That was the point I was making. Cheers
I fear your proposal makes negative spirals possible:
If the price of SafeCoin rises due to speculation or simply on it’s merits as a crypto-currency, at a fixed SafeCoin/GB SAFE storage will be way too expensive. None will buy SAFE storage on the network, so new farmers that would join the network won’t get any new data stored on them. This means they don’t actually farm anything (or very little, not enough to break even), so no new farmers will join. Storage space won’t increase, which means the total supply of SafeCoin won’t increase either, since you based it on SafeCoin/GB*total storage.
Since none buys storage, no SafeCoin is destroyed, so the algorithm needs to cut the farming rewards (which is given on data requests, not on data stores) to maintain the level of total SafeCoins available. Farmers will leave because they start making losses, pushing down the maximum supply of SafeCoins even further (since total storage is reduced), reducing farming rewards even further.
This is the negative spiral, collapsing the system. The only way to prevent something like this is having a quickly adaptable SafeCoin/GB rate. In your proposal it takes a year for the SafeCoin/GB rate to reduce by 30%, this is way too slow to stop the above depression. The algorithm needs the agility of adapting the SafeCoin/GB rate on the fly.
Yes the more we are understand the more sense this does indeed make to me at least.
No, it was just a magic number based on the current trend of cloud storage cost deflation, estimated at 30%. The idea was to keep pace with competition of other cloud storage services.
Currently, SAFE Storage is upgraded for life, while the cost of other cloud storage charge per month. I would suggest we charge per month to solve other issue like: users dying, people abandoning their accounts, and encouraging Safecoin circulation.
I would not hardcode it into the system, but rather allow the community to adjust it accordingly via voting or some other external measurement.
I would like to see Safecoin become too expensive to buy storage. Try to see it this way. If Safecoin rises substantially in fiat terms, then future farmers would enter the Network to make profit, big incentive. Buying storage no longer becomes affordable which means users would rather contribute resources in order to get SAFE Storage. Investors are happy. Consumers still have a way to gain storage, which IMO should be the preferred way.
I’ve wanted this setup all along because the Network needs an increasing amount of resources in order to remain sustainable. If we allow people to buy out the entire Network space with a few hundred dollars, then storage space becomes sold out. The Network will fail due to DOS.
What you see as a negative spiral, I see as a safeguard.
To further smooth out this idea, we could charge Safecoin on a monthly basis, like a storage maintenance fee. If the user provides their own resource, they no longer have to pay the fee.
So basic scenario would go like this.
- Login and upload any amount. Example 100Gb
- Network incurs a negative balance on your account. Example: -100Gb
- The negative balance must be paid for with either resource or a monthly Safecoin payment.
- If the network PUTS 300Gb of data in your vault, your balance is +200Gb.
- If you did not provide resources, then your data will be deleted unless you pay 100 Safecoin within 30 days.
We solve several issues.
Users can upload any amount of data at the beginning, this eliminates the non-starter problem.
Now that farmers have data to farm, Safecoin starts coming into existence. Which they can sell on the exchanges or use for apps, services, buy online products etc.
The details of this idea are adjustable. The point is to encourage people to provide their own resources instead of using Safecoin to buy storage. Safecoin is still free to rise in fiat terms but will not endanger the Network.
EDIT: @luckybit suggest micro payments instead of monthly fees. Whatever works, lets try it.
5 Likes
You’re assuming that digital coins have any sort of physical constraints. Just like we will never run out of websites we will never run out of coins. An exchange could be set up where there are millions of coins trading against each other allowing for way more freedom than we have now.
The price of your coin would be exactly what your programming is worth to the market. There wouldn’t be any manipulation possible. If your programming isn’t valuable to the market then you’ll have to provide a service which is of greater value.
When you have a universal currency you end up with politics dictating certain things. It’s centralized control that we want to avoid. Efficiency actually would increase if you get rid of that centralized control.
Today you can say why use Bitcoin when you can get everything you need using dollars or euros? Well you can’t get credit so your programming skills don’t help you. You can’t get credit that means you can’t trade the future value of what you will produce. But other people are trading the future value of what they think you will produce and they are calling it a national debt.
Now if you want to see how credit currencies or credit vouchers work in action just look at Gyft. Gyft is basically letting people trade credit vouchers, gift cards. You also have stuff like coupons which could be traded.
If what you’re saying is correct then MaidSafe would have just used the Euro or Dollar without having to bother with issuing credits over the Mastercoin protocol. When we bought in the presale we were buying credits which represent the Safecoin.
I want everyone to have the capability of self issued credit so that we can all issue our own currencies as needed. We can then build an exchange on top of that within MaidSafe and through that we would have as many currencies as we need. There is no indication that we need to do anything more than that.
If you’re a great programmer I would buy your tokens so I could get you to spend hours programming for me in the future but if you’re not so good then I would trade your tokens for something or someone else. You would have no need for a resume, it would be the LETS (community exchange) built into MaidSafe.
As long as there is an exchange where people can trade their different currencies then it easily is more efficient than the Dollar or Euro (both which use Forex as the exchange anyway making them not much different).
What you’re forgetting in your argument is that value doesn’t and never comes from a currency. You don’t actually get value by which units you use and this is why you can use any currency including your own. The value comes from your products and services alone, so it would have the same value whether we trade in Senecacoins or dollars just as with Gyft no one cares if it’s a giftcard or the dollar because credits are credits.
Again, there is no value in currency itself. Currency features are not hard to clone or fork. So there might be value in some feature but those features can be duplicated anywhere else which means the actual value is going to come not from the resources of the SAFE network but the exclusive content on the SAFE network.
If we think of it like a gaming platform then you need exclusive content. Having impressive specs never really works so just having resources without any content will not work. Having nice features is like having a fancy video game controller or other gimmicks but if there is no content it’s all worthless.
That means you still need to get the farmers to up the specs of the network so that the network can produce defining and exclusive content for the users to keep them on MaidSafe for the long term. This means it’s actually the builders and getting their loyalty along with the farmers who are the most important.
There should be a way to determine rewards bonus rewards for builders based on the popularity of the content itself. I mentioned it elsewhere on this forum but it’s all about rewarding for popular content as the value is the content. You could say that the resources are wealth in the way land is but if you don’t do anything with it then anyone else could come along.
And just having a token in a sea of tokens isn’t going to make people adopt MaidSafe in my opinion. At least not by the millions. Think of MaidSafe like a video game console or set top box where you have exclusive MaidSafe only content and market it like that.
In my opinion the less people have to think about Safetokens the better. Those tokens should be used behind the scenes by advanced users but on the surface it should look totally open where anyone can issue a token on MaidSafe (similar to the route Ethereum is taking). This way if HBO for instance wanted to offer exclusive content they could release their HBO channel tokens and make people buy it to get streaming content from HBO on MaidSafe.
At the same time you will have netizen journalists who will need to fund their journalism so they may have a token as well. The content would have to be exclusive to MaidSafe because it could be politically sensitive for example.
As long as you keep your supply of tokens you can receive the microstreams.
The price will certainly be going down even if the value could be going up. So the value is the content not necessarily just the resources. The price for resources being as cheap as possible is good if a Safecoin can get more resources per Safecoin for resources. The more Safecoin is deflationary as a currency (or if the inflation rate is kept very low) the more valuable SAFEcontent could be.
If I could take 1 Safecoin and get 1 TB then 1 Safecoin is priced well compared to the dollar. It also means we’d all have enough Safecoins to build anything we want on MaidSafe.
That would give it value (the content). But it’s going to be a challenge to get farmers to produce an over abundance of resources, and get builders to be motivated. It means price Safecoin has to go up and resources have to expand exponentially. If Safecoins are too cheap then no one will want to work for them.
There can’t really be too much space or too much resources on SAFE network. Safecoin becomes valuable if there is exponential growth in the underlying resources. If you can get 100 TB for 1 Safecoin this year then that would be a major success. But how do you encourage that to happen by incentives?
We should want to encourage farming to the maximum extent and never seek to discourage it. The more farmers there are then in theory the more we can get for a Safecoin. The price of a Safecoin would go up but the farming should increase as well.
How to encourage this behavior? We shouldn’t be marketing to people to buy Safecoins early on but to get people to farm and build. We need way more farmers than users.
Mr. Irvine, I agree on some of this but I don’t see a reason why you would recycle the token as this might make it harder. Perhaps if you reduce the issuance rate it might make sense but the problem is the tokens might not be worth as much as the dollar which to the crypto community is going to be seen as failure.
There are ways to avoid this scenario in my opinion if you focus on encouraging farming and building more so than users. I also think you could get value out of this by turning Safecoin into a sort of perpetual coin because anything we built on top of the SAFE network will require that coin.
Micropayments could help content have value and bring value to the whole network. So credit coins could let people stream or do micropayments in their own currencies which get traded on the network giving people an exchange.
It’s going to be a challenge. I think you need some mechanism which provides heavy incentive for people to farm. I don’t think Safecoin as it is designed now is enough of an incentive to produce hundreds of thousands to millions of farmers but you might need that if you want to make it compete with the dollar. ← Please do not underestimate this point, Safecoin has to beat the dollar.
If Safecoin itself recycles and isn’t destroyed yet it is divisible then can you give a reason why we need to recycle? Why should we care how many coins there are when the coins only exist to provide an incentive to farmers and builders? If you destroy coins to increase scarcity as a way to make the coin appreciate in value faster then there is more of an incentive for people to want these coins so they’ll work for them. If the coin is for sure going to be depreciating then no one wants that coin.
Dilution or inflation reduces the incentive power of a token. Whether the token is a stock or currency if you dilute or inflate the buying power is reduced and it becomes less desirable to have in it’s own right. Early on when these Safecoins cannot buy much the only people who will want them are people who expect them to somehow be worth a lot more later.
1 Like
Like you, I see the value in having a stable crypto currency. The ability to reduce supply is a tool that would make this a lot easier.
Your proposed mechanism for this in SafeCoin seems great, and it’s unique to SafeCoin, as there will be continual demand for the network’s services even when SafeCoin demand experiences an overall drop.
I could see this mechanism being beneficial to SafeCoin, but I don’t think SafeCoin can be the highly stable crypto currency that you desire due to the capped supply, and its need for issuance to be determined primarily by the network’s need for resources, not for a stable SafeCoin price. Farmers need rewarding irrespective of fluctuations in demand for SafeCoin.
I wonder if there is a way to take this mechanism/concept & apply it to another crypto currency (maybe that will run on the Safe network), which has the goal of complete stability, and the flexibility of supply needed to achieve that?
1 Like
As I understand it, recycling is a way to accept Safecoin for network resources, then a allow it to be farmed again later. In short, it is a mechanism to create a market place for resources.
The fee for resources and the reward for farming could be adjusted based on total network utilisation.
Yeah, I thought this as well.
Recycled coins go into the network and are stored (like The House at a casino) and are given out depending on supply/demand of resources. If there’s a ton of space available then storage should be cheaper. If there’s no space available, storage should cost more. Value could just be based on that ratio, right? Slide scale based on availability. Like what Lyft/Uber does at 2am on a Saturday when the bars let out. Cost goes up to incentivize drivers.
Yes I think so to. maidsafe.net/SystemDocs/user_perspective/README.html see rewards para.
Yup - demand based pricing is the official term, I believe.
2 Likes
Maybe it shouldn’t be entirely based on that. A business wants to be profitable as much as possible to support it’s own growth.
So it really depends on the prices people can get elsewhere. SAFE Network should always be cheaper than the dollar and should strive to be the cheapest. What happens when it’s the cheapest?
When it’s the cheapest then it can focus more on paying farmers. It’s really a delicate balance and prices should be something that farmers and builders have a say in perhaps through some kind of voting mechanism?
I don’t think it can be entirely algorithmic until there are a bunch of forks or some competition which push the price down. Then you’re in a race to the bottom on prices but until then you can profit without having to do that.
Weigh the pros and cons?
Should we focus on profitability or lowering cost? Can we maximize both? How do we promote coin appreciation for long term holders? I just don’t see a need for recycling without also having the ability to destroy coins.
If you can just generate and destroy then why would you need to recycle?
Does demand based pricing work? I think it only works when there is competition which can offer an alternative at a lower price. Early on this competition might not exist so farmers can either make a profit from the current price or lower prices to keep ahead of the dollar.
In my opinion pricing should be based on the prices offered by the competition. How many gigs can you get for $1 compared 1 Safecoin? The Safecoin always has to give a better deal than the dollar.
Now if it’s giving a way better deal than the dollar then you’ll have a period where you’ll want to encourage farmers and builders.
How will you do that if you lower prices based on current demand or lack of it?
I like the ideas presented but it seems the math is missing.
I have to be honest, I’m not quite sure what you’re saying. Can someone explain?
Demand based pricing can absolutely work with no competition.
Even with one buyer and one seller, there is still a market rate where a trade can be made. The price at which this occurs may be high or low, depending on the eagerness of each party to complete the trade.
As is currently being discussed for Safe Network, the network sets the price based on resource utilisation. This essentially sets the target rate for bids (to buy resources) and asks (to sell resources).
If the target rate is too low, there will be too many asks relative to bids. If the rate is too high, there will be too many bids relative to asks. The target rate can then be adjusted to match bids and offers (taking into account the target network utilisation percentage), which would form the spot rate.
Of course, all this would happen in software and behind the scenes. Farmers would see the rate they are receiving and could vote with their feet if not economical. Likewise, users will only pay what is economical for them and will also take their storage elsewhere if the price is too high.
I don’t see any need for additional votes here. People vote with their money and resources instead.
2 Likes
What controls the rate of resource price deflation?
My guess is the more farmers you get farming the more resources a Safecoin can buy, correct?
So as a user/investor/builder/farmer, we want as many farmers as possible so that SAFE Network can grow exponentially in terms of resources. This way 1 Safecoin can redeem for as much resources as possible.
So we absolutely do not want farmers to stop farming no matter what. We want farmers to continuously farm and to do so religiously. We want builders to build quality software but builders would stop building if the farmers stop farming.
The users are important but only after you have enough resources to make Safecoin the best deal for resources.
So how do we bootstrap this thing?
The network storage price will find itself. The network is essentially bulk ordering storage from farmers at regular intervals.
If the price is too low, there will be insufficient supply of storage, so there is a floor under the pricing. However, costs will always be driven down to the lowest that minimum number of farmers will accept, as the network only needs sufficient storage to serve to users.
We don’t want more storage than we need at any cost; we need the lowest cost for sufficient storage. The spot price (and therefore the rate of deflation) would find itself at this threshold through market forces.
1 Like
I have not read this entire post. If any of this has already been talked through please forgive me. I was thinking about what @Traktion said about how price is determined and I’m wondering if farming rate and resource price are based on the ideas I’ve posted here or am I way off?
I think we want as much storage as possible. That means a lot more storage than we need because that is what makes it so that 1 Safecoin can get you more storage than 1 dollar.
We have to at least be heavily in favor of abundance.