Filecoin: A Worthy Investment Or Risky Business?

Filecoin is a decentralised blockchain network that supports peer-to-peer storage of files. Users can rent or buy storage space from another computer to store their files. The storage broker who sells the space is rewarded with a FIL (Filecoin native token). The price of storing files depends on the storage services, which quote their prices based on the quality of service and the amount of storage space needed. Filecoin is currently ranked 33rd in the cryptocurrency market, with a current price of $6.24, down from its all-time high of $237.24 in April 2021. Filecoin's price history has been volatile, and its future remains uncertain. While some analysts predict that the price of Filecoin will rise again, others expect it to continue declining. So, is Filecoin a good investment?

Filecoin's price history and future predictions

Filecoin was introduced in a white paper written by Juan Benet in 2014. It raised funds from the public through an ICO in 2017, raising over $200 million, and started trading in October 2020.

Filecoin's price history has been a rollercoaster ride, to say the least. Here is a summary of its price history:

• October 2020 to February 2021: Traded around $20 to $30.
• February 2021: Reached $42.90.
• March 2021: Broke the $100 mark.
• April 2021: Reached an all-time high of $237.24.
• April 2021 (later that month): Dipped to $154 and then to $180.
• April 2021 (even later that month): Dropped back to $133.
• May 2021: Started the month at $164, then the crypto crash happened, and the price dipped to $49 on the 22nd of May.
• May to the first week of August 2021: Recovered, trading between $50 to $65.
• September 2021: Rose to $113 on the 4th.
• September 2021 (later that month): Entered another bearish movement, trading below $55.
• November 2021: Traded at $54.
• November 2021: Ranked 30th overall cryptocurrency with a market cap of over $7 billion and a circulating supply of over 129 million FIL tokens.

As for future predictions, it is worth noting that forecasts are often wrong and that unforeseen circumstances can change the course of Filecoin's price. With that said, here are some predictions for the future:

• WalletInvestor predicts that Filecoin's price will be around $87 by December 2022 and that it will reach $215 in five years.
• Digitalcoinprice estimates the Filecoin price to reach $97.15 by 2022 and rise to $116 in 2023. They believe that in five years, the FIL coin could trade around $191.87.
• Longforecast's prediction is less optimistic, believing that the Filecoin price will be around $65 by the end of 2021 and $82 in five years.
• DigitalCoinPrice predicts that Filecoin will hit $6 by mid-2024, $10 by the end of 2025, $12 in 2026, $15 in 2028, $20 in 2031, and $25 in 2033.
• CoinCodex predicts that the estimated FIL price would be between $17.69 and $92.06, meaning the price of Filecoin is expected to rise by 1,947.41% in the best-case scenario by 2026.
• Changelly predicts that the minimum price of Filecoin in 2024 will be $3.75, with a maximum level of $5.38 and an average trading price of $7.01.

The pros and cons of investing in Filecoin

Pros

Filecoin is a decentralised Blockchain network that supports peer-to-peer storage of files. It is similar to Dropbox but without the centralisation. This means that, unlike Dropbox, it cannot be hacked into or manipulated easily. It also has a strong support team and is scalable.

Cons

Filecoin is slow because it divides files and stores them on different storage units, requiring access to multiple servers. It also faces competition from other storage cryptocurrencies like Siacoin and Storj.

Other Considerations

Filecoin is a relatively new cryptocurrency, having started trading in October 2020. It is currently ranked 30th-36th in the cryptocurrency market. Its price has declined recently, but it could still be a good investment option.

As with any investment, it is important to do your own research and understand the risks involved. Cryptocurrencies are highly volatile and unregulated in some countries.

How Filecoin works

Filecoin is a peer-to-peer network that allows users to rent out their spare storage space on their computers. Users can also buy available storage listed on the network. The network is free to join, and anyone who wants to store their files or get paid for storing other users' files can join Filecoin.

Filecoin is built on the InterPlanetary File System (IPFS) protocol, which is a peer-to-peer distributed storage network that allows for the storage and retrieval of files using a unique cryptographic hash rather than a traditional file path or address.

Users store files on the Filecoin network by creating a storage contract with a miner, who is responsible for maintaining and verifying the files on the network. Miners are incentivized to provide storage and retrieval services by earning Filecoin for each successful transaction.

Filecoin uses two proof-of-work models to prove that work has been completed: proof-of-replication, which allows the network to confirm the replication of data to a unique location, and proof-of-spacetime, which verifies that the data is stored for a specific period of time.

The proof-of-work models are combined to form large-scale storage networks spanning multiple independent parties, eliminating the possibility of forgeries in the network while increasing mining rewards.

The Filecoin marketplace uses a bidding system, where users can specify the amount of storage they need and the duration for which they need it, and storage providers can bid for the storage contract by offering a price in FIL.

The Filecoin blockchain records transactions to provide verification of file storage. People who use the Filecoin network to store their data can choose between various storage miners based on their cost, speed, security, and reliability.

How to buy Filecoin

Filecoin (FIL) is a cryptocurrency that powers the Filecoin network, a decentralised peer-to-peer file storage network. It is currently ranked 30th by market cap.

Step 1: Create a Coinbase account

Download the Coinbase app and start the sign-up process. You will need a valid ID and may be asked for proof of address, so be sure to have those ready. Verifying your ID may take longer than a few minutes, depending on where you live.

Step 2: Add a payment method

Tap on the payment method box and connect a payment method. You can use a bank account, debit card, or initiate a wire.

Step 3: Select Buy & Sell

On Coinbase.com, select 'Buy & Sell'. On the Coinbase mobile app, tap the (+) 'Buy' on the Home tab.

Step 4: Select Filecoin from the list of assets

On Coinbase.com, click the 'Buy' panel to search and select Filecoin. On the Coinbase mobile app, search for Filecoin by typing "Filecoin" into the search bar. When you see Filecoin appear in the results, tap it to open up the purchase screen.

Step 5: Enter the amount you want to buy

Use the number pad to input the amount you want to spend in your local currency. The app will automatically convert that into a Filecoin amount. You can tap the arrow buttons to the right of the amount of money you want to spend to switch the number to the equivalent amount of Filecoin.

Step 6: Finalise your purchase of Filecoin

Tap "Preview buy" when ready. You’ll be shown the details of your purchase. Make sure everything looks good and then confirm your purchase by clicking "Buy now".

Step 7: Review the confirmation screen

Once the order processes, you’ll be taken to the confirmation screen. That’s it – you’ve bought Filecoin.

Filecoin's potential for growth

Firstly, Filecoin's decentralised nature sets it apart from other file-sharing platforms like Dropbox. By leveraging blockchain technology, Filecoin allows users to rent or buy storage space from other computers worldwide, ensuring data security and privacy. This decentralisation also makes the platform censorship-resistant, a valuable feature in an era of increasing data control by tech firms.

Secondly, Filecoin has a strong support team of venture capitalists who regularly review its blockchain technology. It also has scalability, a common problem with other cryptocurrencies, and can meet the needs of rising transactions without hard forks. Filecoin also makes optimal usage of available resources by creating a decentralised system where store owners can sell their storage space, thus guaranteeing safety and reliability.

Thirdly, Filecoin has a bright future in the market. It is currently ranked within the top 30-40 cryptocurrencies by market cap, and while its price has declined recently, it has the potential for growth. Filecoin's price history shows that it can be volatile, reaching an all-time high of $237.24 in April 2021 before dropping significantly. However, with the recent creation of its own virtual machine, Filecoin is poised for another uptrend.

Additionally, Filecoin has strong institutional investor interest, with Greyscale adding it to its portfolio, and significant support from Chinese investors and miners. These factors could contribute to its growth and set it on an upward trajectory again.

Lastly, Filecoin's ability to provide passive income for users renting out their unused hard drive space and its potential to reduce carbon footprint and waste are further advantages that could enhance its growth prospects.

In conclusion, Filecoin has the potential for growth due to its decentralised nature, strong support, scalability, and unique features. However, as with any cryptocurrency investment, there are risks involved, and thorough research is necessary before making any investment decisions.

Frequently asked questions