Filecoin: Amazon S3 for Web 3

Filecoin

In part 3 of our ongoing series about blockchain infrastructure trends, we’ll focus on storage. In particular, how one ICO aims to be the blockchain equivalent of Amazon’s giant cloud storage platform, S3.

Let’s firstly put this in context. A major part of the appeal of blockchain is that it will enable decentralized apps. The example I always gravitate to is a blockchain version of Twitter, which I described in a recent column. I chose Twitter to pick on because it has a history of flexing its centralized muscles and shoving aside third party developers. If Twitter had been a decentralized app from the start, those spurned developers would simply have forked Twitter and continued to build the open platform they – and we users – wanted.

It’s a lovely dream, but there’s at least one key problem with it. A decentralized Twitter would require somewhere to store the hundreds of millions of tweets that are produced every day (currently around 500 million tweets per day are sent on Twitter). While a blockchain such as Ethereum can be used to store metadata, it’s infeasible to store the actual content of tweets onto the blockchain. What’s needed is a decentralized storage solution.

Fortunately, there are companies working on this. The most high profile is FileCoin, which had a $250 million ICO in 2017. Essentially, FileCoin enables you to rent out spare storage on your computer to people or companies that need it. It’s been described as an “Airbnb for storage” by its founder Juan Benet.

If it fulfils its grand ambition, Filecoin could become the Amazon S3 – and perhaps even the entire Amazon Web Services (AWS) platform – of this new blockchain era.

If you’re old enough to remember Web 2.0, you may recall how Amazon made a bold and unexpected move to build a Web platform in 2006. In a post from that time on my old site, ReadWriteWeb, Alex Iskold described the storage layer that Amazon had developed as “a complete virtualization of data storage.” That storage component was – and still is – called Amazon S3 (Simple Storage Service). Basically, it allowed other Internet companies to use Amazon’s servers to store data and retrieve it as required using APIs (Application Programming Interfaces).

In a follow-up post a few months later, Iskold wrote that “Amazon is beginning to look more like an alternative Microsoft for the web computing era.” How fast things change in computing technology. Now, just over eleven years later, we can say that Filecoin is looking like an alternative Amazon S3 for the blockchain computing era.

The key difference is that this time, we’re not reliant on a few large, centralized players who can set whatever price they want. If Filecoin works, it will create a decentralized market for online storage.

Amazon was able to start S3 in the mid-2000s because it had built up an incredible amount of server capacity, mostly as a by-product of rapidly growing its e-commerce business. Amazon was the first of the big Internet companies to realize that owning a bunch of server farms presented a secondary business model: renting spare capacity out to startups and other small businesses. Google and Microsoft eventually did this too, and soon much of the Web 2.0 startup ecosystem was powered by the “Web platforms” offered by these big companies.

If Amazon Web Services was powered by APIs, then Filecoin is powered by its token. Basically, the Filecoin token incentivizes people to offer up their spare computer storage. Here’s how it’s described in the white paper:

The market runs on a blockchain with a native protocol token (also called “Filecoin”), which miners earn by providing storage to clients. Conversely, clients spend Filecoin hiring miners to store or distribute data.

The basic idea is that the price paid for storage using Filecoin will be a competitive market between the users and “miners.” This should result in lower prices all round, because the market is no longer controlled by an oligarchy.

The downside to Filecoin is that it’s almost impossible for the layman to understand how it works. Further in the white paper two key concepts are described: “Proof-of-replication” to verify storage, and “Proof-of-space-time” for mining blocks. The explanation for these two things includes the type of mathematical formulas that perhaps Stephen Hawking is capable of grokking at a glance, but not so the rest of us:

Filecoin math

Filecoin also relies heavily on a distributed web protocol called IPFS, which stands for Interplanetary File System. That grand name gives a clue to the ambitions of IPFS, which not coincidentally was also created by Juan Benet.

Simply put, IPFS wants to replace HTTP on the Internet. I won’t get into the weeds of that here, but suffice to say that IPFS makes use of the same concepts that power blockchains. For example, with IPFS “each file and all of the blocks within it are given a unique fingerprint called a cryptographic hash.” This allows version control, among other things.

But back to Filecoin. While it isn’t easy to understand the technical details, if it works it could potentially replace Amazon S3 as a storage layer for…you guessed it, a decentralized Twitter application. That’s the goal anyway. As usual for blockchain companies, Filecoin is very early in its development.

In Filecoin’s most recent blog update in early January, the company said that IPFS is currently being used by early blockchain startups like OpenBazaar and the Brave browser. On the Filecoin side, the company wrote that “the bulk of our implementation work involves building and testing new Filecoin-specific parts, which are still monumental endeavors.” It also noted that “tens of thousands of very enthusiastic early storage users and miners have already signed up for our early user and early miner programs.”

Who knows if Filecoin will eventually work as touted, but remember that Amazon S3 started as a largely experimental side project in 2006. But by 2013, it was storing 2 trillion (2 x 1012) objects and doing over 1.1 million requests per second. I’ve no doubt that Filecoin is aiming even bigger than that.

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