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A Primer on Filecoin – The Utility Token Everyone Will Need

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Cryptocurrencies have blown up so fast that most people haven’t stopped to consider the varying levels of utility in the various protocols. If you speak to people about cryptocurrencies, they usually get focused on the use case as a digital world currency.

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Bitcoin is the most well-known cryptocurrency for this reason. Its use case is as a digital currency that allows for borderless commerce, which means there is a massive audience. At the same time, it means there are a lot of people competing in the same space.

But when you get past the conception of cryptocurrencies having the pure utility of buying goods, the idea of utility tokens becomes possible. The same way that euros are good for buying goods in Europe and Canadian dollars are good for buying goods in Canada, each coin has a certain utility it permits access to.

Utility Tokens Are Aimed at Certain Niches

Ethereum is one such example of a utility token (ether) which is then exchanged for computation, rather than goods. Another token that has received a lot of publicity is Filecoin. In short, Filecoin is an opensource cryptocurrency that was designed to facilitate the sharing of computer storage. You pay in Filecoin for the right to store your data on someone else’s computer.

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The idea is so simple, as it is essentially an extension of Uber or Airbnb in that users are able to maximize the utilization rate of their storage systems by renting it out. And once you are in possession of Filecoin, it is easily converable into USD, BTC, or ETH.

At the same time, a marketplace for storage space is created, which results in competition pushing the prices down to make them more affordable.

By creating a market for data storage which is scalable enough to bring a lot of vendors and users to the market, Filecoin has a chance to capitalize on a complex problem with an elegant solution.

Background on Filecoin

The company was founded by Protocol Labs and raised $52 million in its Pre-ICO, followed by $200 million during the full ICO. Protocol Labs is a research, development, and deployment lab that creates network protocols like the ones that support Filecoin.

The ICO was executed in early August and raised money from 2,100+ investors. 30% of the tokens went to the genesis group, and the other 70% went to Filecoin miners. The genesis group was split up between Protocol Labs, investors, and the Filecoin Foundation. The first two parties are self-explanatory, but the 5% that went to Filecoin Foundation can be explained as money that is set aside for the long-term governance of the protocol, as well as community building and partner support.

The Filecoin token, FIL, is used to pay for storage, retrieval, and any other transactions on the network. Like many other tokens, the monetary policy is defined by having a limited supply that is set by the token sale. Just like with Bitcoin, you have minting earning block rewards in order to incentivize miners to maintain the network.

Filecoin’s Competitive Advantage

There are obvious security issues that must be faced. Most people have enough issues putting their data in the cloud, let alone on the computer of someone who is looking to make extra cash. This is why a protocol like Filecoin is necessary.

Centralized applications like Evernote and Dropbox have their own vulnerabilities that have come out over the past few years, and Filecoin can hopefully create a solution that transcends these issues.

By using strong end-to-end encryption, Filecoin makes it impossible for your data to ever be read while it is on another user’s computer. Additionally, you can be assured that none of your data is being stored on Filecoin’s servers, lest they be compromised.

When you deal with hosts on Airbnb, they are still a big part of the process. They set things up and make sure you get the keys and the place is clean. Filecoin works differently than that by handling all the file transfer and payment transactions. In this sense, it is not only decentralized away from there being company error, but also from vendor error or malpractice.

Filecoin Solves a Problem

In conclusion, Filecoin is enabling the reliable storage of data at hypercompetitive prices, by creating a scalable market for storage. Unlike mass cryptocurrencies like Bitcoin, utility tokens have specific uses, which is where all their value comes from.

The result is a coin that is scarce and can be used to purchase storage on others’ computers – a valuable resource in its own right. Filecoin has the right backing and seems to be building towards its goal in a sustainable manner, which makes it a token to watch in the near future.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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  1. tray2002

    February 27, 2018 at 2:23 am

    What are the differences between Filecoin and Siacoin?

  2. ebanhataa

    February 27, 2018 at 4:24 pm

    Great article, but why you don’t even mention SiaCoin or Storj? They were there long before Filecoin and nothing you write about is unique for Filecoin. So is Filecoin nothing but a new copy of the firstmovers in decentralized Storage?

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Altcoins

All Sports’ SOC Token Dips Amid Poor World Cup Showing

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The All Sports SOC token has sunk 11% over the past 24 hours, falling to a three month low of $0.107. This takes All Sports back to a late April valuation, right before its market cap trebled over the course of a week in early May.

AllSports Market Analysis

The SOC token’s poor performance against the dollar today coincides with the failure of a member of its advisory board to secure a win in the World Cup game played last night in Russia.

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Sergio Aguero is listed as a consultant on the All Sports website, and even though he managed to grab a goal last night, his Argentina team ultimately failed to get a win against Iceland.

In all objectivity, the price of SOC tokens had been falling for the last few days, so while the football match may have had something to do with it, it seems unlikely to have had a major impact.

Indeed, the value of the SOC token has crashed 30% in the last three days, after a fairly strong week which saw it trade for $0.15 against the dollar. Its 24 hour volume at that time peaked at $54 million. Today it’s back down to $12 million.

Argentina is the team which Lionel Messi represents, and they were hailed as early favourites for the tournament earlier in the week. Their draw against Iceland was all the more embarrassing for the fact that many of the Icelandic players are amateurs who have full-time jobs in addition to playing football.

Trades against Tether (USDT) have made up more than 60% of SOC’s entire trading volume, with Huobi and OKEx being the main centers of activity. The next most traded pair is SOC/BTC, the majority of which can also be found on Huobi and OKEx.

A Sports Hub

All Sports advertises itself as a future hub for the entire sports industry. Their roadmap details plans to turn their platform into a media, betting and market site; an ambitious aim in an industry that’s worth an untold number of billions or even trillions each year. In the UK alone, the football industry is worth an estimated $5.5 billion a year, and that’s without factoring in the billions spent in bookmakers or on gambling sites.

Footballer Advisory Boards

Grabbing a high-profile footballer to help launch your ICO is becoming all the more common, and All Sports are continuing that trend by listing not just one, but two world-renowned football players on their advisory board page.

Alongside Sergio Aguero is the Chelsea and Belgium superstar Eden Hazard, and their presence on the All Sports website is all the more startling for the fact that they are the only team members listed on the site.

Belgium play their first game of the tournament tomorrow against lowly Panama – a team they will be expected to beat. Here’s hoping that his company’s market performance doesn’t affect his own performance in the game tomorrow.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 10 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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Altcoins

Bibox Token Down 33% for the Week

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Bibox Token’s (BIX) loss of 11% over the last 24 hours compounds the 33% loss it incurred over the past week, and ends a fruitful period of growth for the exchange token.

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When the rest of the market sunk throughout the month of May, Bibox managed to power through those thirty days, recording week on week growth to the tune of 133%. Between May 8th and June 8th, the value of BIX tokens grew steadily from $0.75 to $1.75.

This morning however, the price of one BIX token suddenly dived from $1.32 to $1.16, before recovering three hours later to reach $1.29. This marks the first major dip for Bibox in months, and even at its current price, it is still more than 200% up on its early April value of $0.40.

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Bibox Token Utility

Binance Coin (BNB) and Bibox Token (BIX) operate on the same basic concept – offer reduced fees to users if they convert some of their funds into the exchange’s specific token.

Binance offers users a 50% reduction in fees, while Bibox pushes that number up to 67.5%, but requires certain stipulations such as trading at least once per week.

Exchange tokens offer an attractive investment opportunity due to their ability to grow organically through regular use. Every time a new coin is listed on an exchange, it offers an entirely new pool of funds which could conceivably be traded with the exchange token.

A glance at the monthly charts of any exchange token reveals a constant pattern of regular spikes – the result of each new coin being listed on the exchange. Similar to Bibox, the BNB token has only risen in value over the last few months – displaying a 100% growth between March and June.

Dangers of Exchange Tokens

Many crypto users have a hard enough time storing their funds on exchanges as it is. And it’s no surprise given the amount of scandal and media furore that crypto exchanges have attracted over the years.

We’ve all seen how quickly the fortunes of an exchange can change. Regulatory announcements can temporarily derail the progress of an exchange; while malicious hacks can completely wipe them out, as in the case of Mt. Gox.

With such a potential for volatility, investors are reluctant to use exchange tokens in great amounts, and tend to keep a small amount solely to qualify for the reduced exchange fees.

However, with the kind of steady growth shown by the Binance and Bibox exchange tokens over the last few months suggests that these could be solid investment opportunities for long term growth.

If some of these exchange tokens can dodge the disruptive influence of hasty regulators; and if their platforms remain secure against hackers, there’s no reason why such tokens shouldn’t be taken advantage of. But those are big ‘ifs’.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 10 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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SEC Decision on Ethereum Could Open Door to Futures Contract: CBOE President

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Proponents of Ethereum were vindicated Thursday when a high ranking U.S. regulator said transactions involving the cryptocurrency won’t be subject to federal securities laws. The announcement has renewed speculation that ether will soon make its way to the futures market.

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CBOE Optimistic About Ether’s Futures Potential

CBOE Global Markets Inc. President Chris Concannon announced Friday that his firm is seriously considering launching an Ethereum futures contract now that the Securities and Exchange Commission (SEC) has provided some guidance on the digital asset.

“We are pleased with the SEC’s decision to provide clarity with respect to current Ether transactions,” Concannon said in a statement, referring to the recent comments made by SEC corporate finance director William Hinman.

“This announcement clears a key stumbling block for Ether futures, the case for which we’ve been considering since we launched the first Bitcoin futures in December 2017.”

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Ether’s value shot up more than 10% Friday, reaching a high near $520. The currency has since fallen back to around the $500 level early Saturday, retaining a market cap of $50.2 billion on trade volumes of around $1.6 billion, according to CoinMarketCap.

Crypto trade volumes plummeted to around $11.8 billion Saturday, their lowest in over two months.

Ripple also took the SEC’s decision positively and argued that the regulator should apply the same standard to XRP.

“We believe that XRP likewise should not be classified as a security and look forward to confirmation from the SEC,” Ripple spokesman Tom Channick told Bloomberg in an email.

The SEC is said to be examining whether XRP should be grouped in with other securities given the fact that the majority of tokens are held by the San Francisco-based Ripple company.

Futures: A Double-Edged Sword

The launch of derivatives contracts is viewed positively by crypto traders, but as bitcoin futures have clearly demonstrated, this is by no means a golden ticket to profitability. In fact, it has been argued in several places that the introduction of futures is partly responsible for bitcoin’s bear market since December.

This theory was posited recently by Tom Lee, a leading cryptocurrency analyst at Fundstrat Global Advisors. In Lee’s view, the value of bitcoin tends to fall into expiration as traders short the contract but long the underlying commodity.

A controversial study by the Federal Reserve Bank of San Francisco last month concluded that futures have been the main drivers of bitcoin’s meteoric collapse. Fed researchers say the introduction of the CBOE and CME futures contracts in December made it much easier to bet on the decline in bitcoin.

Just as innovations in securitization and bond groupings contributed to the collapse of the subprime mortgage crisis, the arrival of bitcoin futures contracts have similarly impacted cryptocurrency price dynamics, the San Francisco Fed claimed.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 452 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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