The last thing, I'd like to address the longest standing problem in the IPFS ecosystem.
That's news on filecoin. So the main problem our Ethereum users have had is that IPFS does not, on its own, caused data to be backed up by the network. This is by design. As backing data up in the long term is a expansive operation that needs to be compensated or incentivized with some sort of value. As you may know, we have seperated thoes layer of behavior into its own protocol called filecoin. A cryptocurrency file storage network. There are lots of reasons for this. If you use IPFS just as a browser and have to store other people's data. That would not be as good as just to be able to use it natively. A lot of peer-to-peer system failed, because the system force you to do both of these at the same time.
So at the beginning, our intention was to build just enough of IPFS to build filecoin. But three things changed our mind. The first was that there is close to no market for distributed data storage around that time. This was mid 2015. Ethereum and IPFS were both young projects. Decentralized apps were just beginning. And pretty much the clouds satisfied everyone's needs still. Second, we knew that sophisticated data storage needs would require blockchain smart contracts. Because many applications require a lot more looking into who is storing the data and why. The third thing that happened is that, we had a sudden and intense adoption of IPFS much great than we expected. This surprised us. Thousands of users came wanting new feature and bug fixes. Hundreds of developers showed up, started helping us out in the code. They needed review, they needed direction and so on. So we decided to push filecoin to a later date. Now IPFS has been developed and EVM has been battle tested and proven. Now is the time for filecoin. The market for decentralized data storage is emerging.
So you can think of filecoin as amazon s3 meets ethereum, powered by IPFS.
And unlike other alternatives, filecoin is a blockchain protocol designed to do for storage what bitcoin did for hashing.This is the hashing rate of bitcoin. This is absurd amount of power. It is a ridiculous amount of computational power. The world's top 500 super computers put together were left in the dust like in 2013 way before the curve. And we have this expolsion. Every time I look at the graph, I am just astonished by the degree of power that is dedicated to this. Nowdays, I think its using more power than many small nations. So imagine if you can create a network with that kind of incentive structure for data storage. You can summon this amount of disk to show up in the network. That is what is going to make the distributed and decentralized data storage capable of competing with the cloud.
Because at the end of the day, you dont want to storage your data on some laptop you wanna store it in mines like this. You wanna use laptops for fast and efficient delivery but ultimately you want serious operations. The competition between distributed storage networks is kind of interesting becuase the reality is that we should be competing with the cloud. The cloud is where everyone is storing their data. We should be working together to defeat that.
So at its most bacis, filecoin looks like this. Miners rent out their disks and earn filecoins for it. They exchange that for dollars, bitcoin, ether, yuan, whatever. Users, which could be people or applications or contracts, would then buy filecoin and spend it to hire the network to store data.
The first version of the filecoin paper I pulished in 2014 describes the protocol with the core mining function, which uses a concensus building proof, either proof-of-work or potentially proof-of-stake and then a proof-of-retrievibility. It also talks about a secondary market. That secondary market is important, though it does not feature too much in the paper. Becuase it could be used to do low-latency delivery using payment channels or state channel, like the Lightening Network. So you can imagine there is chain continues to mine and there are lots of nodes with a lot of storage do state channels.
The cool thing is tho that now we can add a proper contract engine on filecoin. Like, IPFS has a lot of improvements.
But the thing that is going to set these storage networks apart from the cloud is things like being able to do bounding and collateral, being able to do reputation thresholds, being able to do identity, selecting based on the identity of the one who is storing, being able to deal with geopolitical bounds when you are forced to store certain data within certain nation. All of these things can be represented as contracts when you have a large platform like this. This is pretty important when you platform capable of working. So over the last couple of years, we did enormous amount of exploration. There has been two years of research into the proof-of-retrievibility and a lot of research into how to do smart contract in a safer way. We feel a lot more comfortable doing data contracts today than we were two years ago.
So the design for filecoin is an interesting one. We evaluated a lot of systems and we thought about how to do this construction. We could potentially build on top of bitcoin or we could potentially build on top of Ethereum and so on. And consistently, across all the vectors we measured. Ethereum demostrated greater technology and much more effective development community.
We have some requirements that Ethereum does yet meet. For example, we need really fast volume and speed of transcations giga of transcations per second. That would be insane. We want to get there eventually. We also need disconnected operations. This means being able to operate in an distributed network where you are disconnected from the backbone. So your city gets disconnected from the rest of the world, your applications shouldn't stop. Like imagine you go somewhere travel and lose connectivity to the backbone and like nothing works. We are building filecoin in a direction that is being capable to work in this direction. But these two things are not show stoppers tho. The Ethereum community is also very interested in this. A lot of work is being directed toward sharding and we think we can solve these problems together.
So I am excited to announce that we chose EVM as our contract engine. Beyond this we have two options. This first is to fork Ethereum and build our own network. This means working together on a number of problems and code bases and generately sharing strategies but basically building two different networks. And the benefit of that is we are not blocked in scalability and so on.
Or the alternative is that we visualize filecoin on top of the Ethereum blockchain. This means working together directly in critical problems and code bases. It means not having to build large proof-of-work network to secure the file network and it means enabling filecoin to serve Ethereum contracts natively, directly in Ethereum blockchain. Hopefully, Ethereum could up the sharding and disconnected operation functionality we need or we will have to eventaully migrate the network to be able to satisify the constraints. But fortunately that is not a decision we have to make for another year, at least, potentially more. An important decieding factor for us in this is that the Ethereum community has been through tremendous challenge this year. I wanna remark unlike other communities, Ethereum has demostrated a very effective improvment in problem solving ethos. You are not afraid to come together and solve problems. In the history of computing, nobody has ever gotten everything right from the beginning. And so the teams that are effective and groups that changes the world are those are able to course correct and reinvent technology. They ultimately win out. So we are excited to announce that we are building filecoin as a virtual chain directly on top of Ethereum. And it will be accessible natively in Ethereum network.