Complete Guide to Filecoin: An Overview of How It Works and How to Mine It
Filecoin is one of the best-known peer-to-peer networks that leverages the storage space of the devices that connect to its network to store data. Users that store their data pay those that rent their storage with tokens to ensure the files are properly stored.
The Filecoin tokens can then be exchanged for other tokens or cryptocurrencies. Thanks to its decentralized nature, the network’s biggest advantage is its community. The community, not Filecoin, is the gatekeeper for storage.
If you’re still unsure how everything works, read our article as we detail everything you need to know about Filecoin.
How Does Filecoin Work?
The Filecoin network is based on storage contracts made between a client and a miner. When a client chooses a miner to store its data based on its capacity, duration, and price, it reserves enough cash in an associated wallet to fulfill the contract’s total cost. The storage agreement is disclosed once the miner has accepted the offer.
The data is then prepared for storage and transferred to the miner. The miner stores and seals, and delivers proof to the chain. Once the first confirmation is received, the client is assured that the data has been correctly stored and the contract has officially begun.
There are two types of contracts :
- Storage agreements. These are agreements between storage providers and clients to store data in the network. Once the deal is initiated and the storage providers have gotten the data to keep, they must confirm that they are still storing the data on a regular basis. If they fail to do so, they will be removed from the chain and lose all of their FIL tokens.
- Retrieval agreements. These are agreements between clients and retrieval miners to retrieve data from the network’s storage.
Putting our sensitive data on someone else’s computer is unsafe, so Filecoin has taken certain essential security precautions to protect it from hackers. To protect it from bad actors, Filecoin divides the file into numerous pieces before storing it so that if hackers try to breach it, they will only be able to steal a small portion of it, which will be useless information. Moreover, the network puts the encrypted copy of the data in physical storage so that no other miner could duplicate it.
How to Mine Filecoin (FIL)
Filecoin mining is different than classic mining on Bitcoin and other cryptocurrencies. Miners in Filecoin provide storage capacity rather than computing power to suit the needs of users who want to store data. Miners, in other words, serve as databases in the Filecoin ecosystem. On the network, each Filecoin miner has a power value proportional to the quantity of space donated, which determines the possibility of earning the privilege to mine a block in each epoch.
Requirements for Mining FIlecoin (FIL)
There are no minimum requirements to mine Filecoin, although it’s suggested that your computer have the following capabilities:
- CPU. The Filecoin team recommends an AMD processor with at least eight cores and the ability to implement the Intel SHA extension.
- GPU. A strong GPU is recommended to speed up SNARK computations significantly. On Github, you may get a list of GPUs that are supported.
- RAM. It’s suggested that you have at least 128GB of RAM.
- Disk. The official Filecoin website recommends a minimum of 1TiB of NVMe-based disk space for caching, which should be utilized to store data throughout the sealing process, cache Filecoin parameters, and serve as a general temporary storage location. Additional hard drives will be required for the final storage of “sealed sectors,” the Lotus chain, and other information.
Once you have a computer that meets these requirements, you must install Lotus — an app that lets computers know how to talk to others that follow the same rules — before you can begin storing data from other users and earning Filecoin tokens.
Cryptocurrency is a very volatile issue, so do your homework before buying; however, keep in mind that Filecoin’s potential is huge. It’s one of the world’s most prominent startups, with the potential to answer to the inefficiencies in data storage and retrieval. More importantly, it gives more options and flexibility, aiding in the competitiveness of the cloud storage industry in general.