FSA COMMITTEE
FINTECH FRIDAYS
2nd April 2021
Filecoin - A P2P Cloud Storage Platform
Another week, another altcoin. This week, let’s take a closer look at Filecoin (FIL) and its recent gravity-defying price rally. Filecoin climbed four days in a row by over 79% to reach its all time high of $238.20. Moreover, Filecoin closed the first quarter of 2021 with a 682.32% increase in price, briefly entering the top 10 list of cryptocurrencies by market capitalisation, with a mouth watering peak of $12.7 billion. The coin's pump is predominantly correlated with a sharp boom in Filecoin token mining in China.
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What are Filecoins really? Well, Filecoin is a decentralized data storage network. It functions as a market exchange platform for storage miners to sell their spare disk space to users who are in need of a cloud storage facility for a minimum duration of one month. Users may choose their preferred trade-off between cost, speed and redundancy, e.g. storing with more than one storage miner as a backup. When a deal is reached, the user sends their file to the storage miner, and the contract is committed publicly via Filecoin’s blockchain. The network constantly verifies that the miners are storing files correctly. The contract is complete when the user pays a fee and retrieves the stored file.
When it comes to peer-to-peer cloud storage, reliability is a huge concern as there is no one entity to be held accountable if the storage miner goes missing. To combat this risk, Filecoin employs cryptoeconomic constructions to punish bad actors and incentivise responsible storage mining. For example, storage miners have to provide a small up-front amount into a locked fund. The fund amount grows as chunks of Filecoin block rewards earned by the storage miner are added to this fund. The locked fund then serves as collateral, in the event a miner goes offline for a day, a small penalty will be charged from the locked fund; if the miner completely stops governing the storage of the file, they could lose the entire amount of the locked fund. On the contrary, the miner would be able to claim the full amount if they complete the full term of the storage contract.
Essentially, Filecoin’s platform is a direct competitor to centralized cloud storage services such as Amazon’s AWS. Filecoin is betting that the low barriers to entry of a peer-to-peer network coupled with free-market pricing will be able to outbid competition from other more well-established cloud service providers. Other advocates for Filecoin highlight the utility of Filecoin, and that its blockchain rewards miners for contributing useful storage to the internet, rather than completing wasteful proof-of-work computations - referring to Bitcoin and other cryptocurrencies. The decentralized cloud storage space is growing rapidly and will be an interesting space to watch. Other distributed file storage cryptocurrencies to look out for besides Filecoin are Storj, Siacoin, and BitTorrent.
References:
https://www.coingecko.com/en/coins/filecoin
https://docs.filecoin.io/about-filecoin/what-is-filecoin/#for-users
https://bitcoinist.com/what-is-filecoin-and-why-its-uptrend-is-overshooting-even-bitcoin/
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Here's the Douugh: the AI Neobank
In recent news, ASX-listed Douugh Limited (ASX:DOU), has soared through 10% this week as it announced on Friday morning that the neobank has been granted a Registered Investment Advisor License. This allows them to enable a range of new wealth services such as Robo-Advisory powered by Artificial Intelligence and Trading for their customers.
Founded in 2016, Andy Taylor sought to disrupt the banking industry by using AI to allow customers to have a more personalised banking experience suited to individual needs.
What separates Douugh from not just being another bank account is through 2 internal features they have dubbed the ‘Salary Sweeper’ and ‘Jars’. Through every paycheck that is deposited into a Douugh account, the Salary Sweeper feature automatically stashes away a specified percentage towards your goals and covers your needs into a spending account automatically to help you budget. This could be for bills, specific saving goals or to just build a habit of saving. Smart alerts would also be used when you come close to hitting your targets to help keep you motivated. These specific goals that are created are called Jars, which allows you to easily check your progress, whilst also keeping your spending money into a separate account, which is linked to Douugh's provided Mastercard, or Apple Pay, which is automatically integrated when signing up.
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In addition to creating automated personalised budgets, Douugh also provides automatic spending categorisation every time a transaction is used through the debit card that is provided. While other neobanks also have this feature, what separates Douugh from its competitors is that it ensures that you spend within your meanings. This is done by granting you more control over your budget by specifying exactly how much you want to spend per category, and sending you regular insights and notifications when you come close to overspending.
Granted their RIA license, Douugh is now able to launch another wave of products in hopes of enhancing the banking experience of its users. The planned feature ‘Wealth Jars’ will give users the ability to accelerate all their saving goals by allowing each Jar to have the option of being in three different custom-built portfolios, including Stocks, Crypto, and Retirement. This feature is directly targeted to competitors such as Raiz, Stash, and Betterment, which also use micro-investing to help users reach their budgeting targets. However, as a neobank, Douugh is able to transfer money into spending accounts immediately, whereas other companies do not have that option and will take approximately 3-5 days for funds to be withdrawn.
Douugh's milestone today is only the catalyst that would accelerate their growth, where it plans to start expanding to other countries. Whilst based in Australia, Douugh's app only operates in the US. However with the forthcoming acquisition of the platform Goodments based in Australia, this gives Douugh access to around 13,000 users with $6000 each under management represents a strong position for the plans to carry out the integration of their app into Australia, before further expanding rapidly into other international markets.
References
https://www.fool.com.au/2021/04/01/the-douugh-asxdou-share-price-is-up-12-this-morning-heres-why/
The views expressed within this article are those of the authors and do not represent the views of the Finance Student's Association. All images and references in this article are for fair and educational purposes only. The content in this article is not intended as legal, financial or investment advice and should not be construed or relied on as such.