Investing in Filecoin is easier than beginners might think - all you need is an online account to get started.
Filecoin was introduced to the cryptocurrency market as an alternative to centralized cloud services. The decentralized platform functions as a peer-to-peer file storage network - with the objective to allow anyone to store, retrieve, or host digital information.
Filecoin released its native FIL token as a way to incentivize its global network of users. Today, it is among the top 30 cryptocurrencies available in terms of market capitalization.
If you wish to gain exposure to this digital currency, our How to Invest in Filecoin Guide will tell you everything you need to know. We will cover what factors you need to consider before taking the financial plunge, and how you can buy this token with utmost convenience.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
- What is Filecoin?
- How Does the Invest in Filecoin Process Work?
- Why Should you Invest in Filecoin?
- How to Invest in Filecoin - Various Options Available
- How to Choose a Platform to Invest in Filecoin
- How to Invest in Filecoin Today - Step-by-Step Walkthrough
- How to Invest in Filecoin - The Bottom Line
What Is Filecoin (FIL)?
In order to understand what Filecoin is, we need to first cover the basics of the InterPlanetary File System (IPFS). This is because the Filecoin protocol was built as a way to improve the IPFS and make it more accessible to the public.
The InterPlanetary File System is an open-source, peer-to-peer decentralized protocol where you can store and access digital items such as files, websites, applications, or any other data.
Filecoin is used to develop a decentralized distributed marketplace for IPFS for long-term storage. The FIL token incentivizes this new ecosystem and its community of people - which includes buyers and sellers of the aforementioned storage services.
The two systems, Filecoin and IPFS, are independent - yet complementary to each other. According to the founders of Filecoin, it has the potential to become the cheapest and fastest way to store data on the internet.
Moreover, as a decentralized platform - you can be assured that your data's safety will not be in the hands of a central authority.
Although Filecoin was founded in 2014 - the FIL token was opened for public distribution only in 2017. At the time, the coin was priced at $11.48. By October 2020 - following the Filecoin Mainnet launch, the price of FIL token had since increased to $59.00.
However, it wasn't until March 2021 that the price of Filecoin started to really take off. At the time of writing, a single FIL token is valued at $20.70.
How Does The Invest In Filecoin (FIL) Process Work?
The underlying process of investing in Filecoin is the same as that of any other tradable asset. Put simply, when you invest in Filecoin - you are hoping that the value of the asset will rise over time.
If and when it does, you will look to cash out your investment and make a profit in the process.
However, it is imperative to remember the volatile nature of cryptocurrencies such as Filecoin. In line with the wider crypto-asset market, the value of FIL tokens will fluctuate each and every second.
Ultimately, this price movement of the digital token is determined by market forces. As such, before thinking of how to invest in Filecoin - you should have a clear idea of how the digital currency scene works.
In simple terms, the price of Filecoin will go up if there is an increase in interest from global investors. On the contrary, if the majority of investors are selling their Filecoin holdings - then the value of the coin will also go down.
Here is an example that can demonstrate how investing in Filecoin works in the real market:
- Let us suppose that you want to invest $1,000 in Filecoin.
- At the time of buying, a single FIL token is valued at $150.
- You decide to hold the Filecoin tokens in your crypto wallet as you are investing on a long-term basis
- In two years, Filecoin is now worth $600 per coin.
- This demonstrates an increase of 300% in the price of Filecoin.
- Pleased with the current price, you choose to cash out your investment.
As you can see from the example, your investment of $1,000 is worth $4,000 at the time of selling.
Such significant returns are actually not uncommon in the cryptocurrency markets. If anything, the price of digital assets is nothing but unpredictable.
In light of this, let us take a closer look at the different market factors that might make Filecoin an attractive investment option for you.
Why Should You Invest In Filecoin (FIL)?
Investing in Filecoin means that you are supporting the wider project behind it. In other words, if the decentralized storage solution offered by Filecoin is adopted into the mainstream, you might be able to make notable returns on your investment.
Below, we have listed a few reasons why you might consider investing in Filecoin in 2023.
1. A Unique Solution
Generally, when it comes to cryptocurrency mining, miners receive crypto coins for performing complex calculations that verify transactions on the blockchain.
However, with Filecoin - miners receive FIL tokens in return for providing computer storage. These miners can be an individual or an organization that has spare disk space on a computer connected to the internet.
This way, Filecoin facilitates the creation of an open market for file storage. Users have the option to choose miners to find storage based on the cost, speed, and other requirements.
In effect, Filecoin serves as a huge decentralized data vault - available for disposal to anyone. If the project is to continue in its current success path, it aims to compete with market giants such as Google and Dropbox for storage services.
This real applicability and innovation are likely to make Filecoin more attractive in the crypto industry.
2. Interest from China
If you have been following the price of Filecoin, you might already be aware that the market sentiment towards this coin has suddenly turned positive - especially over the course of the past few months.
This is primarily because usage of decentralized cloud storage is considered more fitting for China's goal of developing its own independent internet infrastructure. As such, prominent Chinese companies like Xinyuan and Ninth City have already invested millions of dollars into Filecoin mining.
3. Mining Interest
As we mentioned earlier, Filecoin miners receive FIL tokens in exchange for storing data for clients. However, unlike typical cryptocurrency mining, Filecoin miners must use FIL tokens in order to be able to increase mining capabilities.
In other words, Filecoin miners need to keep buying additional FIL tokens to build their capacity. As the majority of these miners have to buy FIL from the open marketplace through exchanges - this will continue to drive prices higher.
This indicates that as long as miners are interested in Filecoin, the price of the asset might remain on an upward trajectory.
4. Surging Prices
Since the beginning of 2021 - the price of Filecoin has been rising monumentally. In fact, the FIL token entered the year at a price of $23.11. However, on April 1, 2021 - the price of Filecoin hit an all-time high of $237.24.
Later, in May, a single FIL token was priced at $151.36. This translates to gains of over 550% in a matter of nearly five months.
Given the factors that are causing this surge, it is possible that the trend might continue for a while. As such, if you are hoping to capitalize on the popularity of Filecoin, this might be the right time to invest in this digital asset.
Don't Miss: Filecoin Price Predictions
How To Invest In Filecoin (FIL) - Various Options Available
Mining for Filecoin is not the only way for you to get your hands on this digital currency. Today, you have the option to invest in Filecoin via an exchange, an online crypto broker, or via a cryptocurrency ATM.
That said, each method comes with varying terms of safety, convenience, and associated costs.
In this section of our How to Invest in Filecoin Guide, we will examine which one of these methods might be most suitable for you to buy this digital token.
1. Filecoin ATMs
There are over 20,000 cryptocurrency ATMs distributed across the world. However, most of these machines are concentrated in the large cities of the US, Canada, and Europe.
As you can imagine, these crypto ATMs allow you to buy Filecoin by inserting your cold-hard cash into the machine.
To give you a clearer picture, this is how you can invest in Filecoin through a cryptocurrency ATM:
- Locate your nearest cryptocurrency ATM.
- Choose Filecoin from the list of supported digital tokens.
- Specify the amount you want to invest in Filecoin - for example, let's suppose you want to buy $1,000 worth of FIL tokens.
- Once you enter the amount, the ATM will do the calculations and tell you how much Filecoin you will receive.
- For instance, the ATM might display that you can receive $950 worth of Filecoin while charging you a 5% fee.
- You proceed to insert $1,000 into the ATM.
- The ATM machine will print out a receipt for your payment - which will include details of the Filecoin wallet and how you can claim your FIL coins.
However, the process of buying Filecoin through a crypto ATM does not end here.
In fact, you will have to go through the hassle of claiming your Filecoin tokens using a cryptocurrency wallet. In order to do this, you should be familiar with the concept of choosing a digital wallet and the safekeeping of your private keys.
Although this might be an easy step for an experienced crypto investor, for those who are buying digital assets for the first time - this step might get a little tricky.
Perhaps, more importantly, the biggest setback of cryptocurrency ATMs is the high amount of fees they charge.
Your chosen crypto ATM could charge you anywhere between 5% and 20% in trading commissions. This means that on some crypto ATMs, a $1,000 investment would cost you $200 in fees alone.
This is one of the main reasons why we suggest that you consider an online platform to make your Filecoin investment.
2. Filecoin Broker
Today, the majority of crypto investments take place through online marketplaces. This allows you to put your money into cryptocurrencies without even having to leave the comfort of your home.
When it comes to investing in Filecoin - you have two choices. The first option is through a cryptocurrency exchange. However, our study finds that the vast majority of cryptocurrency exchanges are unregulated - meaning you might be putting your investment funds at risk.
On the other hand, a regulated broker can ensure that your capital remains safe and that you will be making your investments via a secured online space. Moreover, completing your investment through a regulated broker will often take less than 10 minutes from start to finish.
Online brokers are also flexible in offering you multiple payment methods to deposit funds into the platform. The best brokers will give you the option to choose between credit/debit cards, bank transfers, and e-wallets - including PayPal, Neteller, Skrill, and others.
Most importantly, you will also find that some of the most popular online brokers allow you to invest in Filecoin at zero percent commission.
How To Choose A Platform To Invest In Filecoin (FIL)
Now that we are clear about why an online broker might be the better choice for your investments - we will tell you how you can find the right brokerage platform.
Considering the popularity, the online investment space is crowded with online brokers. However, as you can imagine - not every broker offers the same level of service.
For a beginner, it can be challenging to separate the wheat from the chaff. As such, in this section - we will walk you through a list of parameters that you can use to assess the best online broker that can cater to your Filecoin investment needs.
Licensing and Reputation
As we mentioned earlier, the regulatory standing of the online broker should always be a priority. As such, it is best to tick off this aspect before you proceed any further.
To give you an idea, some of the most well-respected regulators of online crypto brokers include the FCA in the UK, CySEC in Cyprus, and ASIC in Australia.
It is recommended that you choose a broker licensed by at least one such financial authority. eToro, for example, is regulated by all three of the aforementioned licensing bodies.
Being a licensed broker means full compliance with the rules set by the respective regulatory agencies.
For instance, this means that the broker should keep your funds secure in separate bank accounts, submit their books to regular audits, and above all, have the best interest of the client at heart.
On the other hand, if you choose an unregulated cryptocurrency exchange, you will be working with a platform that is not serious about its regulatory responsibilities concerning the safety of your funds.
Considering these aspects, it is evident that by choosing a regulated broker, you can confidently invest in Filecoin without having to worry about fraud or internal misconduct.
Fees to Invest in Filecoin
In the earlier sections, we demonstrated the importance of low trading fees. Although online brokers might charge you relatively less compared to a crypto ATM - it is still crucial that you are aware of what you are liable to pay.
That said, as with any other financial service - fees and charges will vary from one platform to another.
For instance, Coinbase is one of the most popular cryptocurrency exchanges available in the online space. However, the platform charges you a commission of 1.49% for buying Filecoin.
Let us consider how this fee would work out for you when you make a Filecoin investment:
- Let's suppose you want to make an investment of $1,000 into Filecoin.
- On Coinbase - this means that you will have to pay $14.90 when you buy FIL tokens.
- Then again, when you decide to sell your coins - you will again have to pay a commission of 1.49%. This is based on the value of the Filecoin investment at the time of the sale.
Although 1.49% might appear a low commission, this amount will add up depending on how much you invest.
On the other hand, there are several regulated online brokers that allow you to invest in cryptocurrencies at a zero commission rate - such as eToro.
Apart from the trading commission, you should also be aware of what transactional fees you will be liable to pay when making deposits and withdrawals to your bank.
Minimum Filecoin Investment and Payments
Similar to traditional stockbrokers, many cryptocurrency platforms will also set a minimum investment amount.
Considering the price of Filecoin stands close to $21 at the time of writing, this means that you will have to invest a minimum of $21 in order to buy a single FIL token.
That said, there are online brokers that allow you to make investments in smaller amounts or with no minimum at all. Moreover, due to the volatile nature of the cryptocurrency market, it is suggested that you keep your investments to modest amounts instead of risking large sums at once.
In addition, it is equally important that you consider what payment methods are supported by your chosen broker. Many regulated brokers - such as eToro, offer a number of options - including credit/debit cards, bank transfers, and integration with e-wallets such as PayPal.
Storage and Cashing Out
Many novice cryptocurrency investors tend to overlook the importance of finding the right wallet for storing their digital assets. In fact, this is one of the most critical aspects of investing in Filecoin.
After all, the safety of your digital wallet will be what determines the security of your cryptocurrencies.
Once you pay for your Filecoin investment and withdraw the tokens out of the brokerage platform - you are entirely responsible for the safekeeping of your wallet. In other words, this implies that you need to have a firm grasp on the security aspects concerning your private keys and public addresses.
However, if you do not want to choose a private wallet, you can also look for regulated online brokers that offer in-built storage services for cryptocurrencies. This means you will not have to withdraw the coins. Instead, you can store it at the online broker until it is time for you to cash out your investment.
How To Invest In Filecoin (FIL) Today - Step-by-Step Walkthrough
If you are new to cryptocurrency investments, here we have put together the step-by-step instructions that you can follow.
Following our guidelines, you will be able to invest in Filecoin in a matter of minutes.
Step 1: Open an Account
Once you know which online broker you want to use, you can open your investment account with them.
You can do this by providing your email address and entering a strong password. In addition, you will also have to submit some personal information, such as your full name, home address, contact details, and date of birth.
Step 2: Upload Some ID
If your chosen broker is regulated, you might also have to complete a Know Your Customer process. This is an additional step to ensure that all users are verified.
On many brokerage platforms, you will have to be verified in order to make deposits and withdrawals.
In order to pass the KYC verification, the platform will request a copy of your passport or driver's license. You might also have to provide a utility bill that proves your address.
Not to worry, many online brokers have automated this step - meaning that it will not take more than a few minutes to verify your account.
Step 3: Add Funds
When your account has been verified, you will be able to proceed to add some funds.
As we covered earlier, depending on the platform - you might have the option to choose from a debit/credit card, bank wire, or e-wallet. Make sure that you add the minimum investment amount required when making the deposit.
Step 4: Search for Filecoin
At this stage, your account is fully equipped to start investing in Filecoin. To buy FIL tokens, you simply need to search for Filecoin on the platform.
Step 5: Complete Filecoin Investment
On the trading page, enter the amount you want to invest in Filecoin. Before confirming the order, make sure that you verify all the data you have specified.
Once you confirm, the Filecoin tokens will be instantly available for you to withdraw to a private wallet.
Step 6: Cash Out Your Filecoin Investment
If your chosen broker provides support for an in-built wallet, then the Filecoin you bought will be directly added to your portfolio.
If not, the platform will give you detailed instructions on how to withdraw the FIL tokens to your private crypto wallet.
Depending on your investment strategy, you will be holding your Filecoin in your wallet for months or even years. When you are ready to cash out, you can then sell the tokens at the same broker you bought them from.
Your capital gains from this investment will be added back into the payment method you used to buy Filecoin - once you request a withdrawal.
How To Invest In Filecoin (FIL) - The Bottom Line
In terms of its utility, Filecoin comes across as an innovative project. If the wider cryptocurrency market is to adopt its storage solutions, then the price of the digital asset might continue to increase in the future.
That said, given that the cryptocurrency market is constantly fluctuating, you might want to tread carefully by investing only modest amounts into Filecoin.
Ultimately, as we have demonstrated in this How to Invest in Filecoin Guide, the process of buying this digital token can be incredibly easy. However, the key is to ensure that you choose a regulated online cryptocurrency broker to facilitate your investment.
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How To Invest In Filecoin FAQs
Which is the best platform to buy Filecoin?
Filecoin is available at dozens of online cryptocurrency exchanges and online brokers. However, it will be best to stick to a regulated online broker as your funds will always be protected under the watchful eyes of a financial authority.
Can Filecoin be considered a good investment?
In the first five months of 2021, FIL tokens gained over 550% in value. However, it is impossible to be certain that Filecoin will experience that upward price movement again. As such, it is crucial that you do your due diligence before investing large amounts into Filecoin.
How can I start investing in Filecoin?
The first thing to do is to find a regulated online broker that offers support for Filecoin alongside low trading fees. After that, you can create an account with your chosen brokerage platform, make the minimum deposit, and buy the desired amount of Filecoin.
What is the minimum amount required to buy Filecoin?
The minimum investment required varies from one broker to another. There are also brokerage platforms that have no minimum requirement in place - so be sure to check this before signing up.
Can I lose money on a Filecoin investment?
Yes, like any other tradable asset, investing in Filecoin also comes with risks. If the price of the coin drops after you have made the investment, you can lose money.