**PART 1 (Speed or Stability)**

This is an old debate on the dev list. I’ve seen some new discussions on this forum, asking the same questions, and adding new solutions. I would like to lay it out and break it down so we can get a better understanding about the function of **Safecoin**.

For this discussion, we need to clearly define the difference between a RABBIT and a TURTLE. It may be obvious but I’ll spell it out anyway.

- A rabbit crypto coin rises or lowers in fiat value quickly. It jumps around a lot.
- A turtle crypto coin rises or lowers in fiat value slowly. It crawls at a steady pace.

Most Investors/Traders want rabbits…

Most Consumers/Merchants want turtles…

**We all want to have our cake and eat it too!**

IMO, most crytpo currencies are setup like rabbits. Tell a potential adopter your alt coin can go from $0.01 to $1.00 in less than a year. Their eyes glaze over and they no longer hear anything else. China bans Bitcoin from the banking institutions, and the price falls. MtGox goes bankrupt, and the price falls even further. A new company accepts Bitcoin, and the price rises again. Without a valuation anchor, the crypto coin ship wanders with the FUD current.

Safecoin has the rare opportunity to implement a valuation anchor. But do we really want it?

As an Investor, I say “hell no!”

As a Consumer, I say “yes please!”

Right now, Bitcoin has reached a critical level of adoption. And the Bitcoin Foundation is hoping the fiat price will stabilize. Why would they want it to stabilize? Because they want consumers and merchants to adopt it as a real alternative currency. Instead of constantly switching out to fiat currencies, people remain in the Bitcoin ecosystem and complete the “production to consumption” cycle. Is this possible? Not likely without a valuation anchor.

**Valuation Anchor:** is a fixed measurement of cost for resources. We can use SAFE storage space as the first example of a valuation anchor. I will attempt to simulate this example in a technical format. If you have read this far, take a break and come back to Part 2 below.

**PART 2 (Network Average Model)**

*This is a simplified hypothetical simulation for the purpose of discussion, not meant for exact Network behavior/performance.*

Safecoin = Rabbits

SAFE Storage = Turtles (Valuation Anchor)

The SAFE Network uses Rabbits to buy Turtles.

~~ FIRST 30 DAYS ~~

**Magic Number Assumptions:** Initially, there should be more famers than free users when the Network launches. Let’s say there are 70% farmers and 30% free users out of a population of 1000 accounts. And the average storage space farmers provided is 1000Gb. We will assume the Average Data Stored is comparable to most cloud storage, which is around 100Gb of unique data. The ADS will have to be set by the first farming node. Otherwise there will be no data to farm and therefore no Safecoin to pay out. For simplicity sake, I’m going to ignore the de-duplication function.

700 Farmers = 700,000 Gb of storage.

ADS (Average Data Stored) = 100Gb FREE.

Space allocated for FREE = 1000 accounts x 100Gb x 4 copies = 400,000Gb

Space available for Safecoin purchase = 300,000Gb

If the average farming rate is 1 coin per 2 hours, we get 360 coins per Month per Farmer.

360 coins x 700 farmers = 252,000 Safecoins able to buy 300,000Gb of storage.

Therefore, 0.84 Safecoin = 1Gb of storage.

We are already giving away more FREE storage (100Gb) than anyone else. Let’s also compare the purchasing prices below…

Price Comparison (100Gb)

- Safecoin 1Gb = $0.013 (As of 6/5/14 - http://coinmarketcap.com/)
- Google Drive 1Gb = $0.02
- Microsoft OneDrive 1Gb = $0.04
- Dropbox 1Gb = $0.10

Price Comparison Reference Link

~~ DAY 60 ~~

If the SAFE Network proves to be reliable and fast, and given the huge cost benefit, let’s assume mass adoption takes effect.

**Magic Number Assumptions:** Now we should see a more free users join for obvious reasons. This would shift our ratio to: 50% farmers and 50% free users out of a population of 10,000 accounts. We’ll keep average storage space provided at 1000Gb and upgrade the ADS to 150Gb of unique data, due to Safecoin being used to buy extra storage. There should be more Safecoin trading on exchanges as well as more data being uploaded to the Network.

5000 Farmers = 5,000,000Gb of storage.

ADS (Average Data Stored) = 150Gb FREE.

Space allocated for FREE = 10,000 accounts x 150Gb x 4 copies = 6,000,000Gb

Space available for Safecoin purchase = **-1,000,000Gb (Uh Oh!)**

I looks like we hit a wall and storage space is sold out.

Let’s add 3 (maybe) variables.

- Maybe the farmers will increase the average storage provided to 2000Gb.
- Maybe no one used Safecoin to buy storage because it was cheaper just to create a 2nd account.
- Maybe farmers will max the farming rate of 1 coin per hour. We get 720 coins per Month per Farmer.

5000 Farmers = 10,000,000Gb of storage.

ADS (Average Data Stored) = 100Gb FREE.

Space allocated for FREE = 10,000 accounts x 100Gb x 4 copies = 4,000,000Gb

Space available for Safecoin purchase = 6,000,000Gb

720 coins x 5,000 farmers = 3,600,000 Safecoins able to buy 6,000,000Gb of storage.

Therefore, 0.6 Safecoin = 1Gb of storage.

If this trend continues it would be a very promising future. However, I had to add 3 maybe variables to get this result. This makes it messy and unpredictable.

*Safecoin’s storage purchasing power rises if more storage becomes available compared to the total amount of Safecoin in circulation. It’s a race between the Safecoin generation rate and the total amount of storage being added to the Network. Safecoin (rabbit) is designed to start quickly then slow down as it reaches the 4.3 billion cap. This would guarantee the storage space (turtle) to catch up and overtake it in the long run, if it hasn’t done so already. After the cap, Safecoin would keep increasing in storage purchasing power as long as more storage is being added. This is your valuation anchor. *

Take a break and then review the Farm Rank Model in Part 3.

**Part 3 (Farm Rank Model)**

The Network Average Model should work but I feel it is unstable. This is a backup model if the original fails. Instead of giving everyone the same FREE amount based on the ADS (Average Data Stored), we will give them based on their Vault Rank. Same simulation applied.

Farm Ranking System

Rank 0 = ADS x 0.25 (Users is not contributing any resources)

Rank 1 = ADS x 0.5 (Small Farms)

Rank 2 = ADS x 1(Average Data Stored) (Common Farms)

Rank 3 = ADS x 2 (Reliable Large Farm)

Rank 4 = ADS x 4 (Specialized Super Farm, Vital for the Network)

~~ FIRST 30 DAYS ~~

**Magic Number Assumptions:** Initially, there should be more famers than free users when the Network launches. Let’s say there are 70% farmers and 30% free users out of a population of 1000 accounts. And the average storage space farmers provided is 1000Gb. We will assume the Average Data Stored is comparable to most cloud storage, which is around 100Gb of unique data. The ADS will have to be set by the first farming node. Otherwise there will be no data to farm and therefore no Safecoin to pay out. For simplicity sake, I’m going to ignore the de-duplication function.

700 Farmers = 700,000 Gb of storage.

ADS (Average Data Stored) = 100Gb.

Farm Ranking System

**30% Accounts** Rank 0 = ADS x 0.25 = 25Gb x 300 = 7,500Gb

**25% Accounts** Rank 1 = ADS x 0.5 = 50Gb x 250 = 12,500Gb

**30% Accounts** Rank 2 = ADS x 1 = 100Gb x 300 = 30,000Gb

**10% Accounts** Rank 3 = ADS x 2 = 200Gb x 100 = 20,000Gb

**5% Accounts** Rank 4 = ADS x 4 = 400Gb x 50 = 20,000Gb

Space allocated for FREE = 90,000Gb x 4 copies = 360,000Gb

Space available for Safecoin purchase = 340,000Gb

If the average farming rate is 1 coin per 2 hours, we get 360 coins per Month per Farmer.

360 coins x 700 farmers = 252,000 Safecoins able to buy 340,000Gb of storage.

Therefore, 0.74 Safecoin = 1Gb of storage.

We are still giving more FREE storage AND encouraging users to become farmers. This is essential for the Network to grow and become sustainable. Let’s also compare the purchasing prices below…

Price Comparison (100Gb)

- Safecoin 1Gb = $0.011 (As of 6/5/14 - http://coinmarketcap.com/)
- Google Drive 1Gb = $0.02
- Microsoft OneDrive 1Gb = $0.04
- Dropbox 1Gb = $0.10

Price Comparison Reference Link

~~ DAY 60 ~~

If the SAFE Network proves to be reliable and fast, and given the huge cost benefit, let’s assume mass adoption takes effect.

**Magic Number Assumptions:** Now we should see a more free users join for obvious reasons. This would shift our ratio to: 50% farmers and 50% free users out of a population of 10,000 accounts. We’ll keep average storage space provided at 1000Gb and upgrade the ADS to 150Gb of unique data, due to Safecoin being used to buy extra storage. There should be more Safecoin trading on exchanges as well as more data being uploaded to the Network.

5000 Farmers = 5,000,000Gb of storage.

ADS (Average Data Stored) = 150Gb.

Farm Ranking System

**50% Accounts** Rank 0 = ADS x 0.25 = 37.5Gb x 5000 = 187,500Gb

**20% Accounts** Rank 1 = ADS x 0.5 = 75Gb x 2000 = 150,000Gb

**15% Accounts** Rank 2 = ADS x 1 = 150Gb x 1500 = 225,000Gb

**10% Accounts** Rank 3 = ADS x 2 = 300Gb x 1000 = 300,000Gb

**5% Accounts** Rank 4 = ADS x 4 = 600Gb x 500 = 300,000Gb

Space allocated for FREE = 1,162,500Gb x 4 copies = 4,650,000

Space available for Safecoin purchase = 350,000Gb

Max Farm Rate 720 coins x 5,000 farmers = 3,600,000 Safecoins able to buy 350,00Gb of storage.

Therefore, 10.28 Safecoin = 1Gb of storage.

*The drastic reduction in Safecoin’s storage purchasing power is reflected by the increased amount of free users compared to farmers. Even in this situation, the Network remains functional. However, it is still not economical for Safecoin. Let’s take it a step further and see if it will hold up in an extreme situation. We’ll make the amount of free users 70% and farmers 30%.*

3000 Farmers = 3,000,000Gb of storage.

ADS (Average Data Stored) = 150Gb.

Farm Ranking System

**70% Accounts** Rank 0 = ADS x 0.25 = 37.5Gb x 7000 = 262,500Gb

**14% Accounts** Rank 1 = ADS x 0.5 = 75Gb x 1400 = 105,000Gb

**10% Accounts** Rank 2 = ADS x 1 = 150Gb x 1000 = 150,000Gb

**5% Accounts** Rank 3 = ADS x 2 = 300Gb x 500 = 150,000Gb

**1% Accounts** Rank 4 = ADS x 4 = 600Gb x 100 = 60,000Gb

Space allocated for FREE = 727,500Gb x 4 copies = 2,910,000Gb

Space available for Safecoin purchase = 90,000Gb

Max Farm Rate 720 coins x 5,000 farmers = 3,600,000 Safecoins able to buy 90,000Gb of storage.

Therefore, 40 Safecoin = 1Gb of storage.

*While the Network remains functional, Safecoin’s storage purchasing power is not economical. Obviously this is an extreme situation and we are making some broad assumptions. The idea is to look at what might be some problem areas. How can we fix those potential land mines?*

I know this is a really long read and appreciate if you have made it this far. So take a break and review my summary in Part 4.

**Part 4 (Summary and Solutions)**

During our hypothetical simulation, we discovered the following “potential” issues. Keep in mind it took me all day to make this post. If any of my math or theory is wrong, please point it out and I’ll correct it.

SUMMARY

- 4 copies of unique data present a complication in storage space calculations.
- If Safecoin’s generation rate exceeds the amount of storage space being added, it causes Safecoin’s Network value to plummet. This is directly related to lack of growth in farmer population. Although, this issue should resolve itself as Safecoin approaches the cap in 10 years, and assuming more storage will be added over time.
- We did ignore data de-duplication to simulate worst case scenarios.
- Neither model (Network Average & Farm Rank) was able to stabilize Safecoin’s storage purchasing power. I don’t know Safecoin’s actual generation rate, so it was based on max farming rate and number of farmers.
- The Farm Rank model seemed more capable in handling excessive free users.

SOLUTIONS

- We need to calculate the 4 copies as part of the storage space used. So 1Gb upload would actually cost the user 4Gb. This accurately reflects the amount of storage being occupied by the user.
- AFAIK, Safecoin’s generation rate is not linked to storage increases. This makes it very unstable to valuate Safecoin when being used to buy storage. Perhaps we could “anchor” the generation rate to increase tandem with the storage rate. If total storage increased by 20% per month, Safecoin generation would increase by 19% per month. In this way, there would always be an increasing amount of storage compared to Safecoin. You could actually force Safecoin’s Network value to increases by 12% per year, using this method. Buying storage would always get cheaper.
- In order for the Network to remain functional long term, I think it is necessary to incentivize farmers/builders as much as possible.
- If storage approaches a RED Level, the Network should activate a garbage cleaning protocol. This is similar to Network maintenance, where the oldest data is removed.
- If Safecoin can be valuated by it’s own Network, then it no longer needs to be converted into Fiat. Everyone will know what 1 Safecoin is worth, measured by the storage space it can buy.

*Normally, I would do a Q&A but I’m too tired at this point. Feel free to add ideas, or debate this post. A good discussion is the point and we should look at every angle.*

Thanks for reading.