The Top Three Reasons People are Buying Filecoin

For starters, Filecoin (FIL) is an open-source distributed network for file storage. It has built incentives to make it worthwhile for users to run nodes and use the system. Filecoin was made by Protocol Labs, and was first started in 2017, and is built in conjunction with the InterPlanetary File System (IPFS), which is also made by Protocol Labs. IPFS is a network for sharing files in a distributed way, so the idea is to use both and that they go hand-in-hand with file storage and file sharing.

The way Filecoin works is that people can rent out their hardware to others in this distributed network, allowing people to use it to store data. In return, users are incentivized by receiving FIL tokens. Think of it as a decentralized marketplace for storage. By rewarding users with tokens, it creates a circular economy of people who can earn money by making use of the network. In addition, miners can earn FIL by securing the network, and speculators can become profitable from buying the coin when it appreciates in value.

Filecoin has been worked on for a number of years now, but only recently did the long-awaited main net launch happen. Dubbed the “Mainnet Ignition and Liftoff,” Filecoin launched officially on October 15, 2020. In the official Filecoin blog post, the team wrote:

“Together, you have helped upgrade the web with an open, decentralized, verifiable storage layer. The Filecoin network represents a completely new way to store and retrieve data peer-to-peer – secured by cryptographic proofs to verify data is uniquely stored and replicated over time. With Filecoin, anyone can participate as a storage provider, monetize their open hard drive space, and help store humanity’s most important information. This provides an important incentive layer for IPFS, the InterPlanetary File System - enhancing the existing web3 storage infrastructure already used by thousands of projects and developers.”

With the launch of Filecoin, it immediately began to take off in price and acceptance from the cryptocurrency space including investors, venture funds, speculators, developers, and users.

After the initial launch, there was a lot of excitement and news about the new cryptocurrency network, in particular with the boom of non-fungible tokens (NFT), Filecoin and IPFS both have seen a big surge in demand for a free decentralized way of storing and sharing files.

NFTs have received a huge amount of attention in the past few months, garnering mass media attention from around the world. Due to the surge in demand for NFT’s, one of the price drivers early on for Filecoin and its token FIL, has been from NFT space. Non-fungible tokens have many use cases, from digital art, collectibles, to even athletes who are offering rights to their body parts. Since NFTs use media in many of these applications, having a decentralized network to store the media that can’t be shut down later is highly sought after.

However, it wasn’t until February 2021 when the price seemed to jump up, more so than from the NFT boom. What happened recently that drove the FIL price up even higher was due to computer hardware giant Xinyuan Technology Co. investing in Filecoin miners. According to reports, Xinyuan Technology invested $580 million yuan, or just over $89 million dollars into the miners, and that the firm signed a sales contract on March 15, 2021.

FIL/USDT Chart on the 8h Timeframe | Source: KuCoin

The final reason for the rise in the price of FIL has simply been the market playing catch up. After the NFT build-up and the significant investment price drivers, the price jumped up to an all-time high of $232 FIL/USDT on Kucoin.

Since the all-time high, the price has dropped a bit as the market has settled down, which is normal to see corrections like this after a big run-up. At the press time, FIL is standing at $180, seeing an increase of 1.44% over the last 24 hours.

Filecoin is listed on Kucoin, where you can buy, sell, and trade FIL. On Kucoin, you can also buy and sell other cryptocurrencies like Bitcoin, Ethereum, XRP, Cardano, Bitcoin Cash, plus many more. If you go to Kucoin Markets, you can see a list of all the coins that are currently supported, including specific categories like NFT and DeFi.