This question is raised in Reddit by EndThePurge and re-posted here, which I personally think is important to be addressed.
FileCoin, still in development, is the most prominent and best-funded of the four “storage coin” projects. Arguably, it’s also the earliest-stage, or “furthest-behind”, of those projects. By “storage coins”, I mean currencies which are mined primarily through the use of hard drive space, where rewards are issued for storing data rather than performing calculations on CPUs, GPUs, ASICs, etc. This isn’t to say that “storage coins” are computation-free, but just that storage is the main criteria for mining.
I’ve observed the following regarding other storage-coin projects:
BURST: This is the oldest storage-coin network; it's also the technically-simplest, and its coin is widely traded on exchanges, which isn't the case for FileCoin. In a sense, it has the strongest infrastructure; the BURST mainnet is online, and the software is effectively out of beta. However, BURST is also effectively dead; the token has lost ~96% of its value from ATH, and BURST mining is absurdly unprofitable, as reported by a reputable source here: https://www.youtube.com/watch?v=nJ4ea5NNqcg. BURST suffers from relatively high computational overhead; plotting drives for BURST mining is both slow and computationally-expensive. Since it's impossible to earn anything by mining BURST, nobody is doing it, which means no meaningful amount of reliable storage is for sale, which means nobody is using it, hence the "death spiral" of the network. STORJ: This is the second-oldest coin; it retains some value (more than BURST), though most STORJ miners are doing GPU mining; the STORJ algorithm allows both HDD and GPU mining (same algorithm as ETH, so can be mined with ASICs for ETH as well). Only the GPU mining is at all profitable, and even that is rarely done; generally it's better to mine ETH instead. As with BURST, STORJ is reasonably trade-able, supported by Poloniex, etc. SiaCoin: This is the second-newest coin (only FileCoin is newer), and the project is more similar to FileCoin than any other project. It's also the second-most-complex project. However, token value has collapsed, as with BURST. Source: https://www.coinbase.com/price/siacoin
My question is this: What does the failure of competing projects mean for FileCoin? Is the failure of competitors a positive sign (because FileCoin will face little competition), or is it a negative sign (perhaps indicating that the business model itself is untenable)?