Protocol Labs, the team behind IPFS, has raised $52 million from Sequoia Capital, Union Square Ventures, and others, in a pre-sale of the Filecoin ICO which has now begun.
The ICO is open to only accredited investors through a new platform created by Protocol Labs in collaboration with AngelList called CoinList. Making it compliant with SEC regulations.
Their aim is to create a free market for data storage to complement the InterPlanetary File System (IPFS), a distributed method of connecting dispersed computer storage.
Users can pay a small fee in filecoins for their data to be stored, while “miners” – anyone with free storage willing to share it – are compensated in return.
The process uses a Proof of Replication method, which, as the name says, forces miners to prove they are actually storing the file. The whitepaper details it thus:
“The Proof-of-Replication functions cryptographically verify that every copy is stored independently, and allow this fact to be checked periodically. Each unique replica is generated by cryptographically sealing the data at the time of storage, using a per replica encryption key. The Seal and Proving functions are chosen such that generating a new Seal cannot be performed fast enough to compromise the proof.
These proofs also create a publicly verifiable record that the miner correctly stored the data as promised, and was online to serve it. The Filecoin Blockchain uses Proof-of-Replication in its mining process, to reward miners for storing files, to punish miners who fail their contracts, and to detect and recover any missing pieces.”
As with any project that raises huge amounts – with Filecoin’s pre-sale being the biggest so far – there are critics. And Filecoin has a scathing one, Stefano Bernardi, an actual VC.
He criticizes the project for giving pre-sale investors a 50% discount on the ICO starting price, further complaining they are moving ahead with an effectively uncapped sale as the minimum cap is calculated at near half a billion while max at more than a billion according to Bernardi.
Finally, he says Filecoin will keep twice the amount of tokens sold for themselves – plus the eth and btc raised during the ICO.
He has no criticism on the technology, but his critique of the manner funds are being raised indicates the SEC decision has hardly aided and may in fact have made things worse.