Crypto Beginner

Filecoin vs. IPFS: Similarities and The Differences Between Them

For those looking for a simple explanation, Filecoin is to computer users what Airbnb is for homeowners. Like you rent your home with Airbnb, with Filecoin, you rent out your computer’s hard drive space because Filecoin is a decentralized storage network. It allows network users to rent out unused storage space in exchange for crypto assets. But isn’t that like what IPFS does? Yes, so let’s take stock of the similarities and differences between Filecoin and IPFS.

Introduction to Filecoin and IPFS

Filecoin and Inter Planetary File System (IPFS) are more popular decentralized storage systems. While both have been developed by Protocol Labs and are complementary, they serve different purposes. They also have unique features that distinguish them from each other.

While IPFS is similar to torrents work, Filecoin incentivizes users to provide storage space and bandwidth. And Filecoin is built on top of the IPFS protocol.

Understanding the working of Filecoin and IPFS

IPFS is designed to provide a way to store and access files in a distributed manner without relying on centralized servers or services. IPFS breaks files into smaller pieces and stores them across a network of nodes. However, the storage is not permanent. So it has to rely on pinning services. But that makes IPFS not fully stable or reliable.

Filecoin, on the other hand, ensures that stored files are always available because it relies on blockchain technology. One of its key benefits is that it provides a market-based approach to storage. This means that storage providers are incentivized to offer competitive prices, so users can choose a provider who offers the best value for their money. IPFS’s content-addressed system is beneficial since each file is given a unique identifier based on its content rather than its location. This makes it easier to share files without worrying about their location and ensures that files are tamper-proof.

Comparing the key features of Filecoin and IPFS

Both platforms offer the ability to store vast amounts of data over the internet. But IPFS is similar to torrents. The main difference between IPFS and torrents is that the former is more resilient to attacks and uses a content-addressed system. However, Filecoin takes this one level up by incentivizing users to share space and bandwidth. In other respects, both have more or less the same features.

The impact of Filecoin and IPFS on the decentralized web

These storage systems have significantly impacted the development of the decentralized web. Before their creation, there were no common decentralized storage solutions. That means data was mostly stored on centralized servers owned by large corporations. Centralization created a number of issues, such as data breaches, censorship, and even limited access to information.

With IPFS and Filecoin, users store and share data in a decentralized way. IPFS enables content-addressed storage and distribution. So files are stored across a network of nodes, and anyone on the network can access them without relying on a central server. Filecoin takes this further by incentivizing users to provide storage space and bandwidth with tokens.

Similarities between Filecoin and IPFS

The Filecoin network shares several similarities with IPFS. Since Filecoin is built on top of the IPFS protocol, they also share many of the same features and benefits. Both systems, for instance, are decentralized—meaning they do not rely on centralized servers. This makes them more resilient to attacks. Besides, the files are always accessible, even if some nodes go offline.

Also, both systems use a content-addressed system. That means the files get a unique identifier based on their content, making sharing easier. And more importantly, it ensures that files are tamper-proof.

Difference between Filecoin and IPFS

While Filecoin and IPFS are decentralized storage systems, they have several key differences. The most basic one is in relation to incentives. Filecoin incentivizes users to provide storage space, while IPFS does not. IPFS is thus better suited for personal use, while Filecoin is better for commercial applications.

Next, IPFS stores files across a network of nodes, while Filecoin stores files on nodes that provide storage for pay. So Filecoin is more reliable and secure but also more expensive.

When it comes to tokens, IPFS does not have its own token. But Filecoin does—FIL. Filecoin users can, therefore, earn these tokens by providing storage. The tokens can then be traded on exchanges.

Also, Filecoin uses a market-based approach to storage, while IPFS does not. As a result, storage providers on Filecoin are incentivized to offer competitive prices. This ultimately benefits users.

Advantages and disadvantages of Filecoin and IPFS

Filecoin’s incentives to users, creation of a resilient, decentralized market, and a strong community of developers and users is a huge advantages. On the other hand, IPFS has the advantage of easy accessibility, a simple command-line interface, and ease of integration with existing systems and applications.

But there are several disadvantages to both. Filecoin is still relatively new and has yet to achieve widespread adoption. As a result, finding reliable storage providers is much harder. Additionally, it can be more complex to use as it requires some technical knowledge. IPFS, on the other hand, may suffer from slow transfer speeds. Further, it requires many nodes to ensure adequate redundancy and availability. It can also be more difficult to monetize than Filecoin.


While Filecoin may seem more attractive than IPFS, it’s important to note that investing in any crypto always involves risk due to volatility. So do your own research and only invest what you can afford to lose.


Does IPFS need Filecoin?

No, IPFS (InterPlanetary File System) doesn’t require Filecoin, but they can complement each other for decentralized storage and content distribution.

Why is Filecoin storage so cheap?

Filecoin storage can be relatively cheap due to its decentralized nature, as it leverages idle storage capacity from network participants, creating a competitive market that drives down prices.

Is Filecoin storage good?

Filecoin storage is generally considered reliable and secure due to its decentralized architecture and cryptographic measures. However, individual experiences may vary.

What are the disadvantages of Filecoin?

Some potential disadvantages of Filecoin include complex setup and configuration, reliance on network performance, and the need for ongoing maintenance and monitoring of storage deals.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered investment/financial advice from CoinSwitch. Any action taken upon the information shall be at the user’s risk.

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