In the era of big data, “File Coin” must be properly understood to make money

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Dae-Seok Park, Chairman of Korea Digital Asset Finance Association Establishment Promotion Committee

◆The era of the fourth industrial revolution is the era of big data

With the world’s largest collection of books, the U.S. Library of Congress can store far more data on a computer in 15 minutes than it has collected over 200 years.

According to the real-time statistics website’Worldometers’, modern people send and receive more than 210 billion e-mails a day. This amount of information per day is equivalent to the amount of information for a lifetime of people around the world in the early 20th century. Even the data accumulated over 5000 years of humanity is created in just one day.

According to Visual Capitalist, an American market intelligence research firm, it predicted that about 44ZB (1ZB = 1021B) of data was generated globally last year. By 2025, data production per day will reach a whopping 463EB (1EB = 1018B). It is the era of’big data’ in which astronomical amounts of data are created and used every day.

It is that we are currently experiencing one of the few revolutionary vortices throughout the history of mankind, that is, the Fourth Industrial Revolution. Artificial intelligence (AI), Internet of Things, Cloud, Big Data, Mobility, and the so-called’AICBM’ major base technologies are the core.

Accordingly, the Korean government and related industries are also making all-out efforts to promote the data industry, one of the major technologies of the Fourth Industrial Revolution.

IPFS (Inter Planetary File System, hereinafter referred to as IPFS)

Among them, IPFS is a new technology aimed at big data. The problems of the current Internet, that is, HTTP Web, are unstable, centralized, inefficient, slow, and require a high degree of connectivity. IPFS came out as a solution to these problems.

IPFS is a distributed P2P file system that wants to connect all computers. The reason why the expression’InterPlanetary’ is used contains the vision of connecting not only the computers on Earth but also computers on other planets.

It is a protocol for storing data in a distributed file system and sharing it over the Internet. It is used to share large files and data in a P2P method such as Napster and Torrent.

The existing HTTP method was a method of finding the address where the data is located and fetching the desired content at once. However, IPFS uses the hash value converted from the contents of the data to find the contents distributed in various computers around the world. It works by dividing the found data into pieces, fetching it at high speed, and combining it into one.

So, it has many advantages over the existing HTTP method. Hash tables store information as key/value pairs, and since numerous distributed nodes around the world store the information, users store data at a much faster rate than the traditional HTTP method by using IPFS. And bring it.
IPFS can reduce existing bandwidth costs by more than 60%. In the existing method, data of human history is dying even at this moment, while IPFS provides git, a backup and version control system for data mirroring.

IPFS is open and not centralized, which limits the centralization of the web. Since the backbone of the decentralized application (DAPP) is blockchained, it cannot be arbitrarily manipulated.

IPFS enables the creation of a resilient network based on continuous availability, reducing the harm caused by monopolizing data by existing platform powers. Also, in the existing method, all the data gathered in one place can disappear in an instant, but IPFS is distributed and stored, so there is no such risk.

Storage built on IPFS is more resistant to censorship because it does not use a centralized solution. In fact, 9PB (petabyte) of data is also stored in IPFS. Recently, some DeFi services also use IPFS storage to store their own data.

Due to the nature of decentralized storage, IPFS does not have a middleman in the first place, giving users stronger data ownership. For this reason, the big advantage is that you don’t have to worry about censorship or data loss.

Imagine Facebook and YouTube! What if the enormous amount of data on Facebook disappears at once, and if it is arbitrarily manipulated and controlled?

◆Filecoin for IPFS activation (Filecoin, abbreviation FIL)

Filecoin was developed by Protocol Labs, founded by Juan Benet. Filecoin raised more than 275 million dollars (about 280 billion won) of investment funds in one month after starting the ICO on August 10, 2017.

Filecoin is a virtual currency for implementing a decentralized distributed cloud system using blockchain-based IPFS technology. Filecoin owners can use the free hard disk space on other users’ computers to store and view files. Conversely, the owner of the computer rewards FileCoins to participants who make their storage in accordance with IPFS regulations. It is called mining.

Interestingly, a large amount of Filecoin is required to mine Filecoin. Filecoin acts as an intermediary bridge between communication resource (storage and retrieval) users and resource providers (file coin miners).

It is analyzed that this structure was intentionally designed to enable the coins sold by FileCoin developers at the time of the ICO to realize profits to early investors in a short period of time.

Let’s summarize it simply to make it easy to understand. Bitcoin mining is to mine digital gold, while Filecoin is to mine new minerals (metals) digitally, such as Ethereum. Bitcoin is a structure that receives rewards for solving complex cryptography while using enormous electricity bills.

Bitcoin has a total issuance (total reserves) of 21 million, and as of January last year, 18.6 million were issued (mined), leaving about 2.4 million additional mining volumes.

For Filecoin, anyone who wants to use a storage sharing system based on IPFS must pay Filecoin, and if such storage is made according to the regulations set by IPFS, Filecoin is rewarded.

The total issuance is set at 2 billion (FIL), and 30% of 60 million are already issued to early developers, and the target for mining is 1.4 billion. It can be mined for 186 years, and the first 6 years is the half-life when the amount of mining is cut in half.

75% of the mined filecoins can be used after 180 days, and this part can be adjusted according to the policy of the issuing foundation.

◆ Will it be the money for file coin mining?

Bitcoin, a digital gold, has about 9% remaining reserves, and it is not very attractive to enter the mining market now. Filecoin mining began in earnest in October of last year, and there are many risks, but compared to Bitcoin, it is highly likely to generate stable and high profits.

When the analysis started about a month or so ago, the price of Filecoin was less than $20, but as of today it is over $30.

Mining can be classified into individual (self), consignment, and investment depending on the availability of specialized skills such as equipment assembly and operation, and investment. Currently, there are 1405 mining participants (account basis), and the average amount of 1 TiB mined is 0.1126 FIL.

◆Mining equipment and investment costs / 1 TiB is about 1.6 million won, and the expected return is

Mining requires computer equipment, Sealing Sector Pledge Fees, Sealing Sector Gas Fees, electricity, and other expenses. The equipment and costs of Filecoin currently being carried out by various companies in Korea vary widely, and I will look at the promotions of Filecoin that have been promoted over the past two months by a domestic Bitcoin mining expert that I know well.

Mining equipment consists of Main Node, PC (precommit), Worker, Storage, and Switching (10G) with CPU, SSD, HDD (36 × 16T), GPU, and RAM as basic parts.

In general, equipment is made in small units, and as a result of a test by a domestic’aunt expert’, it is said that it is most efficient in terms of mining and cost to configure a set of 480 TiB (physical 576 TiB, hereinafter referred to as a practical standard). It is an opinion.

Deposits (Sealing Sector Pledge Fees) are paid in file coin in preparation for fines (penalties) in case of a cause attributable such as a power outage during the mining process, and if there is no abnormality, all repaid after 540 days.

Gas Fees (Sealing Sector Gas Fees) are expenses paid to create storage during the mining process and are paid in File Coin.

In addition, operation and management expenses (usually around 15%) are paid for consignment and product investment. When investing in a specialized company in a lump sum for the entire mining process, not self or consignment, look at the investment cost as a standard.

1 TiB equipment installation cost is 325,000 won, the deposit is 460,000 won (based on 9.210 FIL, 1 FIL 50,000 won), and gas fee is 505,000 won (10.109 FIL, 1 FIL based on 50,000 won). If 15% of operation and management expenses are added to this, about 1.48 million won per TiB is required.

The average mining volume is released daily, and as of the 18th, it is 0.1126 FIL per 1 TiB. Converting this to a market price of 50,000 won is 5,630 won, and annual conversion yields 2.55 million won.

It is a high return of 138% of the investment capital. If the principal is deducted, the rate of return is 38%, but from next year, the rate of return is expected to be more than 100% annually compared to the initial investment cost. The reason why the yield decreases is that as the number of miners increases, the amount of mining decreases. Still, about 6 years until the half-life is expected to be around 100% of profits.

When 540 days have elapsed after depositing the deposit, the refund equivalent to 31% of the investment becomes a separate income. Filecoin price fluctuates, but as mining participation increases recently, Filecoin price is also rising. Unlike bitcoin, filecoin is required during the mining process, so if you want to participate later, the burden of deposit and gas fees increases in proportion to the increase in Filecoin, and the initial investment for latecomers increases.

However, as the price of Filecoin increases, the initial investment amount increases, but the rate of return increases to more than 212% of the increase in Filecoin. 1 TiB file coin deposit and gas fee is 19.319 FIL, because the annual mining volume is 41.099 FIL. Therefore, as the price of Filecoin increases, the profit increases in proportion.

◆ You need to be aware of various dangers and take countermeasures.

Currently, high returns are expected compared to investment costs, but there are many risks. We look at the entire mining process as an investment type (product) entrusted to a specialized company.

1) It is important to be sure whether the deposit is refunded after 540 days, or whether it is a structure that converts the deposit into profits and distributes it.

2) Gas fees are not paid at once, but are paid for each storage creation, so there is a lot of risk of embezzlement such as random use. Therefore, it is important to check whether it is stored and managed safely, along with the security deposit, and whether it is capable of doing so. If possible, it is necessary to see if there is a way to account for deposits and gas charges separately from company funds. The best way to do this is to have a bank or other agency handle the agency.

3) Since the amount of mining is publicly available, it is necessary to check whether it is mined above average. Conversely, it should be suspected of paying more dividends than the publicly disclosed mining volume. This is because, irrespective of the amount of mining, other investors may try to force a dividend that has been excessively weakened in advance with funds from other investors. In addition, it is necessary to consider whether the method of distributing the profit and the payment method of the file coin with 75% lock is reasonable.

4) Mining can be mined for 186 years if only expenses such as gas fees are paid as long as the half-life of 6 years has passed and the equipment remains (useful life). You have to look at who belongs to.

5) In the event of a problem such as bankruptcy by a company that has been invested in the middle, it is necessary to check whether the ownership of the equipment, etc., is guaranteed to protect investment assets.

6) You should check whether the equipment is installed and operated in an IDC center with credibility. Maintaining the environment, such as electrical stability, constant temperature, and humidity, is important for security deposits and securing safety.

7) Since it is a long-term investment of at least 2 years, it is necessary to check whether it has professional management personnel and has the ability to continuously manage operations.

8) Unpredictable damage such as forced collective closure by the state when a social problem occurs due to policy changes such as the Filecoin Foundation or abnormal operation of Filecoin is an important part to look for during investment.

◆Investing in a reliable professional company is key

As a securitization expert, Filecoin mining has cash flows (mining) that can make a variety of products. First of all, the maturity can be made from 1 to 6 years, or even longer. In addition, profits can be paid in a variety of ways, including monthly, quarterly, and annual profit dividends.

Filecoin mining has the properties of an attractive financial product with a structure that can be designed according to the propensity of investors, such as a method of repaying the investment principal after a certain period of time and a method of distributing principal and interest equally.

Unfortunately, however, many of the Filecoin mining companies I have met are only interested in raising funds. The financial structure is not designed based on accurate cash flow (mining) or the ability is insufficient. In addition, the concept of equipment ownership, liquidation timing, and expiration is unclear.

Filecoin mining, which is used as an incentive to activate a distributed storage sharing system in the era of big data, has a good cause and is a new business area with great growth potential. However, file coin mining is a long-term investment field, and accordingly, management and operation of a specialized mining company delegated to it must have a professional ethic of necessity like a financial company.

As we have seen over the years, we need to make sure there are no cases of being misused by dazzling good investors with temporary blinding. To this end, there is a need for an organization that should always check the status of Filecoin, identify problems, improve measures, internal control system (compliance), and supervise management.

Therefore, through organic cooperation with Filecoin related companies (USA) such as Protocol Labs, the Korean Filecoin market should be promoted in accordance with the purpose of this project, providing stable profits for investors and contributing to the promotion of the domestic big data industry.

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