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Is Filecoin a $257 million Ponzi scheme? [pdf]

272 points by mjnet 9y ago

brndnmtthws 9y ago
Filecoin is one of the ones I'd stay far away from. VCs got in before anyone else with special preferences, which taints the whole project. There are alternatives which don't come with the VC problem attached to them.
- j_s 9y ago
  What is your recommended alternative? Is there any unusual involvement beyond participation as a user that you should probably disclose?
  - shepardrtc 9y ago
    Sia
  - brndnmtthws 9y ago
    Sia is more legitimate. I don't own any Siacoin or Filecoin, but I would hold Siacoin if it was supported by the Ledger hardware wallet.
    - hobofan 9y ago
      https://sia.tech/funding2016/ https://sia.tech/funding2016/ ? How is this any different? I realize that this doesn't concern an ICO, but still there is plenty of VC involvement to "taint" the project.
      - brndnmtthws 9y ago
        Sia didn't do an ICO. Every coin has been mined, with no premine (although I assume the developers mined the first few blocks at least). The investors could have mined too, if they wanted, along with anyone else. This seems more egalitarian to me.
      - deleted 9y ago
        [deleted]
- ringaroundthetx 9y ago
  Most token sales are like this. There is no difference from the equity markets in this regard, except its WAY more liquid, WAY faster route to liquidity, AND there is no dilution. Sorry private equity, step to the left. Sorry egalitarian peons, take what you can get.
  - otoburb 9y ago
    >>AND there is no dilution. There's no dilution unless token stewards (usually structured as non-profit foundations) decide to increase the overall supply of tokens.
    - ringaroundthetx 9y ago
      If they kept a treasury then they can add supply to the market which wasn't already in the trading float. The contracts themselves typically don't allow for more units to be created, unlike shares. Contracts can be structured that way, like Numeraire's.
- hobofan 9y ago
  So what is your opinion on Ethereum, given the knowledge that one of its co-founders was awarded a Thiel Fellowship?
  - brndnmtthws 9y ago
    There wasn't any Ethereum ICO. Every ETH was mined.
    - SippinLean 9y ago
      I'm not sure they were calling it an ICO around then, but there was absolutely an online public crowdsale in 2014.
      - brndnmtthws 9y ago
        You're correct, my bad.
ertand 9y ago
I think it would be helpful if the authors disclosed whether they invested in Filecoin. I didn't really see it anywhere. Did I miss it?
- mjnet 9y ago
  Author here: we did not invest; nor are we invested in any of the competitor projects mentioned in the article.
  - synctext 9y ago
    other author here, no ICO investments. We're actually working for many years on a similar system, non-profit non-ICO based. We know this scientific area a bit (see my other comment).
    - ertand 9y ago
      Thanks for your clarifications. That was my guess too, I just wanted to confirm it.
    - declarisse 9y ago
      >>We're actually working for many years on a similar system... Hmm, this is what you neglected to mention in the paper
jstanley 9y ago
Filecoin is a huge disappointment to me. IPFS is fantastic technology, but the main developers getting sidetracked with yet another scammy ICO is the last thing we need.
- tomasien 9y ago
  Something like Filecoin is necessary to make IPFS what it could become, I recognize there are huge unsolved problems with it but it's not legitimately so that they can't be solved. It's worth a shot and sophisticated private investors took bets on this with eyes wide open, followed by the public of course which many consider problematic (I don't). There are complaints about the discounts private investors got etc but at the end of the day I'm glad this is research getting funded and I think calling it a scam is straight up wrong. We'll see I guess.
  - throwawayico 9y ago
    > sophisticated private investors took bets on this with eyes wide open Bullshit.
    - regulation_d 9y ago
      So you're saying that Sequoia Capital, Andreessen Horowitz, Union Square Ventures, and Winklevoss Capital didn't know what they were getting into?
      - tomasien 9y ago
        Yeah exactly. Anyone who has engaged with the protocol knows there are huge unknowns - they're acknowledged in the whitepaper. They have theoretical solutions which are often discussed in public on Github and Gitter, and they've gotten past many large hurdles already as a team. I think there's a chance. Importantly, if Filecoin were usable right now to guarantee storage and retrievability of files, I have use cases I'd use that for right this second.
        9y ago
soneca 9y ago
edit: Weird, I thought I was commenting on another thread, about Nobel laureates criticizing Bitcoin. I saw it on my phone, then opened HN at my notebook to comment. I misread the title and commented here, but now I can't find the correct thread (was it flagged?). I am growing this idea that Bitcoin (and any cryptocurrency that is affected by aggressive price growth) is an anti-fragile indirect multilevel marketing scheme, the "diamond" of the digital era. It is anti-fragile because it does not have a single point of failure, it is decentralized, its creators are unknown, it is adaptable to several use cases. So each attack on Bitcoin (be it exchange hacking, scams or celebrities' critics) that doesn't kill it, make it stronger. It is a multilevel marketing scheme because it is mostly a zero-sum game, all earnings of bitcoin owners come from new money entering the game. It is indirect because the ones that are most fervourous advertising and defending bitcoin are holding it, not selling. I believe it is the diamond of the new era because of some key similarities: Both BTC and Diamond: - Its original bump in value come from a marketing campaign (even if with Diamond it was centralized and offline, and with BTC is decentralized and viral) - Its scarcity is artificially controlled - Its main use case is black market commerce (for one side of the argument) or money laundry (for the other side). For BTC owners the good news is that the "diamond bubble" it is still strong decades (centuries?) after its modern boom. The bad news is that Diamond was able to correlate to status, a strong (if subjective) value that is part of humanity since always. BTC only appeal is its value as money, so bubbly reinforcements (up and down) apply.
- pavlov 9y ago
  The bad news is that Diamond was able to correlate to status, a strong (if subjective) value that is part of humanity since always. BTC only appeal is its value as money ... Startup idea: Bitcoin wedding rings. A beautiful gold ring with a private key engraved on the inside. Give your loved one the gift of BTC! Your commitment to each other, eternalized on the global blockchain. Gentlemen may prefer blondes, but the modern woman prefers Bitcoin to carats of squeezed carbon. Status, store of value, it's all there. (This is satire, but now I'm worried it will actually happen if the coinmania doesn't subside soon.)
  - realPubkey 9y ago
KasianFranks 9y ago
Where did the funding for this research paper come from, specifically?
- bflesch 9y ago
  Most likely the Dutch tax payer. Edit: Why am I being downvoted? The author even pointed out he is a student at this Dutch public university in a sister comment.
- amelius 9y ago
  It seems like the first author is still a student. So this could be a BSc./MSc. project, for example.
  - pandler 9y ago
    https://github.com/backender/filecoin-survey/releases https://github.com/backender/filecoin-survey/releases Seeing as the release is named "Release to turn in", I'd say so too.
    - amelius 9y ago
      I think it would be fair if the title is changed from "... by Delft University" to "... by student of Delft University". Or just drop it altogether and shorten the title.
      - synctext 9y ago
        Please don't alter our title. I'm the second author and tenured staff member of TUDelft, associate professor.
  - mjnet 9y ago
    Author [Marc] here: I'm a master student at TU Delft and this was a literature survey in preparation for 1) the recent developments in the blockchain lab at TU Delft and 2) my master thesis -- and therefore also to stimulate my interests in blockchain technologies.
patrickaljord 9y ago
tl;dr conclusion from the article: "Filecoin’s economic feasibility is hard to predict and, given a simple summary of risk related points, the biggest hurdles are probably going to be acceptance from the users. In addition, Filecoin shows certain characteristics of a Ponzi scheme but the trust built by the team members in the past leads us to believe that it is not one. Filecoin’s Whitepaper introduces novel concepts and predecessor projects by the team members which prove their technical capabilities. Hence, it appears that Filecoin is poised to be an outstanding project although it remains to be seen if it will be adopted by the average cloud storage user."
synctext 9y ago
[Author here] short answer taken from our .PDF file: "Considering that Dropbox [53] currently holds around 500 petabytes of user data [54], one could argue that Filecoin is overvalued." Study we conducted with a master student at Delft University of Technology. Open lab notes when writing this paper: https://github.com/Tribler/tribler/issues/3097 https://github.com/Tribler/tribler/issues/3097 Note TUDelft has currently 8 professors in their http://blockchain-lab.org http://blockchain-lab.org Various scientists and 38 master students working on improving our own Filecoin-like system, based on our Trustchain fabric: https://github.com/Tribler/tribler/issues?q=is%3Aissue+is%3Aopen+label%3A%22MSc+course+work%22 https://github.com/Tribler/tribler/issues?q=is%3Aissue+is%3A... It's home to one of the largest blockchain labs of Europe.
- eco 9y ago
  Dropbox feels like the wrong thing to compare it to. IPFS isn't really for storing files privately. Public S3 buckets would be closer. I don't have any numbers to say if it's overvalued based on how much public cloud storage there is (I wouldn't be surprised if it were though).
  - api 9y ago
    Storage costs are hyper-deflationary. We have a NAS on a desk with 27 terabytes of storage and it cost under $1000 (with drives) and consumes about 40 watts of power. Ten years ago this would have cost closer to $5000-$10000 and consumed hundreds of watts of power. We bought it about a year and a half ago and already we could replace it for less than $500. The idea of distributed storage at the edge is interesting but it's not something that would cost $250 million to build. We could probably build a friendly system for doing this for under $500k in developer time. It's also a mystery how efforts like MaidSafe or whatever it's called this week have never managed to ship anything after getting multiple multi-million-dollar golden showers. Distributed storage of immutable content-addressable blobs is not that hard of a problem. BitTorrent kind of solved it long ago, albeit with a different UI/UX metaphor and use case. Just take those ideas and pivot them a little and wrap them around the S3 UI/UX metaphor and add payment channels or some other accounting mechanism and you're done. You don't necessarily need the sexiest tech. In fact sexy tech probably makes it more fragile and harder to use. DHT + hashing + RAID-type redundancy techniques + wallets will do it. Everyone over-thinks and over-engineers things these days and it drives me crazy. Stop it. Intelligence is for the things you can't do, not for doing the things you can already do in more baroque ways. Intelligence is also for simplification. Complexification is stupidity.
chvid 9y ago
Are they not all (bitcoin, eth etc.) ponzi schemes?
- taoistextremist 9y ago
  Ethereum at least acts as a platform for other things so it has utility outside of being currency. Bitcoin definitely feels more like one lately, though.
- alexasmyths 9y ago
  The thing about them is technically they are not. But - they can be used as schemes. And that's what makes them powerful as schemes - the veneer of credibility that actual bad actors can hide behind. Which taints the good actors.
- SippinLean 9y ago
  You're aware that a Ponzi has a very specific definition, more specific than "scam," correct? Neither Bitcoin nor Ethereum have a central operator generating returns for older investors by disproportionately funneling revenue paid by new investors to them. When the price rises, new and old investors profit equally. You could use BTC as a currency in a Ponzi, Bitcoin being a Ponzi would be impossible by definition.
saas_co_de 9y ago
No, it's a buy the dip scheme. https://www.youtube.com/watch?v=0akBdQa55b4 https://www.youtube.com/watch?v=0akBdQa55b4
ajross 9y ago
All XXXcoin currencies are Ponzi schemes, in effect. Their "growth" is fueled almost entirely by new investors dumping cash into the system from which no one takes (can take[1]) anything out. That's a pyramid. Eventually when the investment money runs out[2], the support will fall over. The only distinction between this and a Ponzi scheme is that there are (probably) no single fraudsters at the top ready to run off with the money. It's an unintentional Ponzi scheme. Coin boosters simply don't get this: there's not enough money in the world to keep bitcoin (and all the copycat coins) growing forever. What is your plan for when the investment money runs out?. There is no plan, because you can't get your money out. [1] You simply can't dump a large bitcoin holding. There's not nearly enough liquidity to do that in reasonable time. [2] And it will.
- jcoffland 9y ago
  What a load of BS. Of course you can sell off a large Bitcoin holding. People do it all the time. That you think otherwise is ignorance and bias.
  - marcofiset 9y ago
    You can sell as long as people are buying.
    - quickthrower2 9y ago
      That also applies to shares, real estate, apples, Teslas, ...
      - marcofiset 9y ago
        Yes. I was just stating the obvious, which appeared to be not so obvious to the commenter.
        quickthrower2 9y ago
        Not sure we should bash that comment. If large means 1 million dollars it isn't hard to find liquidity to sell 100BTC.
mads 9y ago
Heh.. Yes, probably is now. I dont know if the founders started out to make a Ponzi, but once the dollars started rolling in, I can imagine, they probably got "different ideas". Who am I to judge, but if I was a founder of this, I would be driving my Ferrari in Thailand instead of slaving away trying to build some stupid file system. Who the hell cares about file systems :P
- lgierth 9y ago
  @jbenet has discussed funding for open source infrastructure in-depth in a YC podcast back in June: https://blog.ycombinator.com/ipfs-coinlist-and-the-filecoin-ico-with-juan-benet-and-dalton-caldwell/ https://blog.ycombinator.com/ipfs-coinlist-and-the-filecoin-... (transcript included)
- thinkloop 9y ago
  Driving ferraris gets old, I'd much prefer to be inventing decentralized file storage.
  - mads 9y ago
    I agree, but those cars and the attention is just so tempting. And then in Thailand. Imagine kite surfing, drinks, anything you want for small cash. Hell, you could even contract someone to write that damn file system people are whining about.
- aij 9y ago
  Driving Ferraris... vs. Writing distributed file systems... One of these sounds much more fun than the other. Hint: It is not driving Ferraris. ;)
  - mads 9y ago
    In the long run, I think driving Ferraris would get old much quicker than writing file systems, so yes, I tend to agreee, but in the short run, I doubt it.. Hell, park a Ferrari in my drive way and I would abandon my customers here for at least 3 days.. :D ... But thats just me..
CalChris 9y ago
How is Filecoin fundamentally any different from Bitcoin? Filecoin gave a deal to their buddies Bitcoin and Ethereum were premined Both are variations on a Ponzi scheme where early 'investors' benefit from latter day victims.
pmorici 9y ago
Anyone interested in reading the Filecoin offering info you can find it on the CoinList.co site https://coinlist.co/filecoin https://coinlist.co/filecoin
cocktailpeanuts 9y ago
I think the top comment for this should be about Filecoin, instead of just another uninformed comments about Bitcoin that we see here every day. That said, one thing most people don't talk about is: I think most people think IPFS is disruptive, but I think IPFS itself is susceptible to disruption. The main reason why IPFS is useful is because there's not an easy way to do NAT traversal therefore it's super hard for people to run their own server on their laptop or mobile devices. IPFS introduces all kinds of technologies to get around this, but in my opinion the ability to freely set up your own server on your device is the core problem. You don't really need a globally addressable immutable file storage, because unless you're dealing with static images, a lot of files DO change all the time, and people want to store and share files privately. Which means, if there's a new type of technology that lets people do just that--set up their own server anywhere and make it accessible via HTTP--then I don't see why we really need IPFS. This could be done by startups or other protocols, but even by some innovative ISPs, which decide to change their business model to compete against edge nodes that capture most of the value (such as Google, Facebook, etc.) In my opinion, the reason IPFS is so hot nowadays is because it's riding the DApps wave where people want to build Ethereum apps with IPFS as a file storage. But after playing around with it a bit I think it's much better at this point to just use Github to host your file and use Ethereum as database because the whole point of immutable apps is in the data and transactions, not in the static files. But I would love to be corrected. If anyone actually think IPFS is essential to DApps, feel free to correct me and educate me.
- rklaehn 9y ago
  If your app is hosted on github, it is not really distributed. And Ethereum is extremely limited as a database.
  - azna 9y ago
    Exactly, IPFS allows data storage and retrieval for Dapps to also be done through a decentralized network. That's the whole point of a D-app, not falling back on someone's central servers. The performance and scalability limitations of Ethereum make it virtually unusable as a database, application data definitely needs to be taken off-chain. Also, the IPFS system contains IPNS, which allows users to host mutable content. Rather than navigating to the hash of a file, you're retrieving what's been signed by the publisher's key. So it's more flexible than just static content.
XR0CSWV3h3kZWg 9y ago
It's pretty frustrating to see something that has an easily accessible value (M MBs stored for N seconds consuming X bandwidth) is denominated in the same way that all the other cryptocurrencies are denominated in, as a deflationary good that encourages speculation. If you want to create some token that scale with the value of the system, that's fine, but don't force your users to price their contacts in something that is untethered from the thing they are trying to buy. What I'd do instead is allow people to store random data to mint new MBseconds at a fractional rate and then the cost of a new contract is trivial. If you want someone to store 1GB for a day the cost of that is well known. The price of storage constantly drops, but the price of a deflationary good that is actually desired will continue to rise. This encurages contact churn. If you want to have a token that scales with the value of the network/product then just create tokens that generate MBseconds proportional to the fees paid.
_prometheus 9y ago
Hey HN, this is jbenet -- an author of Filecoin. We think it's great that people ask hard questions, and get involved. It's great to see others studying our work and we really appreciate the open discourse. There are a few things from this article I’d like to address. (Despite the length of this post...) these are quick comments, and not a proper in-depth response. - (a) The article gets some things right and some things wrong -- there is good summarizing of several of our projects, and discussion of many difficult aspects in these projects. The article discusses many technological aspects in good depth, and highlights difficulties in building these systems, aligning incentives, and the trials of past projects. The article also has significant inaccuracies. For example, the sale figure -- which appears in the title and impacts the analysis -- is incorrect. We raised $205M -- officially here: https://protocol.ai/blog/filecoin-sale-completed/ https://protocol.ai/blog/filecoin-sale-completed/ - (b) The authors chose a provocative title. As some commenters have already pointed out, the conclusion is “[we] believe that it is not one.” Despite Betteridge’s law ( https://en.wikipedia.org/wiki/Betteridge's_law_of_headlines https://en.wikipedia.org/wiki/Betteridge's_law_of_headlines ), many people who only read the headline will come to the opposite conclusion, and now we (not they) will have the burden of correcting those misunderstandings. Provocative titles, though they may drive imagination and clicks, can do a huge disservice to everyone in the space, and contribute to misinformation. Most people will only read the title, maybe the abstract, and use that to form and drive opinions. We choose titles of our research with diligence and care, and hope others do the same. - (c) The article has a great technical overview of the Filecoin stack, and how it fits with IPFS and libp2p. This is a large structure with many pieces, and it is rare to see articles grasping how all the pieces fit together so well, and then explaining it cogently. In particular, it’s great to see this article diving deep and discussing advantages and disadvantages of low level technical structures (multihash, ipld, libp2p, and more). We modularized everything in the hope to generally improve peer-to-peer systems, and improve reusability. We hope these components will be useful to the author’s Tribler project (a network similar in goals to Filecoin), and we hope that we can also learn from and leverage solutions they have made. - (d) many of the objectionable things described in this article are common in ICOs in general. Put another way, consider those claims also in terms of other significant token sales, such as Ethereum, Tezos, Polkadot, Blockstack, Cosmos, Golem. People were saying similar things about Ethereum when they did their sale in 2014. Perhaps worth doing a survey / analysis over all of them, comparing and contrasting the different things groups have done, how the ecosystem has improved, and suggest new directions. - (e) It’s worth mentioning that the analysis gives a definition of a ponzi scheme, but their discussion does not map to that definition. Instead, the discussion centers on claims about future investor sentiment or speculation as the driver of value in the token, which is not the only way to establish value in token networks, and ignores the value of the services provided. That kind of analysis does not work for projects like Ethereum and other live and functioning crypto tokens. If the network is useful, and there is a way to generate or introduce value, by providing new or better services, and if the network can capture that value in the token itself (important step), then the tokens can hold value, based on the utility of the network as a service and not just or primarily speculation. Networks like Ethereum, Bitcoin, Zcash, and Filecoin aim to provide useful services, and much of the value stored in their tokens will be thanks to the utility of the networks. Perhaps it’s worth pointing out that most crypto token projects are compared to ponzi schemes at some point :( - http://www.google.com/search?q=is+bitcoin+a+ponzi+scheme - http://www.google.com/search?q=is+ethereum+a+ponzi+scheme - http://www.google.com/search?q=is+zcash+a+ponzi+scheme - http://www.google.com/search?q=is+tezos+a+ponzi+scheme - (f) The article discusses the SAFT and assurances to investors, but does not discuss them in contexts of other token sales and ICOs. Most ICOs are structured as donations (not investments) to a project, with little to no legal recourse -- even though many people refer to these “donations” as being “investments”. In our case, we raised investment through an instrument (the SAFT) that is a direct liability to us, and gives investors greater guarantees on the completion of the project, or consequences otherwise. If we fail to deliver the network, we must return the proceeds of the token sale. Few token sales ever have such a clause. Our structure gives investors greater accountability, not less. The article discusses this in sec IV, but does not take into account that startups are similarly risky (i.e. that startup dissolution events return only remaining capital from the efforts), and does not mention how our structure improves on the ICO landscape in general. - (g) We do share the legitimate concern that ICOs need stronger accountability, and some are structured in a way that leads to abuse. The community as a whole needs to raise the bar on accountability and ethical behavior. We have taken significant steps in this direction, not just in our sale but to improve the ecosystem -- the SAFT project, which was a gargantuan undertaking that many other networks are now using, is one example. Many other networks are introducing and improving structures. We believe token networks present a very important new way to form capital, with promising advantages to users, investors, and creators, but the space is still in its infancy, and significant changes are still ahead. Token sales have improved dramatically in the last three years, and we hope they continue to improve to find the right balance and protection of the interests of all parties involved with the network. Thanks, Juan
notheguyouthink 9y ago
I'm so lost, there are so many conversations here talking about IPFS compared to things like Dropbox and S3. Why? To me, IPFS aims to solve a completely different problem. IPFS does not exist because we don't have means to host and distribute files - that is a problem solved by a hundred different entities. IPFS, as advertised in many mediums (video/etc), is a platform to distribute data from a local-first P2P medium. Like Bittorrent, but without ever leaving the local network/etc. Eg, transferring a file/video/site to someone next to you would not download the data from across the world twice. Has the marketing changed? Because all of the videos I watched on it from months ago were all about reducing global bandwidth usage, utilizing local and distributed sources of the data as much possible. Why is everyone acting like IPFS is trying to solve file hosting?
- detaro 9y ago
  Filecoin is trying to solve (paying for) file hosting through IPFS. Many of the existing projects around IPFS are "host X, but on IPFS".
  - notheguyouthink 9y ago
    Sure, but these comments that I refer to are discussing on IPFS, not Filecoin directly, and as such seem bizarrely misguided to me. Saying IPFS is a useless tool because we already have Dropbox and S3 is completely missing the mark. Not only is IPFS not intended to solve "hosting" as a "problem" (in my eyes, at least), but IPFS goals do not even overlap with S3/Dropbox. Saying IPFS is about hosting because many people use it for that is like saying BitTorrent is for porn because many people use it for that.
  - lgierth 9y ago
    No, it's more generally about hosting any content-addressed data. That's much much more than files/directories, as S3/Dropbox/Sia are doing. Files and directories are just one particular data structure you can store on IPFS. Think of it as a global unified content-addressed graph database really, and Filecoin can store any arbitrary (sub)graphs within that.
DaniFong 9y ago
y'all are forgetting that juan is a genius and still alive...
deleted 9y ago
[deleted]
enderwilde 9y ago
Good discussion on the technical merits. However, let's take a look at the 'overvalued' claim and a critical error the authors make. The analysis rests on this ratio calculated for Airbnb: "Airbnb is valued today at approximately $31 billion while holding around 3 million listings in total. The average apartment in the United States was 934 square feet in 2016. In a hypothetical scenario, Airbnb is therefore valued at $11.06 per square feet. If one compares this number to the median price per square foot in the United States, which is $123, the Airbnb ecosystem diminishes the median price by a factor of 11.12." I get this is back of the envelope so let's ignore the international dimension. The critical error in these calculations is the apples-to-apples comparison of the square feet of an Airbnb listing to a purchased square foot. Basically - when someone pays $123 per square foot (median price in the U.S.) they are paying for the use of that space for an entire year. Said another way, they are paying $0.34 per day per square foot. Airbnb listings are not in general year-long, which means the same square foot of space is rented out over and over again throughout the year, adding revenues along the way. The 11.12 scaling factor is therefore off and too high. This leads the authors to apply an erroneous scaling factor to the Dropbox sizing to come up with an invalid valuation assessment for Filecoin. It looks like a good average stay for an Airbnb property is about 5 days (https://blog.atairbnb.com/economic-impact-airbnb/ https://blog.atairbnb.com/economic-impact-airbnb/). Let's also assume 50% occupancy rate (https://www.mashvisor.com/blog/what-airbnb-occupancy-rate-can-you-expect/ https://www.mashvisor.com/blog/what-airbnb-occupancy-rate-ca...). That means an Airbnb listing is rented out about 37 times a year (365 / 5 days * 50%). The $11.06 per square foot times 37 revenue-generating occasions is $409.22 per square foot ($1.12/day/sq ft v. $0.34/day/sq ft for a purchase). So the correct apples-to-apples comparison here is to say that Airbnb increases the median price of the asset by a factor of 3.32. Aka Filecoin would need to deliver 2,580 petabytes - not 95,185. That's only 5x Dropbox, which is a minnow compared to S3 etc. Why would that be? Most directly, because Airbnb allows the owners of the asset (sq ft in this case) to ask for a higher per day charge since the length of stay is shorter and thus the owner of the asset has more uncertainty over utilization - it's part of why 30 nights in a hotel costs much more than a month of rent. This is a well-understood economic dynamic and one that would apply to Filecoin storage miners given how miners using Filecoin could theoretically 'rent out' the same gigabyte over and over again to different buyers throughout the year - but also cover the risk of less than 100% annual utilization rates of their fixed-cost asset. Honestly, reading this article made me more confident in the future of Filecoin. The authors highlight multiple times the better technical features than competition, proven dev team, and unwittingly call out why economically speaking owners of gigabytes under Filecoin could expect a higher return than if you were going to buy the gigabytes yourself for your own use. Thoughts?
tromp 9y ago
From the paper: > a total of $257 million – so far the biggest initial coin offering (ICO) as of today (September 2017). This appears incorrect, as the Sales Summary on https://eosscan.io/ https://eosscan.io/ shows EOS having raised over $400 million by September (first 68 days).

272 points by mjnet 9y ago

Filecoin is one of the ones I'd stay far away from. VCs got in before anyone else with special preferences, which taints the whole project. There are alternatives which don't come with the VC problem attached to them.

j_s 9y ago
What is your recommended alternative? Is there any unusual involvement beyond participation as a user that you should probably disclose?
- shepardrtc 9y ago
  Sia
- brndnmtthws 9y ago
  Sia is more legitimate. I don't own any Siacoin or Filecoin, but I would hold Siacoin if it was supported by the Ledger hardware wallet.
  - hobofan 9y ago
    https://sia.tech/funding2016/ https://sia.tech/funding2016/ ? How is this any different? I realize that this doesn't concern an ICO, but still there is plenty of VC involvement to "taint" the project.
    - brndnmtthws 9y ago
      Sia didn't do an ICO. Every coin has been mined, with no premine (although I assume the developers mined the first few blocks at least). The investors could have mined too, if they wanted, along with anyone else. This seems more egalitarian to me.
    - deleted 9y ago
      [deleted]
ringaroundthetx 9y ago
Most token sales are like this. There is no difference from the equity markets in this regard, except its WAY more liquid, WAY faster route to liquidity, AND there is no dilution. Sorry private equity, step to the left. Sorry egalitarian peons, take what you can get.
- otoburb 9y ago
  >>AND there is no dilution. There's no dilution unless token stewards (usually structured as non-profit foundations) decide to increase the overall supply of tokens.
  - ringaroundthetx 9y ago
    If they kept a treasury then they can add supply to the market which wasn't already in the trading float. The contracts themselves typically don't allow for more units to be created, unlike shares. Contracts can be structured that way, like Numeraire's.
hobofan 9y ago
So what is your opinion on Ethereum, given the knowledge that one of its co-founders was awarded a Thiel Fellowship?
- brndnmtthws 9y ago
  There wasn't any Ethereum ICO. Every ETH was mined.
  - SippinLean 9y ago
    I'm not sure they were calling it an ICO around then, but there was absolutely an online public crowdsale in 2014.
    - brndnmtthws 9y ago
      You're correct, my bad.

ertand 9y ago

I think it would be helpful if the authors disclosed whether they invested in Filecoin. I didn't really see it anywhere. Did I miss it?

mjnet 9y ago
Author here: we did not invest; nor are we invested in any of the competitor projects mentioned in the article.
- synctext 9y ago
  other author here, no ICO investments. We're actually working for many years on a similar system, non-profit non-ICO based. We know this scientific area a bit (see my other comment).
  - ertand 9y ago
    Thanks for your clarifications. That was my guess too, I just wanted to confirm it.
  - declarisse 9y ago
    >>We're actually working for many years on a similar system... Hmm, this is what you neglected to mention in the paper

jstanley 9y ago

Filecoin is a huge disappointment to me. IPFS is fantastic technology, but the main developers getting sidetracked with yet another scammy ICO is the last thing we need.

tomasien 9y ago
Something like Filecoin is necessary to make IPFS what it could become, I recognize there are huge unsolved problems with it but it's not legitimately so that they can't be solved. It's worth a shot and sophisticated private investors took bets on this with eyes wide open, followed by the public of course which many consider problematic (I don't). There are complaints about the discounts private investors got etc but at the end of the day I'm glad this is research getting funded and I think calling it a scam is straight up wrong. We'll see I guess.
- throwawayico 9y ago
  > sophisticated private investors took bets on this with eyes wide open Bullshit.
  - regulation_d 9y ago
    So you're saying that Sequoia Capital, Andreessen Horowitz, Union Square Ventures, and Winklevoss Capital didn't know what they were getting into?
    - tomasien 9y ago
      Yeah exactly. Anyone who has engaged with the protocol knows there are huge unknowns - they're acknowledged in the whitepaper. They have theoretical solutions which are often discussed in public on Github and Gitter, and they've gotten past many large hurdles already as a team. I think there's a chance. Importantly, if Filecoin were usable right now to guarantee storage and retrievability of files, I have use cases I'd use that for right this second.
      - 9y ago

soneca 9y ago

edit: Weird, I thought I was commenting on another thread, about Nobel laureates criticizing Bitcoin. I saw it on my phone, then opened HN at my notebook to comment. I misread the title and commented here, but now I can't find the correct thread (was it flagged?). I am growing this idea that Bitcoin (and any cryptocurrency that is affected by aggressive price growth) is an anti-fragile indirect multilevel marketing scheme, the "diamond" of the digital era. It is anti-fragile because it does not have a single point of failure, it is decentralized, its creators are unknown, it is adaptable to several use cases. So each attack on Bitcoin (be it exchange hacking, scams or celebrities' critics) that doesn't kill it, make it stronger. It is a multilevel marketing scheme because it is mostly a zero-sum game, all earnings of bitcoin owners come from new money entering the game. It is indirect because the ones that are most fervourous advertising and defending bitcoin are holding it, not selling. I believe it is the diamond of the new era because of some key similarities: Both BTC and Diamond: - Its original bump in value come from a marketing campaign (even if with Diamond it was centralized and offline, and with BTC is decentralized and viral) - Its scarcity is artificially controlled - Its main use case is black market commerce (for one side of the argument) or money laundry (for the other side). For BTC owners the good news is that the "diamond bubble" it is still strong decades (centuries?) after its modern boom. The bad news is that Diamond was able to correlate to status, a strong (if subjective) value that is part of humanity since always. BTC only appeal is its value as money, so bubbly reinforcements (up and down) apply.

pavlov 9y ago
The bad news is that Diamond was able to correlate to status, a strong (if subjective) value that is part of humanity since always. BTC only appeal is its value as money ... Startup idea: Bitcoin wedding rings. A beautiful gold ring with a private key engraved on the inside. Give your loved one the gift of BTC! Your commitment to each other, eternalized on the global blockchain. Gentlemen may prefer blondes, but the modern woman prefers Bitcoin to carats of squeezed carbon. Status, store of value, it's all there. (This is satire, but now I'm worried it will actually happen if the coinmania doesn't subside soon.)
- realPubkey 9y ago

KasianFranks 9y ago

Where did the funding for this research paper come from, specifically?

bflesch 9y ago
Most likely the Dutch tax payer. Edit: Why am I being downvoted? The author even pointed out he is a student at this Dutch public university in a sister comment.
amelius 9y ago
It seems like the first author is still a student. So this could be a BSc./MSc. project, for example.
- pandler 9y ago
  https://github.com/backender/filecoin-survey/releases https://github.com/backender/filecoin-survey/releases Seeing as the release is named "Release to turn in", I'd say so too.
  - amelius 9y ago
    I think it would be fair if the title is changed from "... by Delft University" to "... by student of Delft University". Or just drop it altogether and shorten the title.
    - synctext 9y ago
      Please don't alter our title. I'm the second author and tenured staff member of TUDelft, associate professor.
- mjnet 9y ago
  Author [Marc] here: I'm a master student at TU Delft and this was a literature survey in preparation for 1) the recent developments in the blockchain lab at TU Delft and 2) my master thesis -- and therefore also to stimulate my interests in blockchain technologies.

patrickaljord 9y ago

tl;dr conclusion from the article: "Filecoin’s economic feasibility is hard to predict and, given a simple summary of risk related points, the biggest hurdles are probably going to be acceptance from the users. In addition, Filecoin shows certain characteristics of a Ponzi scheme but the trust built by the team members in the past leads us to believe that it is not one. Filecoin’s Whitepaper introduces novel concepts and predecessor projects by the team members which prove their technical capabilities. Hence, it appears that Filecoin is poised to be an outstanding project although it remains to be seen if it will be adopted by the average cloud storage user."

synctext 9y ago

[Author here] short answer taken from our .PDF file: "Considering that Dropbox [53] currently holds around 500 petabytes of user data [54], one could argue that Filecoin is overvalued." Study we conducted with a master student at Delft University of Technology. Open lab notes when writing this paper: https://github.com/Tribler/tribler/issues/3097 https://github.com/Tribler/tribler/issues/3097 Note TUDelft has currently 8 professors in their http://blockchain-lab.org http://blockchain-lab.org Various scientists and 38 master students working on improving our own Filecoin-like system, based on our Trustchain fabric: https://github.com/Tribler/tribler/issues?q=is%3Aissue+is%3Aopen+label%3A%22MSc+course+work%22 https://github.com/Tribler/tribler/issues?q=is%3Aissue+is%3A... It's home to one of the largest blockchain labs of Europe.

eco 9y ago
Dropbox feels like the wrong thing to compare it to. IPFS isn't really for storing files privately. Public S3 buckets would be closer. I don't have any numbers to say if it's overvalued based on how much public cloud storage there is (I wouldn't be surprised if it were though).
- api 9y ago
  Storage costs are hyper-deflationary. We have a NAS on a desk with 27 terabytes of storage and it cost under $1000 (with drives) and consumes about 40 watts of power. Ten years ago this would have cost closer to $5000-$10000 and consumed hundreds of watts of power. We bought it about a year and a half ago and already we could replace it for less than $500. The idea of distributed storage at the edge is interesting but it's not something that would cost $250 million to build. We could probably build a friendly system for doing this for under $500k in developer time. It's also a mystery how efforts like MaidSafe or whatever it's called this week have never managed to ship anything after getting multiple multi-million-dollar golden showers. Distributed storage of immutable content-addressable blobs is not that hard of a problem. BitTorrent kind of solved it long ago, albeit with a different UI/UX metaphor and use case. Just take those ideas and pivot them a little and wrap them around the S3 UI/UX metaphor and add payment channels or some other accounting mechanism and you're done. You don't necessarily need the sexiest tech. In fact sexy tech probably makes it more fragile and harder to use. DHT + hashing + RAID-type redundancy techniques + wallets will do it. Everyone over-thinks and over-engineers things these days and it drives me crazy. Stop it. Intelligence is for the things you can't do, not for doing the things you can already do in more baroque ways. Intelligence is also for simplification. Complexification is stupidity.

chvid 9y ago

Are they not all (bitcoin, eth etc.) ponzi schemes?

taoistextremist 9y ago
Ethereum at least acts as a platform for other things so it has utility outside of being currency. Bitcoin definitely feels more like one lately, though.
alexasmyths 9y ago
The thing about them is technically they are not. But - they can be used as schemes. And that's what makes them powerful as schemes - the veneer of credibility that actual bad actors can hide behind. Which taints the good actors.
SippinLean 9y ago
You're aware that a Ponzi has a very specific definition, more specific than "scam," correct? Neither Bitcoin nor Ethereum have a central operator generating returns for older investors by disproportionately funneling revenue paid by new investors to them. When the price rises, new and old investors profit equally. You could use BTC as a currency in a Ponzi, Bitcoin being a Ponzi would be impossible by definition.

saas_co_de 9y ago

No, it's a buy the dip scheme. https://www.youtube.com/watch?v=0akBdQa55b4 https://www.youtube.com/watch?v=0akBdQa55b4

ajross 9y ago

All XXXcoin currencies are Ponzi schemes, in effect. Their "growth" is fueled almost entirely by new investors dumping cash into the system from which no one takes (can take[1]) anything out. That's a pyramid. Eventually when the investment money runs out[2], the support will fall over. The only distinction between this and a Ponzi scheme is that there are (probably) no single fraudsters at the top ready to run off with the money. It's an unintentional Ponzi scheme. Coin boosters simply don't get this: there's not enough money in the world to keep bitcoin (and all the copycat coins) growing forever. What is your plan for when the investment money runs out?. There is no plan, because you can't get your money out. [1] You simply can't dump a large bitcoin holding. There's not nearly enough liquidity to do that in reasonable time. [2] And it will.

jcoffland 9y ago
What a load of BS. Of course you can sell off a large Bitcoin holding. People do it all the time. That you think otherwise is ignorance and bias.
- marcofiset 9y ago
  You can sell as long as people are buying.
  - quickthrower2 9y ago
    That also applies to shares, real estate, apples, Teslas, ...
    - marcofiset 9y ago
      Yes. I was just stating the obvious, which appeared to be not so obvious to the commenter.
      - quickthrower2 9y ago
        Not sure we should bash that comment. If large means 1 million dollars it isn't hard to find liquidity to sell 100BTC.

mads 9y ago

Heh.. Yes, probably is now. I dont know if the founders started out to make a Ponzi, but once the dollars started rolling in, I can imagine, they probably got "different ideas". Who am I to judge, but if I was a founder of this, I would be driving my Ferrari in Thailand instead of slaving away trying to build some stupid file system. Who the hell cares about file systems :P

lgierth 9y ago
@jbenet has discussed funding for open source infrastructure in-depth in a YC podcast back in June: https://blog.ycombinator.com/ipfs-coinlist-and-the-filecoin-ico-with-juan-benet-and-dalton-caldwell/ https://blog.ycombinator.com/ipfs-coinlist-and-the-filecoin-... (transcript included)
thinkloop 9y ago
Driving ferraris gets old, I'd much prefer to be inventing decentralized file storage.
- mads 9y ago
  I agree, but those cars and the attention is just so tempting. And then in Thailand. Imagine kite surfing, drinks, anything you want for small cash. Hell, you could even contract someone to write that damn file system people are whining about.
aij 9y ago
Driving Ferraris... vs. Writing distributed file systems... One of these sounds much more fun than the other. Hint: It is not driving Ferraris. ;)
- mads 9y ago
  In the long run, I think driving Ferraris would get old much quicker than writing file systems, so yes, I tend to agreee, but in the short run, I doubt it.. Hell, park a Ferrari in my drive way and I would abandon my customers here for at least 3 days.. :D ... But thats just me..

CalChris 9y ago

How is Filecoin fundamentally any different from Bitcoin? Filecoin gave a deal to their buddies Bitcoin and Ethereum were premined Both are variations on a Ponzi scheme where early 'investors' benefit from latter day victims.

pmorici 9y ago

Anyone interested in reading the Filecoin offering info you can find it on the CoinList.co site https://coinlist.co/filecoin https://coinlist.co/filecoin

cocktailpeanuts 9y ago

I think the top comment for this should be about Filecoin, instead of just another uninformed comments about Bitcoin that we see here every day. That said, one thing most people don't talk about is: I think most people think IPFS is disruptive, but I think IPFS itself is susceptible to disruption. The main reason why IPFS is useful is because there's not an easy way to do NAT traversal therefore it's super hard for people to run their own server on their laptop or mobile devices. IPFS introduces all kinds of technologies to get around this, but in my opinion the ability to freely set up your own server on your device is the core problem. You don't really need a globally addressable immutable file storage, because unless you're dealing with static images, a lot of files DO change all the time, and people want to store and share files privately. Which means, if there's a new type of technology that lets people do just that--set up their own server anywhere and make it accessible via HTTP--then I don't see why we really need IPFS. This could be done by startups or other protocols, but even by some innovative ISPs, which decide to change their business model to compete against edge nodes that capture most of the value (such as Google, Facebook, etc.) In my opinion, the reason IPFS is so hot nowadays is because it's riding the DApps wave where people want to build Ethereum apps with IPFS as a file storage. But after playing around with it a bit I think it's much better at this point to just use Github to host your file and use Ethereum as database because the whole point of immutable apps is in the data and transactions, not in the static files. But I would love to be corrected. If anyone actually think IPFS is essential to DApps, feel free to correct me and educate me.

rklaehn 9y ago
If your app is hosted on github, it is not really distributed. And Ethereum is extremely limited as a database.
- azna 9y ago
  Exactly, IPFS allows data storage and retrieval for Dapps to also be done through a decentralized network. That's the whole point of a D-app, not falling back on someone's central servers. The performance and scalability limitations of Ethereum make it virtually unusable as a database, application data definitely needs to be taken off-chain. Also, the IPFS system contains IPNS, which allows users to host mutable content. Rather than navigating to the hash of a file, you're retrieving what's been signed by the publisher's key. So it's more flexible than just static content.

XR0CSWV3h3kZWg 9y ago

It's pretty frustrating to see something that has an easily accessible value (M MBs stored for N seconds consuming X bandwidth) is denominated in the same way that all the other cryptocurrencies are denominated in, as a deflationary good that encourages speculation. If you want to create some token that scale with the value of the system, that's fine, but don't force your users to price their contacts in something that is untethered from the thing they are trying to buy. What I'd do instead is allow people to store random data to mint new MBseconds at a fractional rate and then the cost of a new contract is trivial. If you want someone to store 1GB for a day the cost of that is well known. The price of storage constantly drops, but the price of a deflationary good that is actually desired will continue to rise. This encurages contact churn. If you want to have a token that scales with the value of the network/product then just create tokens that generate MBseconds proportional to the fees paid.

_prometheus 9y ago

Hey HN, this is jbenet -- an author of Filecoin. We think it's great that people ask hard questions, and get involved. It's great to see others studying our work and we really appreciate the open discourse. There are a few things from this article I’d like to address. (Despite the length of this post...) these are quick comments, and not a proper in-depth response. - (a) The article gets some things right and some things wrong -- there is good summarizing of several of our projects, and discussion of many difficult aspects in these projects. The article discusses many technological aspects in good depth, and highlights difficulties in building these systems, aligning incentives, and the trials of past projects. The article also has significant inaccuracies. For example, the sale figure -- which appears in the title and impacts the analysis -- is incorrect. We raised $205M -- officially here: https://protocol.ai/blog/filecoin-sale-completed/ https://protocol.ai/blog/filecoin-sale-completed/ - (b) The authors chose a provocative title. As some commenters have already pointed out, the conclusion is “[we] believe that it is not one.” Despite Betteridge’s law ( https://en.wikipedia.org/wiki/Betteridge's_law_of_headlines https://en.wikipedia.org/wiki/Betteridge's_law_of_headlines ), many people who only read the headline will come to the opposite conclusion, and now we (not they) will have the burden of correcting those misunderstandings. Provocative titles, though they may drive imagination and clicks, can do a huge disservice to everyone in the space, and contribute to misinformation. Most people will only read the title, maybe the abstract, and use that to form and drive opinions. We choose titles of our research with diligence and care, and hope others do the same. - (c) The article has a great technical overview of the Filecoin stack, and how it fits with IPFS and libp2p. This is a large structure with many pieces, and it is rare to see articles grasping how all the pieces fit together so well, and then explaining it cogently. In particular, it’s great to see this article diving deep and discussing advantages and disadvantages of low level technical structures (multihash, ipld, libp2p, and more). We modularized everything in the hope to generally improve peer-to-peer systems, and improve reusability. We hope these components will be useful to the author’s Tribler project (a network similar in goals to Filecoin), and we hope that we can also learn from and leverage solutions they have made. - (d) many of the objectionable things described in this article are common in ICOs in general. Put another way, consider those claims also in terms of other significant token sales, such as Ethereum, Tezos, Polkadot, Blockstack, Cosmos, Golem. People were saying similar things about Ethereum when they did their sale in 2014. Perhaps worth doing a survey / analysis over all of them, comparing and contrasting the different things groups have done, how the ecosystem has improved, and suggest new directions. - (e) It’s worth mentioning that the analysis gives a definition of a ponzi scheme, but their discussion does not map to that definition. Instead, the discussion centers on claims about future investor sentiment or speculation as the driver of value in the token, which is not the only way to establish value in token networks, and ignores the value of the services provided. That kind of analysis does not work for projects like Ethereum and other live and functioning crypto tokens. If the network is useful, and there is a way to generate or introduce value, by providing new or better services, and if the network can capture that value in the token itself (important step), then the tokens can hold value, based on the utility of the network as a service and not just or primarily speculation. Networks like Ethereum, Bitcoin, Zcash, and Filecoin aim to provide useful services, and much of the value stored in their tokens will be thanks to the utility of the networks. Perhaps it’s worth pointing out that most crypto token projects are compared to ponzi schemes at some point :( - http://www.google.com/search?q=is+bitcoin+a+ponzi+scheme - http://www.google.com/search?q=is+ethereum+a+ponzi+scheme - http://www.google.com/search?q=is+zcash+a+ponzi+scheme - http://www.google.com/search?q=is+tezos+a+ponzi+scheme - (f) The article discusses the SAFT and assurances to investors, but does not discuss them in contexts of other token sales and ICOs. Most ICOs are structured as donations (not investments) to a project, with little to no legal recourse -- even though many people refer to these “donations” as being “investments”. In our case, we raised investment through an instrument (the SAFT) that is a direct liability to us, and gives investors greater guarantees on the completion of the project, or consequences otherwise. If we fail to deliver the network, we must return the proceeds of the token sale. Few token sales ever have such a clause. Our structure gives investors greater accountability, not less. The article discusses this in sec IV, but does not take into account that startups are similarly risky (i.e. that startup dissolution events return only remaining capital from the efforts), and does not mention how our structure improves on the ICO landscape in general. - (g) We do share the legitimate concern that ICOs need stronger accountability, and some are structured in a way that leads to abuse. The community as a whole needs to raise the bar on accountability and ethical behavior. We have taken significant steps in this direction, not just in our sale but to improve the ecosystem -- the SAFT project, which was a gargantuan undertaking that many other networks are now using, is one example. Many other networks are introducing and improving structures. We believe token networks present a very important new way to form capital, with promising advantages to users, investors, and creators, but the space is still in its infancy, and significant changes are still ahead. Token sales have improved dramatically in the last three years, and we hope they continue to improve to find the right balance and protection of the interests of all parties involved with the network. Thanks, Juan

notheguyouthink 9y ago

I'm so lost, there are so many conversations here talking about IPFS compared to things like Dropbox and S3. Why? To me, IPFS aims to solve a completely different problem. IPFS does not exist because we don't have means to host and distribute files - that is a problem solved by a hundred different entities. IPFS, as advertised in many mediums (video/etc), is a platform to distribute data from a local-first P2P medium. Like Bittorrent, but without ever leaving the local network/etc. Eg, transferring a file/video/site to someone next to you would not download the data from across the world twice. Has the marketing changed? Because all of the videos I watched on it from months ago were all about reducing global bandwidth usage, utilizing local and distributed sources of the data as much possible. Why is everyone acting like IPFS is trying to solve file hosting?

detaro 9y ago
Filecoin is trying to solve (paying for) file hosting through IPFS. Many of the existing projects around IPFS are "host X, but on IPFS".
- notheguyouthink 9y ago
  Sure, but these comments that I refer to are discussing on IPFS, not Filecoin directly, and as such seem bizarrely misguided to me. Saying IPFS is a useless tool because we already have Dropbox and S3 is completely missing the mark. Not only is IPFS not intended to solve "hosting" as a "problem" (in my eyes, at least), but IPFS goals do not even overlap with S3/Dropbox. Saying IPFS is about hosting because many people use it for that is like saying BitTorrent is for porn because many people use it for that.
- lgierth 9y ago
  No, it's more generally about hosting any content-addressed data. That's much much more than files/directories, as S3/Dropbox/Sia are doing. Files and directories are just one particular data structure you can store on IPFS. Think of it as a global unified content-addressed graph database really, and Filecoin can store any arbitrary (sub)graphs within that.

DaniFong 9y ago

y'all are forgetting that juan is a genius and still alive...

deleted 9y ago

[deleted]

enderwilde 9y ago

Good discussion on the technical merits. However, let's take a look at the 'overvalued' claim and a critical error the authors make. The analysis rests on this ratio calculated for Airbnb: "Airbnb is valued today at approximately $31 billion while holding around 3 million listings in total. The average apartment in the United States was 934 square feet in 2016. In a hypothetical scenario, Airbnb is therefore valued at $11.06 per square feet. If one compares this number to the median price per square foot in the United States, which is $123, the Airbnb ecosystem diminishes the median price by a factor of 11.12." I get this is back of the envelope so let's ignore the international dimension. The critical error in these calculations is the apples-to-apples comparison of the square feet of an Airbnb listing to a purchased square foot. Basically - when someone pays $123 per square foot (median price in the U.S.) they are paying for the use of that space for an entire year. Said another way, they are paying $0.34 per day per square foot. Airbnb listings are not in general year-long, which means the same square foot of space is rented out over and over again throughout the year, adding revenues along the way. The 11.12 scaling factor is therefore off and too high. This leads the authors to apply an erroneous scaling factor to the Dropbox sizing to come up with an invalid valuation assessment for Filecoin. It looks like a good average stay for an Airbnb property is about 5 days (https://blog.atairbnb.com/economic-impact-airbnb/ https://blog.atairbnb.com/economic-impact-airbnb/). Let's also assume 50% occupancy rate (https://www.mashvisor.com/blog/what-airbnb-occupancy-rate-can-you-expect/ https://www.mashvisor.com/blog/what-airbnb-occupancy-rate-ca...). That means an Airbnb listing is rented out about 37 times a year (365 / 5 days * 50%). The $11.06 per square foot times 37 revenue-generating occasions is $409.22 per square foot ($1.12/day/sq ft v. $0.34/day/sq ft for a purchase). So the correct apples-to-apples comparison here is to say that Airbnb increases the median price of the asset by a factor of 3.32. Aka Filecoin would need to deliver 2,580 petabytes - not 95,185. That's only 5x Dropbox, which is a minnow compared to S3 etc. Why would that be? Most directly, because Airbnb allows the owners of the asset (sq ft in this case) to ask for a higher per day charge since the length of stay is shorter and thus the owner of the asset has more uncertainty over utilization - it's part of why 30 nights in a hotel costs much more than a month of rent. This is a well-understood economic dynamic and one that would apply to Filecoin storage miners given how miners using Filecoin could theoretically 'rent out' the same gigabyte over and over again to different buyers throughout the year - but also cover the risk of less than 100% annual utilization rates of their fixed-cost asset. Honestly, reading this article made me more confident in the future of Filecoin. The authors highlight multiple times the better technical features than competition, proven dev team, and unwittingly call out why economically speaking owners of gigabytes under Filecoin could expect a higher return than if you were going to buy the gigabytes yourself for your own use. Thoughts?

tromp 9y ago

From the paper: > a total of $257 million – so far the biggest initial coin offering (ICO) as of today (September 2017). This appears incorrect, as the Sales Summary on https://eosscan.io/ https://eosscan.io/ shows EOS having raised over $400 million by September (first 68 days).