Simple understanding: How does Filecoin work?

1. Two main core roles 👇
Storage miner: Provides hard drive space, helps users store files, earns FIL. Needs to stake FIL as a security deposit.
Retrieval miner: Provides network bandwidth, helps users quickly retrieve files, also earns FIL. No staking required.

2. Three proof mechanisms 👇
Filecoin uses cryptographic proofs to ensure data security, which is its most impressive technology:
Proof of Replication (PoRep): Proves that the miner has indeed stored your data, and each copy is independent, preventing cheating.
Proof of Spacetime (PoSt): Proves that the miner has continuously stored the data over time, not just stored it temporarily and then deleted.
Zero-knowledge proof: Makes the verification process efficient and privacy-preserving.

3. Two markets 👇
Storage market: Users pay FIL → miners store files for them → miners continuously provide proofs → earn rewards
Retrieval market: Users pay FIL → the fastest responding miners help retrieve files

4. Penalty mechanism 👇
If miners cheat or lose data, the staked FIL will be deducted ("confiscated"), and effective computing power will be reset to zero.

5. Uses of FIL 👇
Pay for storage and retrieval fees
Miner staking deposits
Transaction medium and ecosystem incentives
Deflation mechanism: Filecoin adopts a Gas fee burning mechanism similar to Ethereum EIP-1559, where part of the FIL will be permanently destroyed, accelerating deflation.

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