FileCoin WhitePaper Q&A

We are Bleev.In team. We are interested on renting our data-center storage space for mining FileCoin. We all believe that, IPFS and FileCoin have huge potential to disrupt the current cloud/distributed storage market.
At the same time, we did a full technical analysis of the white paper of FileCoin. We’d like to share our understanding on some KEY questions we had about the FileCoin blockchain.

What’s FileCoin and Why you need it?

Filecoin (Symbol: FIL) is a cryptocurrency that is used to pay for usage of IPFS, which is a global decentralised filesystem that allows storage of large amounts of data. And mining it entails letting other people store data on your storage space.

Users pay tokens for storing data
Users pay tokens for retrieving data

Note: currently IPFS network can be used for free. And storage are provided voluntarily by the open-source community.

Figure 1: Users use FileCoin to upload/retrieve data from FileCoin network

How to use FileCoin?

In the white paper, there are two markets will be implemented: Storage Market and Retrieval Market.
In the Storage Market, users pay storage miners tokens for their storage size. The Retrieval Market, users pay retrieval miners tokens for their bandwidth. In both cases, clients and miners can set their offer and demand prices or accept current offers. The network guarantees that miners are rewarded by the clients when providing the service.
The major income for miners is the payments from users, and the free market determines the price for storing/retrieving data.

And another interesting finding is that storage market is handled on-chain, whereas Retrieval Market is managed off-chain.

Figure 2: Free-markets determines the price for storing/retrieving data

How to secure FileCoin blockchain？

Outsourcing attack is one of the most common attacks on FileCoin blockchain.

So what is Outsourcing attack? Let’s explain a little bit more here. For example, Alice paid tokens to a storage miner for storing a piece of data. However, the miner might actually transferred the data to somewhere else, instead of storing at its own hard-disk. So other miners might do the same thing. The consequence is multiple miners may end up with storing data in the same hard-disk. However, the reliability of the network requires miners to store data in their own independent physical storage to prevent single point failure. Therefore, outsourcing attack will cause unrecoverable damage to the reliability of the system.

Figure 3: Outsourcing attack of FileCoin blockchain

It’s very glad to see that the FileCoin team has solved this problem perfectly by introducing Proof-of-Space-and-Time (PoST) protocol, which gives us a lot confidence on handling outsourcing attack. So what is PoST ? In a nutshell, miners need to prove that they stores users’ data in their own independent physical storage space, during the agreed-upon period of time with users. You may ask how to prove that. As said in the paper, storage miners are required to constantly compute a hash, and the hash takes user’s data to calculate the hash. In another words, if miners don’t have consistent access to users’ data, they won’t be able to produce the proof they need to get reward. Every 1 billion computations, the hash result will be posted to FileCoin blockchain for verification. If the result is not correct, the miner won’t be able to get reward. If a miner is considered to behave as a faulty node, the miner might even lose its token deposit for being a miner.

What’s the time schedule for FileCoin development?

It’s really impossible to estimate a release schedule of FileCoin network at this moment. Because there are so many uncertainties and so less public information regarding to its development progress.
As mentioned in the white paper, in Q3 and Q4 of 2017, the development team will focus on the implementation of FileCoin Protocol. Ideally, early 2018, the first version of FileCoin protocol can be completed. Before the specification of the protocol can be released publicly for reviewing, there are extensive testing and bench marking which needs to be done. And then we should give some time to the dev team and community to fix some essential issues and bugs. Hopefully this wouldn’t take a long time, assuming no big changes in the architectural level. After the first version of network is released, the open source community and enterprises also need time to pick up the technology and build the eco-system. So we have put our rough estimation below. And this is a pretty aggressive estimation, I have to say. For people who are interested on mining FileCoin, you should plan the timing very carefully. If mining facility is built too early, you may end up with sitting on big pile of hard-drive, but without earning much profit.

Figure 4 Estimation of FileCoin network development progress

More discussion

So far, we have discussed about our understanding about some essential concepts introduced in FileCoin’s white paper. We are happy and confident about the technical side of the project.
However, there are still some major concerns.

Competition with Amazon S3

Amazon S3 is so successfully in the past years and has become de-facto standard of accessing data in the cloud. It’s cheap, fast, reliable, and scalable. Moreover, censorship is in place in S3. Illegal content could be taken down immediately when reported. FileCoin network has to be better then S3, in terms of pricing, speed, reliability and scalablity, as it claims in its video. Digital Right Management (DRM), from our point of view, is important. How to handle this? It is still a question now.

Token price fluctuation may cause misbehaviour of miners

In FileCoin network, free market decides the price for storing/retrieving data. It means the price is fairly unpredictable. Users may get 5 tokens to 1 TB space today, but might only need 2 tokens next week. In pursuit of maximum profit, miners also may breach contract with clients, and accepts new offers, in a volatile market. This is unacceptable for a storing service.

Future Work

We are still watching very closely with the development progress of FileCoin. If you have any thoughts and comments, please let us know. Our email is [email protected].