Alex NorthFilecoin’s unique value to the decentralised infrastructure of Web3 is as a storage network. There are many blockchains and similar systems competing and innovating as execution layers, but none offer the abundant and cheap long-term data storage of Filecoin.
Strategic complements
Storage and computation are strategic complements. Large, cheap, accessible storage makes computation resources more valuable. Similarly, cheap and abundant computation makes storage more valuable—you can do more complex processing with more data and at lower cost. Storage and computation are more useful together.
The intense innovation and competition among blockchains and layer-two systems means that blockchain execution is on a path to becoming a commodity: cheap, abundant and relatively fungible. There will be some differentiation between environments, but competition will occur in every valuable niche. The early competitors are a variety of layer-one blockchains, in which we will surely see continued innovation over time. Ethereum’s rollup-centric approach to scaling will provide the environment for a new cohort of dedicated execution layers, especially rollups, and these in turn will drive innovation and competition in data-availability services and other components of the modular stack.
Filecoin’s opportunity
Despite this innovation, storage on most Web3 systems is scarce and expensive because it must be replicated by every validator as chain state. Filecoin is uniquely poised to both solve this problem, and become a hugely valuable network in the process.
When Filecoin storage is accessible to other blockchains, those chains will become increasingly capable development platforms. When Filecoin storage can be accessed from any chain, it can become the default storage layer for Web3. Network effects might then drive increasing utility, as data accessible to many chains is more useful than data tied to one. Cheap and accessible cross-chain storage will beget larger, cheaper, faster, and more secure storage for all.
Value capture
Commoditisation and abundance reduces prices. While execution gas fees can hurt today, in the future we can expect competition to drive those prices down to a subsistence level as platforms compete for applications and users.
This trend will support Filecoin’s opportunity to earn revenue. When a strategic complement becomes a commodity, pricing power accrues to the differentiated product. If blockchain execution prices approach zero, the Web3 development platform will be far more attractive to developers and users. As more Web3 applications are built, more data will be created and stored. More data means more demand for the Filecoin network to coordinate and cryptographically prove the storage. While the actual storage provided by Filecoin storage providers may become cheap and abundant, the network’s core service of coordinating and cryptographically proving that storage is a differentiated product, and should become the core of Filecoin’s network revenue.
From here to there
Filecoin’s unique value and opportunity in Web3 is as a storage network, hosting the data for all our world computers. Cross-chain interoperability is the key to Filecoin’s long-term growth. We should export Filecoin storage services to other chains, increasing the value of storage by making it widely accessible, and enjoy the strategic boost provided by the commoditisation of decentralised computation.
Cryptonet are taking on this mission with the Filecoin cross-chain interoperability project.