Safecoin divisibility

[jlpell]

**TL;DR - SafeCoin Divisibility Notes : Part 2 (~2015)

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Safecoin VS SAFE Storage
Summary: dyamanaka forked from the current Safecoin divisibility thread to discuss the wallet PUT balance as its direct use as a parallel currency to Safecoin called “Safe Storage” or “Safe GB” in order to handle the divisibility issue. He hypothesized network survivability in the far future. neo pointed out most of his concerns are alleviated due to how the network algorithm is not fixed and 1SC is allowed to purchase variable PUTS. The conversation soon transitioned to a discussion about network sustainability due to the the accumulation of “garbage data” in the network and limitations with relying on a Moore type law for storage. dirvine addressed this issue through the use of archive nodes and other means. krnelson pointed out the aesthetics of having safecoin valuations that are close to unity.

Highlighted Cons

@neo

Seems like your whole analysis is based on a fixed price for X bytes of storage, and is wrong.
[…]
The protocol/Network adjusts the PUT costs and GET rewards according to activity on the network.

@Seneca

This scenario can be avoided if we design a proper dynamic PUT price algorithm. It should take into account the elasticity of PUT prices in relation to quantity of PUTs. It should also have a dynamic target % of SafeCoin in circulation, one that makes sure there isn’t excessive inflation and that there is always a sufficient SafeCoin reserve for the network to increase farming rewards during a crisis.

Highlighted Pros

@krnelson

Really it is two sides of the same problem IMO. If whatever it is we are trying to value using Safecoin requires looking at ten zeroes on the left or right of the decimal then it is not aesthetically pleasing (is that 10 or 11 zeros, hard to tell at a quick glance)
[…]
I think dyamanaka idea is interesting and analogous to the Petrodollar.

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Safecoin divisibility vs. inflation ideology
Summary: betterthantrav looked at the number of safecoins per person based on the number of users on the network and asked if inflation could be a solution to divisibility. Anders argued that crypto/safecoin inflation needs to be balanced with fiat inflation. dyamanaka pointed provided use cases for inflation vs. divisibility through an analogy, while others discussed the similarity to stock splits.

Highlighted Cons

@fergish

To inflate by simply increasing the supply, after the fact, would be flat-out theft and completely unacceptable.

@anon81773980

If safe dev decides to increase to 64 bit, then it will be 2.1 quadrillion coins. But, that still won’t solve the micropayment like smacz stated. micro payments works wonder if there is a decimal in place. Even more so, safecoin cannot be divided since it is a data entity. How does one split up datastructure?

@dyamanaka

Regarding currency price stability and usability… I personally prefer SAFE GB as the alternative. It is already divisible, maintains its own global price valuation, and inflates with increase productivity.

Highlighted Pros

@fergish

Division would not do that (theft)

@betterthantrav

Safecoin will not get it’s value from fiat conversion. It receives it’s value from its ability to buy, sell, and trade goods and services ie. storage/computation/bandwidth. This value will be noticed on the exchange markets and the markets will be willing to exchange fiat currency for that value.

@krnelson

You could increase the space for Safecoins to 64 bit ints like Bitcoin does and still maintain the 4 billion SafeCoin limit just by placing the decimal point appropriately.

@smacz

Divisibility can always be worked into the way that the network works, however raising the total number of Safecoins (however it’s done) changes the core of the network itself; 4.3 billion - a figure that most likely will be hard-coded into the network.

Unfortunately for SAFE GB, it doesn’t solve the problem of currency circulation outside of network storage.

@Blindsite2k

I think we need to think about the imagery we are using for safecoin. Is it like gold or some other precious metal with a fixed amount? If so then the cap stays and divisibility is the answer. Or is it like a new resource with an endless supply, say sunlight to be collected or food to be easily grown for example

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Safecoin Cap at 4.3Billion?
Summary: Once again the question divisibility vs. inflation for equal investor value was generally discussed in regards to the future of safecoin. The consensus was that this would be possible by once again “freezing” a safecoin and introducing a parallel currency at some fixed exchange ratio. The use of SI unit system type labels for different denominations were also discussed for the case of decimal subdivision (milliSC, microSC, nanoSC etc)

Highlighted Pros

@betterthantrav

The idea was that instead of dividing the physical SD of a Safecoin, it would instead be divided by exchanging Safecoin’s for smaller value units of physical SD. For example, one dollar is exchanged for one hundred cents. This way the cap would stay at 4.3 billion and Safecoin could be divided infinitely as long as new units of physical SD of smaller value are introduced. Of course there could only be 4.3 billion Safecoin’s worth of any coin at any given time.

@dirvine

Yes indeed, or safecoin v2 comes out, it is 2^64 and existing safecoin holders get 4.3 billion safecon II for each safecoin. Or safecoin just divides etc. my point in the blog was, as people have spotted, not to close any doors.

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Number of safecoins must not be to few
Summary: There is some confusion considering the initial quantity of safecoin chosen to be 2^32 rather than something greater with lesser divisibility. fergish mentions that safecoin will not be divisible from the start due to the computational burden it would place on an infant network. neo mentioned how the PUT balance also serves as a means of divisibility to make network use more convenient to users. krnelson provided a summary of some ideas that had been presented in this thread (Safecoin divisibility) up until that point in time. He pointed out that in order for safecoin to properly serve the network it must be able to serve as a unit of account (UOA), being able to be easily divided and recombined. He also noted that supporting parallel currency denominations on the network is also computationally burdensome and is unecessary if safecoin is design well. Last, he mentions that high levels of divisibility are already required due to IOT.

Highlighted Cons

@mvanzyl

The Safecoin Whitepaper states each coin is divisible something like 4.3 billion times.

I think they have addressed the issues very well there.

@fergish

So a super-high level of divisibility is not needed till it’s needed.

@neo

The network “divides” the coin when it is spent for storage in to an allocation that allows the user to store data at the then going put_cost.

The network “effectively” combines units of work (retrieving chunks) in one coin issue attempt for a certain number of retrievals. That number is determined by the then farming rate.

Highlighted Pros

@krnelson

The problem here of course is that if Safecoin cannot be designed to serve as a UOA as it is speculated to place an undue computational burden on the network, then the burden of supporting “many other easily managed currencies” is also a critical show stopper, and even more so.
[…]
Super-high level of divisibility is needed already - IoT.

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Is the Safecoin Economy Deflationary and would it be better with Inflation built in?
Summary: happybeing raised the question of how people holding safecoin for speculation of rising fiat will affect the internal safecoin ecosystem. Infinite divisibility (approximately) is discussed as the ultimate solution to deflationary spirals while not penalizing or stealing value from savers. seneca raised the point that deflation is not usually an issue for asset backed currency. riddim mentions the idea that safecoin itself need not be divisible but an alt-coin like SafeCents could be introduced to take care of concerns, and other discussions follow that consider other alt-coins denominations at fixed ratios analogous to traditional precious metal ratios that could be traded on decentralized exchanges and the problems associated with that process. It also seemed as though there was some confusion between inflation/deflation regarding the internal safecoin ecosystem vs. how safecoin may be treated by external human markets. It also seemed like there was a tendency to have fluid definitions of inflation vs. deflation rather than a common definition.

Highlighted Pros

@happybeing

Anyway, what I’m saying is that without any inflation in the Safecoin economy, it seems we’re programming the system to move ever more towards hoarding and deflation at some point (having a fixed limit on supply ensures this unless utility of Safecoin falls, and we want and expect utility to increase).

@quippu

On the other hand one could argue that inflation is a mechanism which allows succeeding generations to participate in the economy the same way their parents and grandparents did. In a deflationary system the advantage for those joining the system first can be enormous. So

@Blindsite2k

I agree. Currency is just another exchangable good. Making a “stable” currency that won’t inflate or deflate is like creating food that won’t rot. Yes you can do it but it’s dangerous and kind of ignores the reason of WHY food rots in the first place: because we need the nutrients to return to the soil so we can grow more food.

@Warren

The currency that is the most stable goes a long way toward providing a business the greatest degree of security and freedom.
[…]
Perish-ability does seem like something that could be phased in later to help increase stability. We already have long experience with the psychological equivalent. Coin is less perishable than cash and cash less perishable than card. We have more direct experience with the concept through options and life estates.

Highlighted Cons

@betterthantrav

Both, divisibility or inflation will solve this problem. But only one will solve it with out stealing value from users.

@Traktion

Stuff getting cheaper through progress is benign though… Maybe even desirable. Computers are the obvious case study and people buy technology regardless of imminent obsolescence.

@jreighley

If a currency just exists, and is not being pumped and dumped by some central bank or other issuing authority, the decimal point oughta float naturally… You don’t divide it to infinity just for sport

@happybeing

Just to clarify because I’m not sure if you understand this: the value of Safecoin and the rewards to farmers are only loosely coupled. Essentially the fiat value of Safecoin can go up and down. In the immediate term, yes this increases or decreases the value of the farming rewards, but as farmers respond to that (leave or join) the network notices and adjusts the level of farming rewards to bring the network back into balance.