To retrieve data, users pay a retrieval provider to fetch the data for them. Unlike storage deals, which are handled on-chain, retrieval deals may happen off-chain. This results in a faster data retrieval process.

Filecoin has two functions to keep data safe. First, it uses a cryptoeconomic guarantee that verifies the storage with zero-knowledge proofs. Second, it uses an economic penalty: if the data is unretrievable or the storage fails, storage providers are penalized through locked-up collateral.

The open-market environment incentivizes storage providers to offer their storage capacity in an efficiently priced way. That is, prices are determined by supply and demand dynamics, rather than a fixed pricing structure. To incentivize storage providers to participate in deals, Filecoin rewards them with the network's native token (FIL).

A storage deal is like a service level agreement (SLA) enforced on the Filecoin blockchain. Storage deals are agreements where users pay fees to storage providers to store their data. The terms of the deal include the fee amount and the duration of the storage deal.

Filecoin is a peer-to-peer version of AWS that regularly verifies data availability and integrity. This is made possible by deals negotiated on open markets for data services.

Four major categories have already found high demand: (1) NFT and Web3 storage, (2) permanent storage and Web2 datasets, (3) metaverse and gaming, and (4) audio and video.

IPFS may be regarded as a peer-to-peer version of HTTP, with an important twist. Traditional URLs and file paths identify a file by its specific geo-location on a server. IPFS uses content addressing to store data decentrally. It references a file by what’s in it, i.e., by its content. A content address is unique and is the result of hashing, which is essentially the cryptographic compression of content into a long string of characters. When retrieving a file, the network only needs the file’s hash to locate the nodes storing that file’s content.