Filecoin is a decentralized data storage network built by Protocol Labs that allows users to sell their excess storage on an open platform. It acts as the incentive and security layer for IPFS (InterPlanetary File System), a peer-to-peer network for storing and sharing data files. Filecoin turns IPFS' storage system into an "algorithmic market," where users pay storage providers in Filcoin's native token, FIL, to store and distribute data on the network.