[fg6hr]

IPFS is really just a mix of a torrent tracker with a torrent client, but once IPFS VMs start paying for themselves, people will sign-up in masses. I guess that's what Filecoin is about.

Edit: The way I see filecoin working is anyone can post a reward for a file and once the file is provided, the reward is paid. In other words, it's bit like a brokerage that connects downloaders with uploaders. The difficultly is that this brokerage needs to be distributed and resilient.

[rglullis]

I am yet to write more about this, but one thing that bothers me with Filecoin: the economics don't add up. The price per GB stored will tend to reach an equilibrium around the commodity price - i.e, costs of disks+computers+electricity+internet. Unless I am missing something, if the price gets higher, more people would buy disks and put them online, bringing the price down.

If that is true, it means that a node can only be profitable if you are freeloading. And if you are freeloading, any price you get will be good which means that it tends to go even further down, perhaps even below the commodity cost. I may be missing something, but I really don't see this going beyond techies with spare disks playing around and definitely no way to run a Filecoin node on a VPS profitably.

[anchpop]

That is actually the intent of filecoin. In perfect competition, which is the ideal state for a commodity, there is no economic profit. The reason Amazon and other companies are able to make a profit selling cloud storage is because there is not yet perfect competition.

Right now if I wanted to compete with Amazon, I could buy 2 or 3 petabytes of storage space and some bandwidth. But nobody would trust me not to lose their data. This is the differentiation that makes cloud storage less of a commodity than it could be. The goal with filecoin is to make it so you don't have to trust me, just some general guarantees about the filecoin network. If amazon for some reason was selling storage on this network, I could compete with them on equal footing (and whoever sold it more cheaply would win).

Many commodities are in close-to-perfect competition. For instance, I don't care if grain comes from England or France, just that it's cheap. While it is very hard to make an economic profit selling grain, many people do farm grain and make enough money to support themselves (The money you pay your workers to survive is one of the costs of producing grain. That's true even if the only worker is you)

If you could make a profit by running a filecoin node on a VPS, everyone would do that. By competing with each other you'd all bring the price down and down until it was no longer more profitable than selling any other commodity (and maybe even lower). So you're right to not expect to be able to do that.

[lodi]

I think you're conflating different definitions of "profit". There's at least three important ones:

1) Accounting profit: revenue - expenses. This is colloquially what most people mean when they say "profit". To break even you just need to make enough money to cover your explicit expenses. In your example, you would need to make more in Filecoin income than you spent in disks/electricity/etc.

2) "Normal profit": this is a technical term in microeconomics. Basically this takes into account opportunity cost; the cost of not doing some other profitable thing with your time/money. By these standards, to break even you'd not only have to cover the cost of disks/electricity but also the "opportunity costs" of whatever else you could have been doing with those disks/electricity (like mining Bitcoin), or whatever you could have been doing if you never even purchased those disks to begin with (like investing in the S&P or whatever).

3) "Excess" or "economic" profits. These are extra profits on top of whatever you earn in #2. This is the part that goes to 0 for commodities like milk/gasoline/Filecoin but is non-zero for differentiated products like iphones.

For Filecoin specifically, I would expect that normal profits would probably be above the raw costs of disks and electricity, since it takes some effort to purchase and administer all that hardware, but probably below the cost of renting a VPS, since a VPS is typically used for more profitable things than just sitting around and holding stuff on disk.

[AgentME]

If there's enough enthusiasts using spare disks at home to offer enough disk capacity for everyone, then that means Filecoin hosting will be available cheaper than cloud hosts. If all that capacity gets used up, then supply and demand will cause the price to go up until more people add capacity. If the price hits the price of cloud hosts, then people will just run tons of Filecoin nodes on cloud hosts, so the price of cloud hosting will be the upper bound on Filecoin hosting prices. Then anyone that can undercut the cloud hosts will be free to run their own Filecoin nodes, and the price will be pushed down as people do this.

[StreamBright]

>> but once IPFS VMs start paying for themselves

How does that work in real life?

[WJW]

This looks a lot like the common fallacy (in blockchain circles) that anything that is _possible_ is also _inevitable_. There is no reason at all why IPFS VMs would be profitable in the long term, especially since VM hosters are not stupid and would just dedicate their capacity to IPFS themselves, cutting out the middle man.

Of course, in the shorter term there are many different scenarios where the market is slower to adjust. The STORJ network has been subsidizing their node operators with VC money for example, leading to some excellent unit economics for the early adopters.