Filecoin mainnet launch brings Web 3.0 apps to the mainstream
After some early turbulence, Filecoin is now opening up applications like video streaming and social networks that used to exist only in centralized Web 2.0.
Decentralized cloud storage network Filecoin’s recent mainnet launch, after hitting some initial turbulence, is now opening up a range of applications that previously only existed in centralized Web 2.0 environments.
“Filecoin really brings for the first time the ability to have a large scale application to be fully Web 3.0-native, so you can do things like video streaming or entire social networks, those kinds of applications are now possible in a Web 3.0 environment,” Protocol Labs CEO Juan Benet told Forkast.News.
According to Benet, previous attempts at video hosting or distribution systems in Web 3.0 had been slowed down some form of centralization.
“But now this is becoming possible,” Benet said. “Now, you could actually store these massive datasets and compute on them in a fully decentralized cloud, and so that's a super interesting use case that's coming up.”
While Filecoin’s mainnet launch presents a wide variety of applications to now be available in decentralized networks, a large proportion of Filecoin’s miners are located in China due to its low energy rates and easy access to mining hardware manufacturers.
“Most of the cryptocurrency mining happens in China, and Filecoin right now is no different,” Benet said. “But what we expect to happen is that as the demand for storage comes in and increases around the world, that's going to start pushing out a lot of the mining activities to a bunch of these other countries where clients are going to draw those miners to go there.”
See related article: What's up with Filecoin and the uproar over its miners?
By the second half of this year, visual intelligence tracking platform Sensity has identified more than 49,000 deepfake videos — a three-fold increase since July 2019.
“We need to be able to verify the authenticity of that information,” Benet said. “And it's an important bedrock to society that we actually know what information is true and what information is not true.”
Shortly after Filecoin’s Oct. 15 launch, a Chinese blockchain media outlet 8btc reported that miners were complaining over Filecoin's economic model and shut off their machines in protest, due to lack of Filecoin. This reportedly included one of the network's top miners that operated over 8,000 IPFS mining machines to leave only 276 of its machines running on October 17 — leading some in the media to erroneously report that there was a miners’ “strike” against Filecoin.
Benet said the reports of a miners’ strike weren’t true.
"Miners continue their operations and are continuing to store their data and are continuing to prove that they're storing information," Benet said, adding that the transition from testnet into mainnet has resulted in miners scaling growth rates to match token flow.
Filecoin’s mainnet launch also came with the announcement of Starling, a decentralized storage that is capable of demonstrating a file’s authenticity over time by establishing auditability and authenticity for different kinds of information such as images.
“We're seeing a lot of those problems today, with misinformation and disinformation campaigns and so on, and it's only going to get worse,” Benet said. “Unless we manage to build systems — and this is both technology systems and human systems — to properly verify the authenticity of this information and preserve it.”
Watch Benet’s full interview with Forkast.News Editor-in-Chief Angie Lau as he addresses the controversies and allegations surrounding Filecoin’s mainnet launch, and how decentralized cloud storage can power information integrity and Web 3.0-native large scale applications.
- What Filecoin brings to the Web 3.0 environment: “For a long time, the blockchain space has worked really well for financial transactions and for things where there's a core business logic that can go on a smart contract. But for the most part, it hasn't worked well for full applications that are either native applications or Web applications. Those are all so Web 2.0-oriented and in centralized environments. So Filecoin really brings for the first time the ability to have a large-scale application to be fully Web 3.0-native, so you can do things like video streaming or entire social networks, those kinds of applications are now possible in a Web 3.0 environment.”
- Why society must ensure integrity of information: "Now people are starting to produce fake video entirely, where, right now it's sort of distinguishable, you can sort of tell that it's fake, but in a few years' time, we will get fully indistinguishable pieces of video where we'll have even the audio to be totally fake. So it's extremely important for our society and for our civilization... that the information that we distribute needs to be verifiable. We need to be able to verify the authenticity of that information."
- Filecoin and many other cryptocurrencies' miners are in China: "Most of the cryptocurrency mining happens in China, and Filecoin right now is no different. But what we expect to happen is that as the demand for storage comes in and increases around the world, that's going to start pushing out a lot of the mining activities to a bunch of these other countries where clients are going to draw those miners to go there.”
- On Filecoin's "exit scam" allegations: "We haven't heard any reports from anybody around any illegitimate trades or anything like that. Of course, that could happen in exchanges, who knows. So somebody noticed some movements in currency and some trades and some exchanges, and then some people, some unscrupulous people, claimed that was an exit scam and effectively lied to the broader public, claiming that that was us selling a bunch of Filecoin, and that was absolutely false and completely untrue.”
Angie Lau: It's the promise of Web 3.0: decentralized storage network Filecoin to be the important economic backbone that incentivizes the every-person to participate and grow the internet of tomorrow. It's addressing real time needs of today. And today we dive into Filecoin's mainnet launch. It is one of the most anticipated public launches of a token that we've seen in a very long time, and one that Protocol Labs has been working on for years.
Welcome to Word on the Block, the series that takes a deeper dive into blockchain and the emerging technologies that shape our world at the intersection of business, politics and economy: it's what we cover right here on Forkast.News. I'm Forkast.News Editor-in-Chief Angie Lau.
Well, let's get straight to it. Here to address everything — the launch, Filecoin, and the promise — for the first time, and it's a rare interview that he grants. It's Juan Benet, named in 2018 Fortune's 40 under 40. He's a Stanford grad, a Y Combinator alum, and founder and CEO of Protocol Labs. Juan, welcome.
Juan Benet: Thank you so much for having me here.
Lau: I absolutely know how intense and crazy it must have been, just these past couple of months, all culminating into the launch. So congratulations on launching the mainnet. How do you assess the past week, the years of prep? How did it all go for you?
Benet: Oh, it was really, really amazing — super thrilling to have the network live and have a lot of participants coming together to add a lot of capacity and start storing data on the network. As a group, we're over-the-moon excited for what comes next. This was a really important milestone. It's a new beginning. Of course, we've been working towards this for many years, so it's been a great culmination of effort, but it's just a milestone in a very long journey ahead. And so for us, it's great to turn the corner and now set our sights on all kinds of interesting applications and use cases that are coming ahead.
Lau: In the run up to mainnet was certainly the testnet and all the projects that you have been working on. And I'm curious that in the past couple of years you've just been aggregating a lot of applications to IPFS (InterPlanetary File System), to Filecoin, you've accrued about 85 projects that are working on this. Tell me just some of the highlights that excite you the most as to the promise of what Filecoin can really fuel, for people like, well, not you, because you're the vision behind it, but for people like me, and a lot of our audience who have been watching from the sidelines and trying to figure out what the future holds.
Benet: It's been super exciting to work with a lot of the developers who are stoked about bringing Web 3.0 applications to the mainstream. For a long time, the blockchain space has worked really well for financial transactions and for things where there's a core business logic that can go on a smart contract. But for the most part, it hasn't worked well for full applications that are either native applications or Web applications. Those are all so Web 2.0-oriented and in centralized environments.
So Filecoin really brings for the first time the ability to have a large scale application to be fully Web 3.0-native, so you can do things like video streaming or entire social networks, , those kinds of applications are now possible in a Web 3.0 environment. So it's been really fantastic to be working with a whole range of developers that are now breaking ground on this new platform and are starting to build the first versions of the next wave of Web 3.0.
So we see this as a really critical moment in the progression of Web 3.0, where there's a very large wave coming, and that's partly due to a whole range of new blockchains that are adding new transaction throughput and new smart contract languages and so on, plus systems like Filecoin that now finally give you the capability to deploy full applications that are Web 3.0-native and actually compete with and contend with the centralized cloud. We think that there are teams now that are starting to build a whole range of applications that, probably in six months or a year, are going to be the big news and the big thing of Web 3.0. And as an example, one of the things that I've been extremely excited about is video. So nobody's been able to really do video in Web 3.0.
We have a really cool set of demos around us where a few application developers just, fairly quickly, plugged Livepeer and Filecoin together and built a full video on demand distribution platform, entirely on Livepeer. That's pretty impressive and pretty amazing. So that's one of our use cases. Another one is information distribution systems, like blog sites or things like social networks and so on. That whole range of applications hasn't been possible in Web 3.0 before. There have been attempts to do that, but they've always been hampered by having to have a centralized crush of some kind. And now all of those are possible at this moment. So we expect to see a bunch of development around those.
And then other kinds of interesting applications in computing where machine learning, for example, is a super hot field and generates a vast amount of data, and you want to be able to compute very close to the data, in those environments before, Web 3.0 has not been at all able to say anything about that; that has been mostly the realm of fully centralized clouds. But now this is becoming possible. Now, you could actually store these massive datasets and compute on them in a fully decentralized cloud, and so that's a super interesting use case that's coming up.
Lau: I mean, it's just that the voracious appetite of humanity right now, even in advance of 5G and IoT, which is just going to exponentially explode the size of files and the scope of data, one of the questions with current Internet is: how do we organize and how do we address all of these data needs? I'm curious that as more come into play, how does Filecoin aim to incentivize not only the miners but also the everyday person to actually utilize? Tell us a little bit more about the basics of how the tokenomics thinking works for the average person.
Benet: Yeah, so Filecoin is a decentralized storage network where you think of it kind of like a marketplace like Airbnb. There are two sides to that marketplace: there are the providers, the service providers, and so in the case of Airbnb, this would be the hosts that are going to host people in their space. In the case of Filecoin, this is people with a lot of storage. They add that storage to the network and basically rent it out to the network. And then on the other side of the market are the people wanting to rent that storage.
So they use Filecoin as a medium of exchange for those transactions to happen. And the way that the network operates is that first of all, the one layer of incentive is just, of course, the clients paying the miners for those files to be stored in the long term and for retrieval. So any kind of operation, both long term storage and the retrieval can be incentivized by the payment from the clients.
Now, in addition to that, there's also the normal block reward incentive that comes from having a blockchain network that is mined. And so that block reward incentive is paid out to Filecoin miners that are storing useful data. So that's where Filecoin had an important contribution beyond even blockchain systems, where we found a really good way of making storage — having useful work be provided to maintain consensus. That's a very important piece because it means that when you think about blockchain mining, things like Bitcoin or Ethereum or others, where there's an enormous amount of work invested in mining each block and so on, you have an enormous amount of energy and resources spent in mining the currency.
And in Filecoin's case, we can divert all of that effort, all that work and energy and so on, to provide a useful service. So there's this very important block reward incentive that brings a lot of miners to the network to provide that capacity and then to ultimately store valuable data for users in the long term. So that's one of the really key components. Now, there's a lot of other layers to the economy; there are different kinds of incentive flows that you want to enable, you want to catch bad behavior, like if miners are storing data for somebody and they lose it, then you want to be able to punish that behavior so that miners actually fulfil their obligations and their deals with clients.
This is where collaterals are involved, so there's usually some amount of collateral involved with all of these kinds of actions. You can think of it kind of like staking in Ethereum 2.0 or other proof-of-stake blockchains, where there is some collateral at stake for performing a set of good actions. The Filecoin economy has a number of mechanisms like that.
In terms of incentivizing clients and developers and so on, we think the ability to use extremely cheap storage is going to be a very, very powerful incentive, and we're already seeing people be drawn to Filecoin for that reason.
Lau: Yeah, I mean, part of the strength of what Filecoin needs to depend on is that decentralized network. We do know that this is not only an issue for Filecoin, but Bitcoin and a lot of other protocols, where we see a large aggregate location of miners from one geographic location. So we're talking about China here. There are incredible incentives for China miners to participate: the energy rates are low, there's great access to hardware and teams, and so we are seeing a lot of aggregation there. Do you see that as an issue, and how are you addressing it?
Benet: That's a great question. So the composition of the mining community, and you can think of the diversity along a few different axes. One of them is just organizational diversity. You want multiple different organizations to be mining the currency. This is important to prevent certain kinds of attacks, like a 51% attack and so on. Famously in Bitcoin and Ethereum and other networks like that, there's been a small amount of mining pools. Bitcoin in some periods of time got down to three. You only really need two mining pools to collude to be able to mount an attack, which was pretty bad.
Nowadays, Bitcoin's a lot better — that number has been bumped down. Now, you would need like five or seven to collude. In Filecoin, we're really happy to report, we have a lot more organizations that are vying for those top spots, so you would need a lot more miners to actually be wanting to attack the network, which is a great, great result. So that's one important component: just organizational diversity.
Now, you point out geographic diversity. That's a very, very critical point to the miner base, not just for a cryptocurrency in general. So, of course, mining — you would want a lot of different miners to be around the world to prevent any kind of problem that maybe takes out one part of the Internet or takes out one country and disconnects it, then you wouldn't want that kind of disruption to disrupt the operation of the network. So that's kind of like tablespace. But on top of that, in Filecoin's case, you also want a storage distribution where you have capacity all around the world. So when a client wants to hire storage, they want to hire that storage in specific regions of the world, not just in one or two.
And so that really creates a supply and demand geographic diversity as being a really important thing for Filecoin, because in Filecoin, you want the storage providers to be in many regions of the world. So when a client wants to store data in a storage network, they might want to pick precisely which regions of the world to store that data in. So a client might want their data to be located in South America, or in Europe, or in Southeast Asia.
They might have specific requirements around where the data is stored. Those requirements come from a lot of reasons — one reason might be latency. You want that data to be served within a certain speed. Another might be redundancy. You might want data to be stored on multiple different continents. Or there might be certain jurisdictions and legal requirements for storing data in a particular jurisdiction. For example, GDPR (E.U.'s General Data Protection Regulation) restrictions force data to be stored in one particular region. So that means that the demand for storage will be different in different regions and will depend on the community of clients that bring in that demand.
So currently, the Filecoin network is — there's interest around the world, but it's skewed in China, like many other cryptocurrency mining endeavors. Most of the cryptocurrency mining happens in China, and Filecoin right now is no different. But what we expect to happen is that as the demand for storage comes in and increases around the world, that's going to start pushing out a lot of the mining activities to a bunch of these other countries where clients are going to draw those miners to go there. But we expect it to track the demand and we'll probably lag behind the demand.
So we sort of expect the demand to have to come in in certain regions of the world first before miners start moving and creating operations or really scaling up operations in certain regions of the world. And like you mentioned, definitely manufacturing is one of the big reasons why a lot of mining happens in China. It is just dramatically cheaper to be able to set up a really robust mining operation there. But in fact, we sort of expect over time — and this might take years — but we expect over time the distribution of storage will match the distribution of demand. And so right now, it's early days, so the capacity is skewed at the moment. But as the demand for that storage comes in, that'll start shifting the distribution.
Lau: And there's no doubt you're learning every day. You're learning via these relationships that you have with your miners, you're taking a look at your network, and obviously, there's a lot of learning to be done; a recent media report shared that top Filecoin miners shut off their machines due to not having sufficient Filecoin. Was that an issue that you're learning from? How did you address it?
Benet: Yes. So, first of all, that wasn't true. So people reported that the miners were stopping their machines entirely and were stopping their operations. And that just hasn't been true. Miners continue their operations and are continuing to store their data and are continuing to prove that they're storing information.
Something that has happened is people are matching their growth rate. So now that we've transitioned from testnet into mainnet, miners are scaling their growth rate to match their token flow. So miners have a certain amount of token flow coming from the storage that they are providing and from the block reward and so on, and that implies a certain growth rate that they should match. So in testnet, it was basically growing for free, and so people were maxing out and going as fast as they possibly could. So we've seen now that we are in mainnet, that has come down to adjust to the right growth rate.
So that's the shift that has happened. Now, some people and some miners use the moment, and maybe they chose to stop growing for this reason or something, but they try to use that — basically what's happening is, in any kind of network like this, people will try to claim X or claim Y if they think that that can get them something. So we anticipate that just in the history of Filecoin, just like in the history of Ethereum or the history of Bitcoin, there will be a lot of different parties trying to jockey for power and jockey for greater rewards by claiming various things.
And so at the end of the day, you can look at the chain explorers and you can see the mining power, you can see the growth rate, which the network continues to grow at a tremendous rate, and you can see the rewards, and you can see all of the miners and what they're proving — you can see that they're storing the data, that they're continuing to prove it and they're continuing to earn rewards, and they're making a lot of money. So looking at the data does not correlate with those reports.
Lau: And it underscores actually the thing that you noted at the very beginning when you thought about what Filecoin needed to be, which is completely decentralized, what other efforts beyond tokenomics, obviously these are different business relationships that exist in blockchain that don't necessarily exist in the traditional legacy space. I guess one example would be if you are a huge retailer and you're jockeying over shelf space and then access and price. I guess that would be a real-world example. So to understand that, we've got to boil it down back to, it has to be decentralized. And so how are you learning from this experience during the launch and how are you moving forward to really get beyond a geographical aggregated point of people who are supporting it via mining and expand it to a truly decentralized space?
Benet: Well, first of all, I would say that even with a geographical concentration in China, it's still way more decentralized than most other blockchains, just by the organizational diversity that Filecoin has. So that's a really promising spot where it's already more decentralized than other networks. Now, in terms of geographical diversity, yeah, that's definitely the next area to go, but again, that'll track demand.
So this means as developers and users appear in a bunch of the regions and they start introducing demand, that's what will cause the distribution of storage to shift. And so it's only as that demand comes in that distribution of storage will shift. It'll just lag whatever the growth of storage used in those regions is. So from our perspective, it's an open network. Anybody can go and add demand. There's a lot of developers that are already developing applications in a bunch of cases. It's as those applications gain usage in different regions and as that requires storage in those particular regions that we'll see the mining community shift in numbers. That said, there is growth in every major region. So we know the number of miners in North America and Europe and so on all continue to grow. It's just that so far, their growth has been eclipsed by the growth in China.
Lau: One of the key things about Filecoin is as an alternative to existing centralized data storage of really Web 2.0, but one of those traditional centralized data storage giants, Google, just teamed up with EOS. It's interesting that it's either a coincidence or there's just a lot of promise in the decentralized cloud storage space. I wonder what your comment is about that partnership.
Benet: So we don't have any specific comments on that partnership, but I think the broader landscape points to the giants of computing taking blockchain much more seriously, which is great. I think that 10 years ago, Bitcoin was laughed out of rooms in a lot of these environments. The giants of computing at the time regarded transacting through Bitcoin as super silly and didn't really understand the value these systems would offer. Now, fast forward a lot of time, Bitcoin grew tremendously, so did Ethereum and a whole bunch of other blockchains and systems, and the broader Web 3.0 landscape emerged.
It's just following the traditional technology revolution story, which is that when something new comes along, it's either so obvious to the current incumbents that the incumbents just completely own the space — so, for example, this happened in mobile. Mobile was so obvious that the current incumbents just moved over to own that space.
So this is why Apple, which was already a greatly established company, became one of the main players, and then why Google, another extremely well-established company, became the other major dominant player. Now, if the innovation is not obvious, and it is kind of strange and different in some important way, that usually creates a whole range of new systems and new applications, and usually the incumbents take a very long time in understanding the magnitude and importance of the shift. This happened with personal computing. Funnily, when Apple first started, IBM and other companies at the time thought it was totally ridiculous that people would want to have computers in their home. At the time, it was seen as very silly. It was a very silly proposition that somebody would want a computer in their house, and really computers were only for big business tasks and maybe executives, and IBM lost the entire personal computing market to them until much later, once they had to play catch up. So it's really interesting and promising to see that finally the broader giants of computing are now actually taking steps towards realizing how important blockchain systems are.
Now, the important challenge, though, is making sure that the values of these systems don't get broken along the way. So these larger systems and these larger players, fundamentally Web 3.0 has a whole set of principles about how the networks are supposed to operate that should embed important rights of operation in these networks. This comes along usually under the banner of decentralization, but what it really means is reducing the level of control that any party really has over the network, and reducing the ability for these parties to censor or the ability for these parties to prevent the operation of certain applications and whatnot.
And so as the giants of computing start getting interested in Web 3.0 and in blockchains, if they don't really adopt those principles and those values and they start breaking them, then those systems won't work. It'll be kind of like when there were a lot of companies that tried to build social networks, and they didn't work because they were just copying and they weren't really understanding how the social networks function. And so it'll be interesting to see, with these larger-scale players coming into the blockchain space, whether or not they understand the reasons why people use these systems.
If they don't get those principles right, then they won't work, which is good because in either case, we win. If they get the systems and they help build out a large-scale system that follows the principles, awesome. We now have large-scale systems developed and deployed in partnership with these larger players that follow the important principles and rights of Web 3.0. Now, if they don't get it, then their systems won't work, and then the current wave of systems will win at the end.
Lau: That truly is a promise. I note that there are already a lot of incumbents in the Filecoin space. As you launched, one of the big announcements was Starling framework for data integrity. This is actually led by someone who is actually well known to the mainstream from his HBO days: Silicon Valley. How is this Starling framework designed to really create a new way of thinking in Web 3.0 in video and data integrity?
Benet: Thanks for mentioning Starling. So Starling is a really important project to bring useful cryptographic techniques in helping ensure the integrity of information. So there's a lot of information that we produce as humans where we really need to make sure that the integrity of that information is preserved, and we can verify the authenticity of that information, and that we preserve that information in the long term. So, for example, if in a newspaper or any kind of piece of media, you see an image of some important event, it is extremely important that that image is known to be true. And nowadays, there's a lot of competing techniques for faking these images and so on.
Lau: Yeah, deepfakes are so... it's crazy what you can do with deepfakes. It looks so real.
Benet: Exactly, and it's going to get more real over time. And this is starting to reach video. So now people are starting to produce fake video entirely, where, right now it's sort of distinguishable, you can sort of telling that it's fake, but in a few years' time, we will get fully indistinguishable pieces of video where we'll have even the audio to be totally fake. So it's extremely important for our society and for our civilization, really, it's a large-scale, very important principle that the information that we distribute needs to be verifiable.
We need to be able to verify the authenticity of that information. And it's an important bedrock to society that we actually know what information is true and what information is not true. We're seeing a lot of those problems today, with misinformation and disinformation campaigns and so on, and it's only going to get worse, unless we manage to build systems — and this is both technology systems and human systems — to properly verify the authenticity of this information and preserve it.
So this is where Starling comes in. Starling is a really amazing project that is using a lot of different components in technology to establish auditability and authenticity in a lot of different kinds of pieces of information, including pictures and so on, taken by camera phones and whatnot. And also it's helping organizations to preserve extremely important records that need to be preserved for a long term.
So for example, there's a lot of critical testimonial evidence gathered about important human conflicts that many powerful groups would benefit from wiping out and disappearing, and it is that testimonial evidence that historically has provided a way for achieving justice in the long term, and a way for attempting to repair the damage or at least knowing what has happened in the past so that we don't let ourselves as a civilization commit those mistakes again. And we can observe them, and we can take action when we start to see them happening again.
Lau: So we don't repeat history, yeah.
Benet: Exactly. And some of the evidence is as important and deep and... it carries a very large magnitude in that this includes things like testimonials about genocides, where....
Lau: The Holocaust, even.
Benet: The Holocaust, exactly. So there's a lot of really important testimonial material that is collected and archived by a lot of different organizations, and that material is collected, it is annotated with a lot of information that helps verify the authenticity and the validity of that testimony, and then you need to preserve that testimony in networks and systems that will make sure to carry that information on for the future.
And so one of the experiments that Starling is trying, is a few different things, but one of them is using the Filecoin network to effectively get a lot of copies of this important testimonial piece of evidence out into the network and get a lot of different redundant copies of this really vital, vital information to be preserved in the long term. And it is Filecoin's verifiability. Filecoin provides the ability to check and to really tell whether or not people are storing the data. That kind of becomes useful here; you can get an auditable trace of whether or not people are continuing to store that data.
Another really important thing that I think Starling is experimenting with as well is embedding the ability to produce proof of authenticity when a picture is taken. So imagine if your camera phone, every time you took a photo, there was additional cryptographic material embedded in the photo that could be used to really verify the authenticity of that particular photo being taken, so that if at any point it was doctored or changed or whatever, then people could tell that that was a different image. That's another really important experiment that hopefully will help bring a lot of authenticity, verifiability to media in general.
Lau: I mean, that just speaks a lot to the issues we're facing right now, with fake news and deepfakes and all the rest, I mean, you're essentially applying a lot of the tools that we as journalists apply to our work to cross-reference and make sure that the original source is authentic and true, and so, we could take your word for it, but as the saying goes, if your mother tells you she loves you, you'd better check it out. That's literally the kind of thinking that you have to apply here. You're talking about cross-referencing not only the person who's taking the photo, but the ownership, even, of the device itself, even GPS locations. You could cross-reference time, you could cross-reference environment, and just to really aggregate all of those pieces of data that then truly authenticates the authenticity of that. I see the application there.
DeFi is another interesting application for Filecoin. I mean, we've just seen the enormous trend of DeFi growing up into 2020; it's now reached more than 11 billion from just half a billion about a year ago. There's just a lot of new innovations that are happening in the space. But then as we've noted in our community, in this industry, there are also a lot of bad actors. How is Filecoin integrating and working inside DeFi, looking to obviously encourage innovation, but keep things on the straight and narrow for a lot of users in that space?
Benet: Yeah, so DeFi — for those unfamiliar, decentralized finance — is a new set of techniques that enable different kinds of financial transactions and instruments in blockchains. So one of the big things that's been happening in DeFi is lending. So people are able to loan tokens, and these are like collateralized loans and so on. That's one important thing that we've seen since launch: already, very quickly, various different groups set up, loan markets around Filecoin that help miners scale their operations. So this is an important component in an economy like Filecoin, is you want to reduce the problems that come from volatility in markets and whatnot, to give miners and other participants much more reliable and stable pricing. And so this is something where DeFi has benefited both the lenders and borrowers in that space. That's one piece.
Another piece that we think is really interesting and promising is, people are starting to build markets for storage. With Filecoin, you have the ability to list out and rent cloud storage. And that can be a basic operation that allows you to hire space for a duration of time on the Filecoin network. And so that commoditizes storage in a really powerful way, in a way that hasn't been done before. So this means now cloud storage itself can become a commodity.
So before, maybe hard drives were commoditized, but cloud storage itself is a large industry with large reputational moats and so on, and usually it's only the large computing giants that are trusted and whatnot. So fully commoditized cloud storage is very interesting and promising, and that's where DeFi and Filecoin kind of mix, where there's all kinds of important financial structures and instruments around commodities that help adjust the commodities markets, and we're sort of seeing different groups interested in experimenting with those kinds of primitives in Filecoin.
So that would be very interesting evolution where we sort of expect a lot of DeFi-oriented contracts to emerge in Ethereum and in other blockchains like that that will use the actual digital storage, cloud storage, as a component to trade on.
Lau: Yeah, I mean, and so then how does it feel for you — I've got to bring this up, it's out there, but as part of the launch, 800,000 Filecoin were released, and one person characterized it as "an exit scam." How does that feel to you, as there's just a lot of that activity right now in DeFi, and then to be wrapped up alongside that?
Benet: So I guess you're referring to Justin Sun noticing there were some trades in some exchanges that were — by the way, all of the trades and exchanges, as far as we know, are all legitimate. We haven't heard any reports from anybody around any illegitimate trades or anything like that. Of course, that could happen in exchanges, who knows. So somebody noticed some movements in currency and some trades and some exchanges, and then some people, some unscrupulous people, claimed that was an exit scam and effectively lied to the broader public, claiming that that was us selling a bunch of Filecoin, and that was absolutely false and completely untrue.
So this is people that are used to attacking our networks and other networks and are just trying to... we have to come out and call it out very publicly, but it's unfortunately par for the course with those folks. These kinds of activities happen in blockchain, so Ethereum for a very long time was called a scam, and it was called a Ponzi scheme, and things like that by a lot of detractors that stood to benefit a lot by harming Ethereum. And so we sort of see that same story playing out in most networks that are useful and valuable in the long term. Various different groups can make money by harming those networks, either by shorting them or because they're competitive with them or something like that.
And just in this particular case, we just know that the people that went out and lied and made all these bogus claims, they have a history of attacking other networks like that. It sucks, it's part of the way that — one person put it as like, it's the big leagues, people will go out and do that. And so unfortunately, it comes with the success.
Lau: Well, you've been at it for a couple of years, Juan, and mainnet, it finally happened. How does it actually feel to take a look at the universe of projects that are now in place based on a vision that you had those years ago, triggered by something called censorship? From that early genesis of your idea to what we've seen in mainnet launch this month, how do you feel about the journey?
Benet: Yes. I mean, for me personally, it's been a six-year journey to get to this launch moment. But I really see it as many decades ahead of a lot of development and computing. A lot of this started for me with IPFS. This is the first major system that we built, and this is a different way of addressing information so that you can address digital information by what's called the content address of information, so that you can have many different references to the same piece of information, but you can find it anywhere and so on.
So this is making the web peer-to-peer. Filecoin started off as a way to incentivize distribution of content in IPFS, and so it's been part of the vision from day one. And it took a very long, long journey to build out IPFS, and build out components of that called libp2p, which is now in a whole network stock that is used by many different blockchains, and then build out other projects, including IPLD (InterPlanetary Linked Data) and drand (distributed randomness beacon). There's a whole menagerie of systems that we've built out over the years to really make something like Filecoin possible. It's really been a tremendous, amazing journey that I've been so lucky to share with incredibly brilliant people. So I get to sit here and talk about the projects, but really it's the work of a lot of people involved in building out Filecoin and IPFS and a lot of these systems.
So it really takes many villages to build a blockchain system like Filecoin, both Protocol Labs and the team there, but also many other organizations and groups that have come together to build the network. So really, the fact that our work has been super blessed to have many other participants and many other organizations, miners, developers, ecosystem partners, that are all coming to build this thing together, it's been really phenomenal to get to share this journey with them.
So for me, it's a very sweet moment of just realizing this important milestone that realizes a lot of our efforts. But like I was mentioning at the beginning, it's really turning the corner and really a new whole range of challenges are ahead. It's a new beginning in a bunch of ways.
Lau: A new beginning, and last question here, you've watched your baby grow, and as you said, it takes a village. Forkast just sat down with Michael Godsey the other day who leads Infura over at ConsenSys. This is the infrastructure-as-a-service, and folks, if you want to take a look at that interview, it's on the site, but they're working with you, they're working with Filecoin, that actually allows even more developers to think about all of the opportunities, the new business relationships, the new economics using Filecoin as the incentive layer. So five years from now, as you start this and you kick off this partnership, where do you see the developers take this? Where do you see the potential of how much this can grow?
Juan Benet: So we're super excited to see Infura bring on Filecoin support to their platform. Infura has been the strongest cloud provider for blockchain systems. They started off with Ethereum, and then later on added IPFS and a bunch of other features. Infura is used by a lot of different applications in Web 3.0 and even entire platforms. And so it's been really amazing to see, the promise of a utility that Infura brings to the table now coming into the Filecoin ecosystem. Seeing Infura add Filecoin support to their platform is super powerful for developers.
A lot of developers will find it way easier and simpler to develop applications with Filecoin, and especially applications that mix Filecoin and Ethereum together. So that's an area where we think that Infura's going to help a lot, is in these kinds of applications that we'll start doing cross-chain operations, and we'll maybe have smart contracts and Ethereum and we'll then store a lot of the information in Filecoin. These kinds of applications will be, we expect, way easier to develop in Infura. Now, where will that head? Well, it's really enabling a whole new category of applications to appear. And so we expect that a lot of the current Web 3.0 applications out there will start migrating a lot of their storage over away from S3 and similar systems and over to Filecoin. So that's one thing that we expect will happen.
And then another is a whole new kind of application will start appearing that really was only made possible by having a fully Web 3.0-native way of addressing information. This includes systems like — something that wasn't possible before, is they can now have programs that can hire storage for themselves. So, before Filecoin, if you wanted to hire large amounts of storage, you had to be a human or an organization and have a bank account and so on, so that you could register with a cloud company and then hire storage. But now with Filecoin, this is entirely programmable in a way that wasn't there before. So that enables a whole category of applications to emerge, and maybe different publishing schemes and structures where publishers can come online and publish their information and then move on and disappear, and then other people can go and carry on the storage of that information, and the preservation and distribution of that information.
So we expect to see a lot of new and exciting applications. We really can't wait to see what people build with it. I'm particularly excited for a lot of the video use cases — search up Web 3.0-native social networks and games as well. So we think it's going to be pretty powerful for games down the road. Maybe not immediately, but I think in a few months or a year or so, we expect games and especially VR to be heavy users of Filecoin.
Lau: I mean, I think what I take away from this conversation, Juan, is that if the present day web that we experience, if that incentivized us economically, what Web 3.0 does with authentication and verification, it adds an extra layer of texture, of civility, and it incentivizes, hopefully, good behaviour. I think media is a critical part of that, and to restore that trust and actually help people economize trust, peer to peer? I think that's truly powerful.
Thank you so much for your time. What a great conversation it was with you. It just inspires us to think about what we can do and inspires us to pay attention to this future that's emerging right now as we speak.
Benet: Thank you so much for having me. Thank you for helping us share of the story for Filecoin and for Web 3.0 and what's possible. I really look forward to Filecoin at some point being able to host all the information you distribute. A really exciting thing would be to have this conversation itself and the video produced for this conversation to be stored and distributed to Filecoin someday. So I look forward to that in the future.
Lau: The future is coming sooner than we think. Juan Benet, a pleasure. Thank you so much for joining us, and thank you, everyone, for joining us on this latest episode of Word on the Block. I'm Angie Lau, Forkast.News Editor-in-Chief. Until the next time.