will increase on-chain activity and send the FIL rate higher, and vice versa. 

FIL's price can also be impacted by the number of tokens available in circulation. If the team of developers resort to burning or destroying FIL tokens from their fixed supply, it can create a deflation and boost the value of the tokens that remain. 

One of the biggest factors that drive volatility in the Filecoin rate is the market sentiment towards cryptocurrencies in general, especially towards larger cryptos like Bitcoin and Ethereum. When the investor mood towards cryptocurrencies is favorable, there is an increase in buying activity across the board which can drive up Fielcoin's rate as well. On the other hand, news about tighter regulations or countries imposing bans on cryptocurrencies could cause a sell-off in the crypto market and send Filecoin's price lower as a result. 

Trading Filecoin

Filecoin is one of the younger cryptocurrencies in the market but offers immense potential in terms of use cases. The highly versatile blockchain network can support a variety of different applications and, as a result, can be an exciting investment for cryptocurrency traders. However, ensure that you have done your due diligence by researching the crypto market in general as well as the technology behind Filecoin before trading FIL. Stay updated about all the latest news related to its development, adoption and regulations in the crypto market. This is an ongoing process but will make you a far more confident trader. 

You can then select an appropriate crypto exchange or broker which lists the FIL token among its offerings. Once you have registered for an account with the platform that suits you, convert your trading capital from fiat currency into crypto and use it to buy and trade Filecoin. Based on technical and fundamental analysis, you can pick the right time to enter the market and execute buy or sell on your FIL holdings.