Three big questions about the future of Filecoin now that it has finally launched

When Filecoin launched three years ago, it made a lot of noise. The initial coin offering (ICO) for the project raised over $205 million and Filecoin became an instant poster child for the ICO era. 

Since that big splash, however, the team behind the peer-to-peer data storage network has been methodical about turning all that ICO hype into reality. In fact, it has struggled to stay on schedule for the launch of its mainnet, facing numerous delays and more recently, an investor revolt against Protocol Labs, Filecoin’s parent company.

Now, Filecoin has finally launched, and we'll get a chance to see if it can live up to all the excitement it generated back in 2017.

Can it live up to its ambition to draw users away from centralized cloud storage services? Can it make the InterPlanetary File System (IPFS) better? And what will the developer team focus on now that the network is up and running? We dive into each of those questions below.

1. Can Filecoin make IPFS more compelling?

Filecoin is built on top of IPFS, a peer-to-peer data storage network that was also developed by Protocol Labs. The vision behind it idealistic: a decentralized, uncensorable and uncapped storage space for important information. Filecoin is intended to add what many see as a much-a monetary incentive to participate in the data storage network.

Now users will be able to rent storage using the network’s own cryptocurrency, filecoin (FIL), which is already available via multiple popular exchanges. They can hire miners to store or distribute data, and miners earn rewards by carrying out requests.

Similar to Bitcoin, Filecoin miners must compete with each other to mine blocks and get rewarded, but the main difference is that their mining power corresponds with active storage instead of computing power. This incentivizes them to trade and rent out as much storage as possible. 

Andrew Hill, the founder of open-source tool development company Textile, said Filecoin is a “missing piece” for IPFS. According to Hill, the launch of Filecoin is a significant step toward digitizing “humanity-scale” datasets that could be used to make scientific discoveries.

Brian Mosoff, CEO of Ether Capital and a Filecoin investor, said IPFS’s lack of an incentive model was a “fundamental problem.” But the fact that it is already live and has gained some traction around the world gives Filecoin a leg up on competitors in the market such as Storj. “Filecoin only makes (IPFS) more robust and adds a dynamic to widen its reach and use cases.”

Matt Ober, co-founder of decentralized storage platform Pinata, which has been working with IPFS for over two years, said his team sees the addition of Filecoin as an important upgrade.

“Filecoin is providing another layer to the decentralized storage stack,” Ober said. “While IPFS excels at quickly retrieving content addressable data, Filecoin excels at providing long term archival storage at a much lower cost.” he said.

The ultimate goal behind Filecoin is for it to be a mainstream alternative to dominant centralized cloud storage firms like Amazon and Google. According to Filecoin’s Head of Operations Ian Darrow, one of the major challenges the network faces now that it has launched will be achieving greater adoption. 

“Right now, Filecoin works really well for a bunch of use cases and has many passionate users, but it’s not the best choice for every use case yet. This needs to change,” he said. The goal is to advance from early adopter tech to a system that competes with or even exceeds centralized cloud storage services, said Darrow. 

Before Filecoin can achieve mainstream adoption, it needs more people building applications for it, said Textile’s Hill. “We need developers to build on this network, but developers are comfortable using today's existing storage systems. So we need to make sure Filecoin is as familiar and straightforward to adopt as possible,” he said. 

Hill emphasized the importance of validating Filecoin’s system. He cautioned that although organizations can begin to use Filecoin immediately if they want, the network will only be able to complement, as opposed to replace, existing cloud storage APIs — at least at first. 

“Storing critical datasets on a novel network isn't an easy decision for most,” Hill said. “Over time, we will build up the case-studies and successes that make others adopt the network.”

“I don’t see average users being able to easily access the network,” said Ether Capital’s Mosoff. "But perhaps that’s for the better,” he said. “It will need to go through a fair amount of iteration and battle testing before it’s ready for a mainstream subset of users.” 

Gregory Markou, co-founder of blockchain and Web3 R&D firm ChainSafe, said he anticipates that Filecoin will struggle to convince users to move away from more traditional, non-blockchain based payment methods. Still, Markou said Filecoin’s massive data storage capacity gives the network a tremendous advantage over other networks. 

“The way they're rolling out their main net is by transitioning the testnet into a mainnet by saying, if you've already committed all this mining and storage power, you don't have to recompute that,” Markou said. “Other storage solutions had to start organically and in the lower thresholds, but Filecoin is already hitting these high volumes on IPFS with a relatively diverse set of miners too.”

Filecoin says that during its incentivized testnet competition, which it called Space Race, more than 500 miners added 325 pebibytes (PiB) of storage capacity to the network. According to the team, that’s the equivalent of having "enough space for 90 million 1080p movies, 1,400 full copies of Wikipedia, or 7 times the entire written works of mankind (in all languages) from the beginning of recorded history to the present day."

3. What’s next for the developer team?

According to Filecoin’s Darrow, the network has several objectives it plans to pursue after the launch. 

The team is planning to upgrade its cryptographic proofs to cut down on the costs of providing storage on the network. “It’s important to get that overhead as low as possible over time so that the other efficiencies Filecoin brings to the table can dominate,” Darrow said.  

Darrow said the most promising candidate for a proof upgrade is the “Narrow Stacked Expander” proof-of-replication, which the network defines as a "new proof of storage system that can be used to prove that some data has been replicated to its own uniquely dedicated physical storage." The goal is to launch this system next year. The developer team also plans to roll out a series of user experience improvements. 

Filecoin also intends to throw support behind the products that have already been developed on the network. According to Darrow, there are hundreds of projects that have been under development since long before the mainnet launch, ranging from storage and retrieval services to blockchain infrastructure and DeFi applications. However, most of these projects are still in an early stage of development, he said 

“When you look at ecosystems like Ethereum, a huge part of their success has been the ability to support dozens or hundreds of self-sustaining companies,” Darrow said. “Filecoin’s mainnet means that all the necessary infrastructure is in place to support that sort of ecosystem, but there’s still a lot of work ahead for projects built on Filecoin, and the whole ecosystem will have to come together to support them.”