Make Explosive Gains with the “Airbnb of Digital Storage”

Backed by the biggest Silicon Valley insiders, this crypto will roll out to 2.1
billion computer owners this year. This hack-proof technology will secure
the Internet, disrupt the biggest growth driver of Amazon and Microsoft, and
generate potential returns of 22,620%.
You’ve seen the news. Hackers are getting bolder and they’re cracking into giant pools of
personal data – yours included.
The Equifax breach alone exposed the names, birthdates, Social Security Numbers, and
driver’s license numbers of more than half the US adult population.
Kick in the Target, Yahoo, and eBay hacks, and there is a better than 75% chance that your
personal records are in the hands of hackers.

According to a 2015 report by Javelin Research, if your personal data is compromised in
a data security breach, you have a 1 in 3 chance that it will be used.
And, if that data included your debit card information, the odds are nearly 1 in 2 that
your data will be used, and you will be the victim of financial fraud or theft.
The good news is that there’s a way to virtually eliminate data breaches. Even better,
ordinary people will be paid to shut the hackers out using the crypto technology we call
the “Airbnb of data storage.”
This technology leverages the power of decentralization inherent to both blockchain and
to the sharing economy…
The Sharing Economy
From 2009 to today, Uber has become a household name and its valuation has exploded
from $4M to $68B.
Over the same period, Airbnb has grown from a tiny $1.5M startup into a $31B juggernaut.
Both companies have rewarded early investors with gains of better than 5000x – turning
every $200 invested into over $1M.

While most people have heard of Uber and Airbnb, few understand the business model
that allowed them to grow at such incredible speed and to disrupt large entrenched
industries in under a decade.
These companies and their users are part of the sharing economy.

The sharing economy is simply peer-to-peer business. Someone needs a place to stay for
a week and someone else has an empty condo they’d like to rent. Someone needs a ride
to the airport and someone else is happy to drive them for a fee.
Uber and Airbnb built software platforms and mobile apps that match buyers and sellers
of transportation and lodging services. The apps are incredibly easy to use and
dramatically increase the efficiency of bringing buyers and sellers together. They also
self-regulate to a large degree by allowing app users, on both sides of the transaction, to
rate each other.
These are beautiful business models because they require very little overhead and no
inventory. The vehicles and the homes are provided by users of the platforms.
For example, over 1 million people drive for Uber, but it owns no taxis (apart from the
self-driving autos it is currently testing).
Similarly, Airbnb controls 4 million home and room listings - more listings than the top
5 hotel chains (Marriot, Hilton, Intercontinental, Wyndham, and AccorHotels) combined
have rooms!
As a result of competition from Uber, New York City taxi medallions have plummeted in
value from $1 million to around $200,000 today. Meanwhile, Airbnb is steadily eroding
the margins of the major hotels.
The sharing economy model is expanding to include more and more services and PwC
projects that the sharing economy will grow to $335 billion in annual revenue by 2025.
The key for any sharing economy startup is building an easy-to-use platform that matches
service users with service providers.
The sharing economy play that interests us today is about to disrupt the data storage
market. Presently, the data storage business generates $40 billion in annual revenue and
is growing by about 30% per year.
Bank Heists and Data Hacks
When asked why he robbed banks, Willie Sutton is famously, though erroneously,
attributed with saying “that’s where the money is.” Simply put, the concentration of
money within banks make them attractive targets.
In most bank heist movies, the robbers typically go after the primary vault and don’t
bother with the safety deposit boxes. Clearly, the treasure trove is the central vault; that’s
what makes it such an attractive target.

It’s far more of a gamble to go after the safety deposit boxes because that takes too much
time, increasing the risk of getting caught by the authorities, and the payoffs are smaller.
Of course, the analogy is that, like banks, big centralized pools of data are attractive
targets for hackers.
In recent years, we’ve heard of more and more large centrally-stored data pools being
compromised. High-profile victims abound including Yahoo, Linked-In, and most
recently, Equifax.
But if those breaches weren’t bad enough, significantly more concerning is that even the
CIA and NSA use centralized servers to store their data. And, each agency has an arsenal
of their own cyber weapons (i.e. malware, viruses, trojan horses, etc.)
In 2016, the central server containing the NSA’s cyber weapons was itself hacked and the
hackers proceeded to auction off those cyber weapons to the highest bidders. It’s no
wonder malicious hackers have become so bold – and successful. They now have the same
tools as the most powerful government agencies.
According to a study funded by IBM, the average data breach, across the 419 global
businesses surveyed, costs $3.6 million. In total, the cost of these breaches runs well into
the hundreds of billions annually. In fact, according to a report by Juniper Research, the
cumulative annual cost of these data breaches will rise to $2.1 trillion by next year.
So, what’s the solution?
Creating Millions of Decentralized Mini-Vaults
Imagine taking all the money stored in a bank vault and distributing a few dollars across
millions of mini-vaults spread across the globe. How attractive would those targets
appear to thieves? Not very, right?
How much would it cost to break into all of them? Clearly, the cost would be vastly higher
than the potential reward.
Likewise, one should not store large amounts of data in a single place if given a choice.
You break the data into pieces, encrypt it, and distribute it. Decentralized data storage is
the solution to the hacking problem.
Of course, creating all these mini data vaults from scratch would be prohibitively
expensive. The good news is: they already exist.

An “Airbnb for Data”
Like millions of computer owners across the world, chances are, you have unused space
on your computer’s hard drive. If you’d like to rent out some of that space, just like
homeowners rent out extra rooms using Airbnb, then Filecoin (FIL) is for you.
The Filecoin platform matches people and businesses who need to safely store data with
computer owners who have unused hard drive space.
Of course, this idea could be a little confusing and questionable at first. If you are a user
of the service, do you really want your data stored on someone else’s hard drive?
Well, it’s actually quite simple and ingenious.
As a user, the platform takes your data, breaks it up into small pieces, encrypts it, and
then stores it on thousands of other computers. No one else can read or retrieve your data
but you.
As a storage provider, you simply join the network and dedicate a certain amount of your
hard drive capacity to the platform. You earn Filecoin tokens, as payment, from that point
forward. You can then either hold the tokens, sell them for Bitcoin, or convert them to
Dollars or Euros through cryptocurrency exchanges.
Why would one hold onto their Filecoin tokens?
Filecoin tokens are used to pay for storage on the network, and there is a fixed supply that
will not increase. Thus, if the Filecoin storage network grows, demand for Filecoin tokens
should also grow, causing upward pressure on the token’s price.
Merging the Sharing Economy with Blockchain Decentralization
Filecoin’s platform combines the power of the sharing economy with blockchain
decentralization. One of the key reasons blockchain is so powerful is because it’s virtually
impossible to hack.
In order to successfully hack a blockchain-based network, a hacker needs to hack 51% of
the computers on the network simultaneously. When you are talking about thousands of
computers, the level of difficulty skyrockets. More importantly, the cost of hacking
thousands of computers simultaneously is astronomical – both in computing power and
in electricity.

The incredible security of blockchain-based systems is why every major financial
institution in the world is looking to integrate blockchains into their technology
platforms.
Competing with the Big Guys
Filecoin’s developers hope that their platform will become the preferred way to use and
sell the world’s unused data storage. Their decentralized model should be significantly
more cost effective than the offerings of cloud computing juggernauts like Amazon Web
Services (AWS) and Microsoft Azure. At present, similar decentralized platforms are
charging are about half the price of AWS and those are the kinds of economics we expect
out of Filecoin.
Filecoin leverages a decentralized sharing economy model, similar to Airbnb, while its
primary competitors like AWS use less efficient centralized models, similar to the major
hotel chains.
Presently, just a handful of big cloud storage providers, like AWS, account for more than
70% of data storage worldwide. Filecoin’s distributed model should vastly expand the
number of participants in that market, thus decreasing the world’s data concentration. In
turn, decentralized storage should enable a more decentralized internet, one that is more
robust and resistant to even state-sponsored hacking attacks.
Filecoin Breakdown
Summary
A decentralized data storage network, powered by a blockhain and the Filecoin token.
Use Case: A+
Filecoin’s model is a perfect use case for blockchain and decentralization.
Development Team: AFilecoin
is the product of Protocol Labs, a US-based company building internet
infrastructure technology. The Protocol Labs core team has deep expertise in distributed
systems, cryptography, and open-source community management. Over 1,700
individuals and institutions across the globe have contributed to open-source projects led
by Protocol Labs.
Juan Benet is the Founder and CEO of Protocol Labs. He has a Bachelor’s and Master’s
degree in Computer Science from Stanford University. He has experience in advising and
working with Silicon Valley start-ups.

Nicola Greco is a key programmer at Protocol Labs who developed the Filecoin protocol
and wrote the 2017 Filecoin whitepaper in collaboration with Juan Benet. He is also a
Ph.D. student in Computer Science at the Decentralized Information Group at MIT.
Key Investors: A
Marquee investors include Union Square Ventures, Y Combinator, Digital Currency
Group, Winklevoss Capital, Sequoia Capital, Andreessen Horowitz, and Naval Ravikant
(AngelList founder). The list is a virtual “who’s who” of prominent crypto investors.
Additional Info:
Filecoin’s initial coin offering (ICO) took place in August 2017, however, FIL is not yet
trading on any crypto exchange. The founders have said that the coin will list once the
platform launches. As for launch, the founders have yet to provide a concrete date but it
is anticipated sometime this year.
The concept, the developers, and the investors behind Filecoin are each impressive and
the market opportunity is huge. In fact, it is more than big enough to support multiple
competitors. As of this writing, another crypto project called Storj (STORJ) is the
dominant player in the decentralized data storage market and we consider it a buy in our
CryptoInvestor portfolio.