Early miners, new investors, and Chinese tech companies keen to diversify have helped drive up the price of Filecoin, the token behind an open-source, cloud-based storage system that is operated by its users, rather than a central owner.
Filecoin was trading at $192.14 as of this writing with a market cap of $12.2 billion, having reached a record high of $237.73 early on April 1, according to crypto exchange platform Coinbase. The cryptocurrency surged 150 percent in seven days, part of a sustained bull run in the overall crypto market.
Crypto market price tracker Coinmarketcap at one point listed Filecoin as No. 9 on its list of cryptocurrencies by market capitalization, bypassing Litecoin. Litecoin has since resumed the No. 9 spot and Filecoin is at No. 11.
Filecoin is project of Protocol Labs, an internet-focused software research and development institution in San Francisco. Its founder has likened its mission to making a decentralized version of Amazon Web Services. Filecoin incentivizes users to storage as much data as possible by linking data storage with block rewards, according to CoinMarketCap. It hopes to compete with existing cloud storage services offered by Dropbox or Google.
Filecoin hopes to remove the central data aspect of storage, allowing users to request cloud storage access by using apps such as Slate, Newsweek reported. Users will be offered storage options by others users, aka miners, who compete on price and speed. The client then chooses the preferred miner, and sends data to the miner for storage.
Miners must provide storage space, and also provide proof that they can store other users’ data properly. This is verified on the network, and any blocks of data that are not “correct” are denied. Miners are paid for correctly storing data and verifying the data of others.
“This guiding purpose is one of the reasons FIL has gained more than 400% since the start of March — it offers a potential for blockchain document storage that Bitcoin does not,” Sarah Smith wrote for InvestorPlace.
Other reasons Filecoin is surging include Coinbase listing it in December, and global crypto asset manager Grayscale Investments adding a Filecoin Investment Trust to its roster of crypto investment vehicles in March.
Filecoin mining is booming in China. On crypto exchange Huobi, Filecoin trading activity using the Chinese yuan was higher over the past few days than yuan trades into Ethereum or Bitcoin, Decrypt reported.
Large Chinese companies are getting into Filecoin mining, including Xinyuan, which invested close to $100 million in miners, and Ninth City, which is publicly traded on the Nasdaq (NCTY) and has spent $12 million since February on mining partnerships. There are Filecoin ads running in Chinese subways.
Unlike Bitcoin miners, Filecoin miners must buy FIL in order to mine more of it, which means new miners are always buying FIL to get starting capital, Decrypt reported. An average 370,000 FIL tokens are mined each day — about $82 million at the current FIL price — according to Filecoin blockchain explorer Filfox.
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