> can you explain how the protocol can tell the difference between a legitimate hardware From the perspective of the network, there is no difference. When you

> can you explain how the protocol can tell the difference between a legitimate hardware From the perspective of the network, there is no difference. When you agree to dedicate some storage to the network, you post a collateral in FIlecoin. If you lose something you've agreed to store (fail to prove that you're storing it when asked to do so by the network), you pay a penalty out of your collateral. > Is payment only collected upon retrieval No. Storage miners continuously prove (probabilistically) to the network that they're storing the files they've agreed to store.