The underlying IPFS protocol revolutionizes not only commerce but the internet itself
In spite of the widescale devastation of the pandemic, technology firms have been among this year’s biggest winners in the capital markets. While critics have blasted this dynamic as a bifurcation of the underlying economy, the reality is that at its core, technology exists to bring solutions closer to the source of demand. So close, in fact, that technical advancements often eliminate burdensome and increasingly irrelevant middlemen.
This is a pivotal reason why cryptocurrencies such as bitcoin and ethereum have captured mainstream attention. Of course, the phenomenal rise in valuations of major virtual currencies have attracted speculators but this sector is so much more than merely gambling on a digital platform. Rather, the blockchain innovation that underpins cryptocurrencies democratizes the definition of economic value – instead of being tied to declarations of a central authority, virtual currencies attain their value through pure free market principles.
Just as bitcoin and the blockchain concept released value from almost-predatory intermediaries (think central banks and their privately controlled monetary policy decisions carried out by big commercial banks), almost anything of transactional worth can be democratized. And one of the most critical demand areas is in data storage and distribution.
As former Democratic presidential candidate Andrew Yang was fond of telling his supporters, data is the modern era’s oil. Everyday, companies pay large sums to acquire our data and the information that it provides – what we buy, when we buy it and why we make the decisions that we make.
Further, we consume data and to a ravenous degree. Because of the accelerated demand, societies desperately need a new approach to data storage and distribution. In years past, the solution was to apply a brute-force approach – merely increase the number of data centers and content delivery networks. But that approach only increases the scale of an inefficient architecture.
This is where Filecoin comes into the picture with a radically new solution. Filecoin doesn’t waste time increasing the footprint of an inadequate technology. Unfortunately, at some point, the law of diminishing returns prevents brute-force methods from being economically viable. Instead, using the power of the blockchain, Filecoin democratizes the data sourcing and distribution architecture.
But to truly understand the game-changing innovation behind Filecoin, we must first appreciate the fundamentals of the InterPlanetary File System, or IPFS.
Out with the Old, In with the New
If you’ve ever used the internet, you’re familiar with Hypertext Transfer Protocol, even if you don’t recognize the name. Better known as HTTP, technically, it’s defined as an application protocol for “distributed, collaborative, hypermedia information systems.” Basically, it’s the gateway to the internet, allowing peer-to-peer communication and content dissemination on an international scale.
But the problem with HTTP is that it’s fundamentally unfit for the modern world. Sure, when the internet first became a reality, HTTP was just fine. Initially, the scale of usage was limited to localized content distribution. But over time, as computers became cheaper and more accessible across the economic spectrum, the cumbersome and vulnerable architecture of this protocol has become increasingly evident.
Primarily, under the current worldwide web paradigm, your browser must establish a connection with computers that are serving the target website. The issue is, these servers could be located halfway across the world. As such, this creates massive bandwidth requirements, imposing potentially sharp costs to data providers. Further, HTTP must download files from a single computer at a time, rather than downloading information from multiple computers simultaneously.
Not only does this result in slow and expensive internet, the HTTP transfer process is susceptible to failure or attack: should one link break down for whatever reason, the whole transfer cuts out.
Think of HTTP as a series circuit. If one light bulb in a series circuit fails to work, the other bulbs in the series will also fail, irrespective of their individual integrity. That’s an incredibly frustrating prospect for anything. But when you’re establishing vital communications over the internet, it could lead to devastating financial costs.
On the other hand, IPFS is a radically new approach. Instead of operating in series, IPFS essentially is layered as a parallel circuit. In this analogy, there is more than one continuous path for an electrical current to flow. Should one light bulb break, the others – assuming that they are functioning properly – will light up.
Why shouldn’t your internet be the same way? With IPFS, it can be and so much more.
Underlining the IPFS protocol is a decentralized, peer-to-peer distributed file system which connects all internet-accessible devices to the same system of files. IPFS utilizes a technology called content-addressable storage or CAS. The beauty of CAS is that unlike location-addressed storage, information is recorded as a content address, not a content location.
Let’s say that you want to listen to a song that you downloaded. To access the song, you must search for its location – the path and file name. At first glance, this seems like an organized structure. However, the file that you downloaded into your computer is only accessible to you. If you owned a large website, the servers storing your site’s data may only be located in a few places around the world.
That could be very inefficient, as we just mentioned above. Moreover, users have no assurances that the original file they are searching for is indeed original and unedited or uncorrupted.
On the other hand, CAS changes the game by eliminating the location paradigm. Instead, users search for identifiers linked to the content itself. Right on the spot, CAS eliminates fears of tampering. Under this system, each piece of content will have its own unique, permanently attached identifier, with the integrity guaranteed through advanced cryptography.
With that security fear resolved, virtually anyone can be a storage provider, monetizing the extra space on their hardware. And this really speaks to the foundation of Filecoin. Instead of data being stored at random places across the world, the data can be brought closer to the source of demand as individual providers compete (similar to how crypto-miners compete to validate transactions in a blockchain) to store data on their hardware.
This is an important issue to bring home. In the old HTTP paradigm of utilizing location-addressing storage, data was linked to specific servers. In the new IPFS protocol of content-addressing storage, data can be stored anywhere without fear of tampering. Thus, IPFS allows content to be decoupled from origin servers, facilitating true decentralization of content dissemination.
Indeed, because of the decoupling effect, content can be accessed despite sporadic internet service or even no service at all. It also means that content itself can be stored anywhere and in multiple locations, preventing cybercriminals from “hacking” the Filecoin-stored data. Unlike the location-based content paradigm in which we live, the decentralization of content renders distributed denial-of-service (DDoS) attacks – and similar intrusions/disruptions – pointless since there is no centralized source of content to attack.
In a philosophical sense, data can be everywhere and nowhere.
Better yet, the economics of Filecoin is exponentially more democratic than cryptocurrency mining. While crypo-mining democratizes the financial system through decentralized management of supply and demand, the practicality of the process means that only those with the means to buy expensive mining hardware can participate. In some ways, traditional crypto mining replaces one aristocracy with another.
That’s not the case with Filecoin. For instance, Sub-Saharan Africa is a frontier market for digitalization. Because of its low financial status, the opportunities for accelerated technological implementation is exponentially massive. Should this region go online, it will not be rich Americans that will be the best data storage providers under the IPFS protocol. Instead, the advantage will go toward local providers, thereby bolstering the regional economy.
Quite simply, this is one of the most profound developments in blockchain technology as Filecoin utilizes its inherent security and decentralization attributes to promote the greater good for all people.
A Burgeoning Economy
With so much interest in the cryptocurrency sphere, it’s inevitable that some bad actors have infiltrated the space. Not too long ago, fundamentally empty crypto projects or outright pyramid schemes siphoned money from unsuspecting individuals. Naturally, the general public is leery about new blockchain-based ventures.
Fortunately, Filecoin has the provenance to back up its myriad claims. For one thing, the concept has been covered by multiple mainstream publications, including Forbes. Second, Filecoin isn’t about a get-rich-quick scheme. Rather, it’s the incentivization system that supports the IPFS internet protocol.
In this vein, it’s akin to the blockchain concept’s relationship with bitcoin. One is a protocol or platform (like IPFS), whereas the other provides the economic incentive (Filecoin) to drive attention and engagement toward the platform.
Though the Filecoin system is not yet operationalized, publicly traded companies have started to pay attention to this alternative internet protocol. One notable example is QEBR (OTCMKTS: QEBR). Previously, QEBR’s acquisitions focused on companies mining ethereum and bitcoin. Currently, it’s targeting Filecoin thanks to its groundbreaking potential to democratize data storage and by doing so, making internet access cheaper and more widely attainable. As soon as Filecoin goes online, QEBR will be prepared for that launch.
As things stand now, QEBR has 300 machines configured to engage the Filecoin network. Based on internal estimates, each machine has the possibility to mine 358 Filecoin reward tokens per month. At an expected price of $22.52 per coin, QEBR, assuming no changes to the hardware count, could generate nearly $2.42 million in revenue per month.Ultimately, the revenue potential for QEBR could be extraordinary. Please note that I’m not making any promises nor predictions. However, the fact is that on a quarterly basis, Filecoin’s reward token – currently assigned as FIL [futures] – shares a strong 78.2% correlation coefficient since December 2017. Stated simply, as bitcoin goes, so goes FIL.
Further, the strong correlation implies that both Filecoin and bitcoin are rising on the same fundamentals of democratization. Theoretically, whatever buoys bitcoin and other major cryptocurrencies will also lift Filecoin. That’s something to strongly consider, given that many crypto proponents forecast blistering upside for bitcoin.
Also, note that bitcoin can move substantially higher despite being the most fleshed-out blockchain ecosystem. Imagine, then, what could happen to Filecoin once its narrative becomes widely known. Now you can appreciate why so many insiders are enthusiastic about the broader IPFS revolution!
Finally, what will substantially trigger interest in the new data storage network is the accessibility of its economic environment. Principally, Filecoin allows participants to engage and profit from the network in the storage and extraction of data. Whoever can provide the most data for storage and facilitate quick transmission of desired files will win out.
Critically, Filecoin does away with the proof-of-work concept, where those with the most computing power earns the rewards. As mentioned before, this impugns the democratization principle of many cryptocurrencies. Here, the reward is linked directly to participation and expansion of the Filecoin network.
Further, this participation is accessible to laypeople who may not be well-grounded in blockchain concepts. Hardware requirements for storage are not imposing. For instance, Filecoin.io states, “Miners should be able to use most commodity HDDs, SSDs, or other types of disks to provide bulk storage to the network, and it is to the miner’s advantage to architect a system that allows for scaling addition of hard drives.”
As well, Filecoin is currently structured to accommodate Nvidia graphics processing units (GPUs). As a leader in GPU hardware, Nvidia products are readily accessible to the everyday consumer, making engagement of the Filecoin network far easier than other blockchain-related projects.Because of the transformative nature of Filecoin – decoupling content from data servers and opening a participatory economy in the multi-billion-dollar cloud storage market – Filecoin could very well be the next big blockchain revolution. While bitcoin disrupted digital payments, Filecoin has the capacity to upend the internet as we know it.
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