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The expansion of blockchain technologies relies on venturing into new domains and acquiring additional knowledge. Traditional cryptocurrencies merely scratch the surface of what blockchain and decentralization can achieve. Decentralized custodial services, like those offered by Filecoin, present another promising avenue. This network supports the storage of various data formats, including audio and video files.
The product has already demonstrated its value, as NFT.Storage and Internet Archive utilize Filecoin’s decentralized storage. In fact, the Internet Archive reported in October that they had stored a petabyte (1,024 terabytes) of their archives on the Filecoin network.
What is Filecoin?
Filecoin provides a decentralized ecosystem with built-in economic incentives for participants, ensuring secure data storage. Users pay storage providers to store and maintain the integrity of their information. Consequently, individuals seeking blockchain-based data storage, as well as those offering storage resources, can join the Filecoin network as participants.
How does it work?
There are two types of service providers within Filecoin: storage providers and retrieval providers.
Storage providers are responsible for storing clients’ files online and offering cryptographic evidence to verify the integrity of the data.
Retrieval providers are responsible for delivering quick data access to users. Although storage providers often offer retrieval services, these roles can be separate.
The process of obtaining storage services is conducted through transactions, known as deals. Such negotiations occur off-chain, and once the user and provider(s) reach an agreement, the terms are recorded and validated on the blockchain. These transactions include information about the price, storage volume, term, and collateral.
The Filecoin blockchain supports smart contracts, and the Filecoin Virtual Machine (FVM) enables the porting of smart contracts to the Ethereum Virtual Machine (EVM).
Transactions within the Filecoin network utilize FIL, a token specialized for this ecosystem.
FIL token
When users desire to store data in the Filecoin network, they pay storage providers with FIL in exchange for their storage space. The payment is made in advance for a specific period during which the data remains accessible. Storage providers are then rewarded with FIL for offering their storage space and performing other network tasks.
FIL is also used for data retrieval, rewards for validators, block rewards, and commissions. Additionally, FIL holders have voting rights regarding proposals for the future of the Filecoin network.
FIL is freely tradable on most major exchanges and can be acquired using both cryptocurrencies and fiat currencies. You can review the list of exchanges, for example, here. However, how compelling is this project considering the recent updates?
Watermelon upgrade
On December 12th, the Watermelon network underwent an upgrade that extended the maximum term of storage contracts to 3.5 years (previously limited to one and a half years). The upgrade also introduced improvements to the Filecoin Virtual Machine (FVM), resulting in reduced fees for several transactions. Moreover, the upgrade introduced synthetic proof of replication (PoRep), enabling storage providers to prove data replication without the need for transfer.
Overall, this upgrade highlights ongoing support for the project’s development. How does the coin fare from a technical analysis standpoint?
FIL course
The current trading value of FIL is approximately $5.14. A clear positive trend has been observed since the second half of October, with FIL rising from $3.2, peaking at $6.19 in December, which now serves as the nearest resistance level. The support level is set at $4.42. The graph below illustrates the asset’s value changes since October:
Source: tradingview.com/
Conclusion
Filecoin is designed as a decentralized data storage solution. The recent Watermelon upgrade positively affected the FIL asset’s rate, despite its value having already adjusted. The token exhibits a high level of volatility, and its prospects depend on the success of upcoming updates, as well as surpassing the nearest support and resistance levels.
This material and the information contained herein should not be construed as individual or other investment advice. The opinions expressed by the editors may not align with those of the author, analytical portals, or experts.