CRYPTO MOVERS AND PRICES
Crypto is off this morning though BTC remains well above USD 13,000. Spot volumes continue to be elevated and are just under 2x the 30-day average.
Crypto Story of the Day
On October 15, the Filecoin (FIL) network went live. We provide an overview of the project and discuss FIL's performance.
Filecoin, described as a ‘decentralized storage network designed to store humanity’s most important information,’ was developed by San Francisco-based Protocol Labs. The project raised USD 257M in a 2017 ICO. Filecoin’s goal is to ‘incentivize a global network of computer operators to provide a file sharing and storage service.’ According to its founders, that goal is achievable if the network receives enough adoption where Filecoin could become ‘the fastest and cheapest way to store data on the internet.’
The crucial tenant to this vision is Filecoin’s decentralized architecture, where files cannot ‘be censored by governments or other actors.’ The Filecon network comprises nodes; miners run nodes that offer either file storage or retrieval. In both cases, users pay miners FIL to store a new file or retrieve previously stored files. Miners do not have access to stored content, which is encrypted with the file’s owner's description keys. Filecoin’s main net was delayed by several years, with initial estimates for the launch pointing to late 2018 or early 2019.
The launch was also marked by disagreements within the network’s mining community. For example, a group of Chinese miners threatened to fork the network due to disagreements over mining rewards. These disagreements have persisted post main net launch. Last week miners initiated a software upgrade that would allow them to receive 25% of their reward for processing transactions immediately instead of a gradual 180-day release. FIL’s market cap reached a high of just over USD 1B on the main net launch. Since then, the asset’s market cap has remained within a range of USD 419M to 858M, trading on several leading venues such as Bitfinex.
Filecoin is one of the few to have emerged from the 2017 ICO cohort with a concrete product with reasonable real-world applications. It is also unique in its specialization. Networks like Ethereum, with its ‘world computer’ mantra, are designed to serve as platforms on which other applications will be built. This gives FIL, similar to Chainlink’s LINK, a more straightforward value proposition with a focus on one concrete use case.
On the other hand, Filecoin is not without competition. Competitors include Storj, with a market cap of USD 52M, and Sia, USD 116M. Moreover, file and data storage has been a pronounced use case for the BSV network, a function that has ultimately brought it to see the unique transactions of any Bitcoin fork. Ultimately, while an interesting launch, FIL enters a heavily competitive sub-segment of crypto, with a limited user base and an over USD 500M valuation.