This is a very interesting topic and we’ve hashed it pretty thoroughly, so I’ll share some of the treaded path, at least the takeaway that I’ve accumulated.
Basically, the price of safecoin is determined in the market of personal choices out in the world at large. It is not tied to any factor on the SAFE network directly.
The price of resources to be purchased from the network is determined by a network algorithm designed to keep network resources balanced. If there’s lots of extra resources available to the network, the price will be quite cheap. If it starts to get scarcer, the price will move up to balance it.
As safecoin gets more valuable, the desire to get it through farming will increase, which should provide plenty of incentive to provide excess resources to the network, in exchange for safecoin.
We went around quite a lot on this topic in June in the topic “Price discovery for purchase of network resources”.
It was a long hashing out and might be worth reviewing, though it might also be painful to slog through.
I’ve quoted below a sort of summary-of-my-understanding type post which David Irvine acknowledged as being on the same page with his thinking. It’s post 97 in that string, if you want to explore the context.
(Sorry, lost formating, had to make due)
fergish
17 Jun 2014
(quote)
"dirvine said:
“If every user gets free storage up to a value, lets call it network average (which does increase). Then it seems fine. If you have 4 1Tb farmers you have plenty of safecoin to pay for your account being very large as you earned and did not need to purchase them”
(end quote)
(My summary)
My vault/farmer nodes and my User Account are two very different things.
So you’re saying that I get plenty of safecoin sent to my User Account by my nodes running, so I can use it to buy more storage cap “from the Network”. The Nework has some sort of algorithm that it uses to determine the price per unit storage, of which I can buy as much as I want or am able to. This would then be assigned to my account by some sort of Network validated tag that enables me to store that much. The collected vault network keeps track of this.
So the price per unit storage is determined by an algorithm that the network executes in an attempt to keep the network in harmony, not any bid/ask sort of market. It’s sort of an internal supply/demand calculation rather than an external one involving people. Safecoin is required to buy, at whatever rate the network algorithm sets, which safecoin is buried for refarming.
Are we tracking?
(end quoted post)
[he replied that we were tracking]
Hope this helps.