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Filecoin (FIL) is the native token of the Filecoin network.
Filecoin aims to decentralise web storage, providing an alternative to cloud computing services like Amazon Web Services as well as content delivery networks like Cloudflare. Filecoin allows almost anyone to provide storage in return for cryptocurrency. This means the Filecoin network is made up of a wide range of storage providers, from dedicated companies with fully fledged data centres to home users offering up the spare space on their home PC.
How to buy FIL
Follow these steps to purchase your first Filecoin.
- Compare crypto exchanges
The easiest way to buy Filecoin is from a cryptocurrency exchange. Use our comparison table to find an exchange with the features you want such as low fees, ease of use or 24-hour customer support.
- Create an account
To create an account on an exchange you will need to verify your email address and identity. Have some photo ID and your phone ready.
- Make a deposit
Once verified, you can deposit AUD using the payment method that best suits you – Bank transfer, debit card, wire transfer and credit cards are all widely accepted.
- Buy Filecoin
You can now exchange your funds for Filecoin. On easier-to-use exchanges, this is as easy as entering the amount you want to purchase and clicking "buy." If you like you can now withdraw your Filecoin to your personal wallet.
Where to buy FIL in Australia
Compare exchanges that list the FIL token on things like payment methods, fees and features.
A step-by-step guide to buying Filecoin
Want to buy Filecoin? Follow these simple steps:
Step 1. Create an account on a cryptocurrency exchange that allows you to trade FIL
Compare exchanges that support FIL, then determine if the exchange you choose supports buying FIL with Australian dollars (AUD), Bitcoin (BTC) or Ethereum (ETH). You'll need to provide your email address and create a password to register for an account.
- Note: It's also recommended that you set up two-factor authentication to provide an extra level of security.
Step 2. Deposit funds into your account
Many cryptocurrency exchanges only allow trading between cryptocurrencies and don't allow the direct deposit of fiat currency, such as AUD, so you'll usually need to own or buy BTC or ETH first.
- Note:The exact process for depositing funds into your account varies depending on the exchange you choose.
Step 3. Buying FIL
The final step is to trade your chosen currency for FIL on the exchange. Once again, the exact process you need to follow may vary slightly depending on the exchange you choose.
Which wallets can I use to hold FIL?
Unless you're looking to place a trade, storing cryptocurrency in an account on an exchange is not recommended. Instead, it's generally much safer to store your FIL in a secure wallet.
How does Filecoin work?
Filecoin is essentially a network of miners who provide storage and retrieval services, and clients, who utilise the storage available. It runs on the InterPlanetary File System (IPFS) protocol which connects users in a peer-to-peer manner.
For instance, a server farm might take advantage of the Filecoin network to make money off its unused storage space, while a video streaming platform might pay to store its content there. Payment is settled in FIL.
Unlike centralised storage systems, where a single company provides all the storage infrastructure, anyone can join the network in return for depositing FIL proportional to the amount of storage they are selling.
This means both miners and clients need to own Filecoin in order to use the network.
Contracts for storage between parties are known as deals, which are settled via bids from both sides on the native Filecoin marketplace. This system could be thought of as similar to a decentralised cryptocurrency exchange, where the marketplace acts as an intermediary matching buy (bid) and sell (ask) orders. The idea here is that free-market economics will lead to dynamic pricing for storage.
Once a deal is settled, payment is made upfront in full for the lifetime of the deal. This is in contrast to legacy cloud storage systems, which usually employ a pay-as-you-go model. Another quirk of this system is that both sides are subject to the volatility of the FIL price until the deal is settled.
|Circulating supply (approx. as of September 2020)||36,962,319|
What does Filecoin do?
Filecoin's native token FIL is used for payments on the network, as well as held by miners as collateral in order to use the network.
Contracts between miners (storage providers) and clients (storage buyers) are settled through bids on an open market, using Filecoin as payment.
Filecoin tokens are also used to settle microtransactions on the network, such as when data is pulled from multiple storage locations on demand.
In addition to receiving payments, miners can also earn Filecoin simply by offering space, even if it goes unused. This is so there is a given amount of free storage on the network at any given time.
In return for providing storage space on the network, miners are rewarded with newly minted Filecoin tokens, in addition to the tokens they receive as payment from clients.
Key factors to consider when buying FIL
Filecoin is a highly inflationary cryptocurrency, which means it may not be a great asset for holding long term.
This is because it is a utility token, so it is designed to be spent and used within the Filecoin ecosystem, rather than held for its speculative value like Bitcoin.
At the time of writing – 20 November 2020 – CoinGecko data reports that only 1.85% of the total supply is in circulation. This means that a fully diluted market cap at current prices would place Filecoin at a $58 trillion valuation – about a third of global GDP in 2019.
The bulk of tokens are reserved for mining rewards, which makes up 70% of the total supply and will be gradually released over the lifetime of the network. The remaining tokens are already allocated, either sold to investors in the 2017 ICO or reserved in order to fund future development. Much of these funds are in time-locked contracts which will gradually unlock over the next few years, which is why less than 2% of the total supply is currently circulating, despite already being allocated.
Filecoin token allocation as of 20 November 2020 (source: Filecoin Specification)
How to sell FIL
To sell the native FIL token find a cryptocurrency exchange that it is listed on. This could be a centralised or decentralised exchange. You will then need to follow a similar process to that depicted in Step 3 above. Select the cryptocurrency, stablecoin or fiat currency you would like to exchange your FIL tokens for. Once you have found an exchange pairing you are happy with, look for the 'Sell FIL' button and enter the amount you wish to sell.
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