But If you want keep your FR high you can not switch off vault every time when there is drop in price and cheap PUT.
I think it is not that easy. It is kind of lottery.
This might work if the Safecoin price on external markets were driven primarily by (and was tightly linked with) the value of the resources being offered on the Safe network, but I think this is unlikely to be the case, at least once the market is well established.
Traders may expect that any deviation from an established market price for data storage is likely to be temporary / unsustainable, so Safecoin prices may not rise greatly when network capacity increases ahead of demand (i.e. they may not consider this drop in PUT price as an increase in the intrinsic value of Safecoin).
If the cost per PUT is forced down temporarily by a large farmer flooding the network with capacity, there could also be a short term drop in demand for Safecoin on external markets, as the Safecoin users already have will go further - less need to buy any.
A bigger issue than these may be if the price is mainly be driven by longer term speculation of the network’s expected future value, including uses for Safecoin as a currency for all kinds of uses other than buying network resources.
I guess we won’t know for sure until the network is up & running & Safecoin is being actively used & traded, but it’s interesting considering these kinds of possible risk.
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Safecoin getting value from monetary purposes wouldn’t necessarily raise the stimulus for more vaults as the profitability of farming is not going to be a function of Safecoin market cap, which the network is unaware of.
Safecoin’s market cap could double due to demand for non-network uses (e.g. general use crypto currency), and at the same time data provision by vaults could drop if profitability was reducing (e.g. due to a hard drive shortage pushing price of new storage up, or a competing data network taking some of the market share).
I agree that Safecoin’s use for Safe network services is likely to be its primary use, and will always remain significant.
If short term demand for Safecoin on exchanges drops without a change in supply, the price will go down in the short term. If exchange price of Safecoin went down, the fiat price of Safecoin will have dropped in fiat terms.
It’ll be interesting to see if anyone does try to play the market in this way in the early days while the network is small… I guess node aging & the probable small gains & high risks from this would make it unlikely… but I know nothing about how to manipulate markets, so maybe there’s a way to make it work 
Yes, we definitely agree on the first part, and I agree with the sentiment that users will respond to incentives.
But once the network is big, the difference between upload cost being high & low might be one or two percent difference in price, as the network is working to balance supply & demand, with an army of farmers ready to increase resource provision if prices go up a bit (supply curve), and an army of users ready to pick up the slack if prices go down (demand curve).
When a market is big, based on predictable real world costs (hard drives, internet connections, computers), and has fairly stable demand, prices in that market are likely to be quite stable.
Of course while it’s small, it’s likely to be less stable until the supply & demand sides of the market are established.
This is possible, due to using spare capacity of people’s devices if demand isn’t massive.
Though I’m hoping that demand for the Safe network is sufficient to push the market beyond what spare resources of willing farmers can deliver, up to equilibrium where it’s profitable for farmers to keep increasing capacity at a steady rate equalling the growth of the network’s usage (data usage goes up over time).
We’ll have to see what happens, but if the network catches on for all kinds of uses, including as a back end for apps, cloud storage service, web & digital media hosting service etc etc etc, I think spare resources will become exhausted & dedicated / purposed devices will take up the slack & be able to break even, leading to a very stable market.
Edit: here’s a comment from another thread that agrees with your view: MaidSafeCoin (MAID) - Price & Trading topic (Part 1) - #5049 by wydileie?
This would only work for a small network. Once the network is larger the effect will not be be great enough to really be worth it. There are other methods to manipulate the market.
This is a satisfying answer!
I still feel a little bit unclear what will happen if/when the demand for safecoin become more or less independent from storage demand.
It will be natural for people making sites to let people pay for goods from webshops with safecoins and to pay for content with safecoins. If the safe network becomes huge, then the demand for safecoins for these could vastly outstrip the demand for safecoins for storage space to the extent that the $ price of safecoin would be basically independent from storage demand. How would the network react to this?
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Hopefully by balancing supply & demand for available resources.
E.g. put storage prices up & farming rewards up when spare resource is reducing beyond a target amount, and vice versa.
I don’t know how quickly the network will respond to changes in market conditions, but hopefully it can be effective in matching supply & demand to meet a target spare resource availability level so that Safecoin market price fluctuations don’t greatly impact the cost of Safe network resources in fiat terms for users.
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Even though it maybe be easier to farm a safecoin than it is to mine a bitcoin, surely there will be a limited amount of Safecoins farmed per day? So even if everyone is coming online to farm, the coins that are minted will just get chopped up and spread out more, so therefore not crashing the price as easily as you stated?
It’s just a feeling, I don’t have data to prove it, but I feel this will not be the case.
The use for Bitcoin is almost exclusively just as money (be it speculation, long term hedge for fiat, or something else). There aren’t a ton of (currently) practical uses outside of that.
Safecoin is a way better Bitcoin as it’s proposed. It has all the good parts, and minimal to no bad parts. It’s even “backed” by something (data) which is a major complaint of many of the “big brains” in finance about Bitcoin.
I think the uses for safecoin as better money will outstrip the internal uses pretty quickly.
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I don’t think this will need to be the case - e.g. if price of Safecoin goes up rapidly, the network will be able to respond to a short term drop in demand from users by reducing the PUT cost to maintain the target level of spare resource on the network.
This could happen without requiring more farmers to join, which would presumably take a lot more time than adjust PUT price, especially when new vaults won’t be able to contribute storage immediately due to node ageing.
Given the network will relatively quickly be able to manage demand to target a specific spare resource level, its possible for the value of Safecoin to be driven by many factors other than the supply & demand of Safe network resources without becoming a problem for the network’s ability to balance resource supply & demand.
There’s far more demand for money than just for the services the Safe network will offer, so if Safecoin’s value were not highly de-coupled from the value of network resources, it would be massively held back from achieving its greater potential.
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Rather than more space being added, in this situation, I’d think users could store more data for a given quantity of Safecoin as the network adjusts the PUT price to match demand.
This is right, though in the event of a spike in Safecoin price, with all other factors being equal, its the drop in PUT cost that keeps the fiat price of uploads in check rather than new vaults joining.
So except perhaps in the very short term, the Safe network’s internal market for resources will be unaffected by the fiat price of Safecoin.
Yes it is limited by both the demand for reading and spare space.
If 100 times the farmers come on line with average vault size then spare storage dramatically increases and the farming rate drops. Then there are 100 times the farmers farming that demand so the farmers get 1/100th of the dropped farming rate.
So the coin creation rate will actually be lower and that lower amount spread across all those 100 times of farmers.
Obviously human nature will see many of those 100 times farmers turn back off and it will settle back down to an individual rate that the farmers are happy to keep farming.
My view is that it will be a combination. The coin price will likely keep rising, albeit slowing as time goes on, because of utility in shops. The price of PUTs in fiat though will reflect the market rate of storage. In other words the dynamics of the network and farmers rate of fiat exchange will balance out longer term, with some short term fluctuation.
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Here’s a good article about how to calculate the price of a cryptocurrency or at least the direction the price should go based on velocity of money etc
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Old idea here…