SafeCoin supply -> Market Cap shrinkage

piluso · December 19, 2014, 3:29am

Hello guys, I was wondering about the market cap.
Currently we are 5th on the coinmarketcap listing.
We are worth $19,060,965 at $0.042119 each token based on the current total supply of 452,552,412 units.

So what will happen when we open the dam and flood the supply with 4.2 billion safecoins?
Isn’t the price going to plummet 10x?

Isn’t it better to officially cap the supply to the already released amount fixing the total units at 452 million safecoins?

eblanshey · December 19, 2014, 3:47am

There will be no flood, safecoins will be generated over time, thus increasing distribution.
Safecoin mining is needed to incentivize the network.
You can’t successfully start a currency with all of it already being in a few peoples’ hands.

dallyshalla · December 19, 2014, 5:33am

Yes, of course you must consider that each MaidSafeCoin currently costs .00013250 Bitcoins per maidsafecoin on [masterxchange maidsafecoin][1]

So, right now our Bitcoin marketcap is .00013250 * 452,000,000 = 59,890 = 18,565,900

That means that if our supply was to be 4,320,000,000 then that means our market cap = .00013250 * 4,320,000,000 = 572,400 bitcoins = usd = 177,444,000 at 310usd/1bitcoin

Depending on from how you look at it, actually market cap is much greater of the live network, than the first adopter entry tokens called maidsafecoins which you can trade for 1 safecoin per 1 maidsafecoin.

thanks: @zack for first bringing this to my attention
[1]: https://masterxchange.com/market.php?currency=maid

Seneca · December 19, 2014, 9:55am

Not really, because the increase in supply would proportionally decrease the value of the unit (inflation). Market cap would be the same.

eblanshey gave the right answer. There won’t (or at least shouldn’t) be a flood, instead the coins should be released roughly proportional to the growth of the SAFE network.

Market cap will probably (hopefully) grow when the network goes live because the demand for SafeCoin will grow. Concerning the value of the SafeCoin per unit, it’s all about (over)compensating the farming with an increase in demand. If that doesn’t happen the price of a SafeCoin will drop, though the market cap will still increase (as long as demand rises at all).

piluso · December 19, 2014, 1:32pm

Thanks, for your response.
I actually found the reward distribution here:

github.com

maidsafe/Whitepapers/blob/master/Project-Safe.md

Version 1.4

## MaidSafe.net announces project SAFE to the community  ##

#### 1.	Introduction

Existing Internet infrastructure is increasingly unable to cope with the demands placed on it by over [2.4 billion](http://www.internetworldstats.com/stats.htm) connected people, a number that is predicted to grow to [3.6 billion](http://newsroom.cisco.com/release/1197391/) by 2017. Today's architecture, where central intermediaries (servers) store and provide access to data is expensive and inefficient. Data centres use between [1.1% and 1.5%](http://www.koomey.com/post/8323374335) of the world's electricity (growing at 60% per annum) and represent significant expenditure for data centre owners, providers and businesses, who all have to pay to host user data and maintain the infrastructure. Security of user data has proven to be nearly impossible in today's networks with almost weekly reports of ID and password thefts.
 
To overcome these challenges a fresh approach is required, a solution that removes these inordinately expensive central points of failure, data leakage and bottlenecks. By developing a fully decentralised replacement for all Internet based services, Secure Access For Everyone (SAFE) will ensure the decentralised Internet is a reality, enabling:

- Autonomous handling of structured and unstructured data types
- Private and secure communications
- Data shared at the filesystem level worldwide, no need for http, smtp, ftp etc.
- Highly encrypted and private data at rest and in transit
- The ability for people to self-authenticate onto the network and join anonymously 
- A network resistant to man-in-the-middle attacks or IP address identification
- A network that requires no administrators or human intervention of any kind
- No requirement for forward planning using infrastructure that automatically configures around its users in real-time (no data centres)
- A highly usable and free API that enables a plethora of developers to create the next wave of secure applications not currently possible with today's centralised architecture
- An underlying crypto currency called safecoin that will incentivise all actors in this ecosystem

This file has been truncated. show original

Point 6:
30% of allocation on Day 1

5% to angel investors
10% to MaidSafeCoin holders
15% Developers pools
3.1) 5% to Core Development team

So my main question is how does the “day 1 allocation” work?

piluso · December 19, 2014, 1:38pm

You are making the same mistake as @dallyshalla: you guys ignore basic economics.
Higher the supply, the lower the price.

4M8B · December 19, 2014, 1:44pm

Whoops You’re right I was reasoning wrong … I’ll remove it

Seneca · December 19, 2014, 2:15pm

It has been almost half a year since I last read these parts of the whitepaper. What’s pretty funny is it’s (probably outdated) projection of earning 800 SafeCoins per vault on day 1. With current pricing that’s over 32$ in a day, at launch day probably far more than that.

Melvin · December 19, 2014, 2:48pm

In most of the cases a higher supply can create a lower price because (more) people can sell more. But this isn’t something that happens automatically, so I dont understand why you’re calling this basic economics.

The more I’ll earn, the happier I am because I value every Safecoin as a piece of freedom, but this is my idea and not basic psychology.

piluso · December 19, 2014, 2:53pm

Grab a microeconomics textbook

Seneca · December 19, 2014, 4:00pm

A higher total supply means the pie gets cut into more (smaller) pieces (SafeCoin units).It doesn’t make the pie bigger (market capital, i.e. total perceived value of the MaidSafe project).

Traktion · December 19, 2014, 8:05pm

IMO, demand will increase quicker than supply. If maidsafe becomes popular, the bitcoin market cap will be tiny in comparison.

dallyshalla · December 19, 2014, 10:41pm

@piluso people buy the coin knowing that the supply increases ten times… So im not sure for the condescending insults…,

The next coins after maidsafecoin takes very relevant action to acquire you’re not going to be able to just go and buy them off of the shelf

There’s been very thorough thought and action taken on this.

Seneca · December 20, 2014, 12:56am

Fair point, though I think that still doesn’t justify multiplying the market cap by 10. By that logic any currency without a hard cap on it’s total supply of units would have an ‘infinite’ market cap. We’d also need to nearly double Bitcoins market cap, and so on.

This is the reason why current MaidSafeCoin owners value MaidSafeCoin at it’s current price despite the prospect of an increase in the supply by a factor of 10:

Reignbeau · December 20, 2014, 3:43am

Far be it for me to correct someone being all arrogant and being a jackass to other people but…

Present value of goods in Markets adjust for EXPECTED value in the future. If you expect that price will rise in the future, you will charge more for the good because you have the option of holding onto it and reaping the rewards yourself. The same is true of expectations of prices falling. If you know that your good is going to be worthless in the future, you will lower price now and dump the good rather than be the one holding it when it crashes. Current value of goods includes the expected value of the increase or decrease in prices.

Thus, the value of safecoins can reasonably be expected to already include all known liabilities.

piluso · December 20, 2014, 3:48pm

What you say say might be true if:

The market is efficient.
All assumptions are true

The market isn’t efficient, and assumptions can’t predict future performance or unexpected accidents.
Secondly, inflation is supposed to be built in for 20 years, but it is said that at day one it will suddenly allocate 30% of the total supply.
10% is for the existing MaidSafeCoins tokens (which conforms the current market cap), so when the network goes online it will suddenly create an extra 20% of safecoins?
My question is how does that “allocation” work, will it be pre-farmed? I don’t understand the mechanics.

And please I would appreciate a response from people who actually understand and know the answers, semantic speculations or fanatic diatribe is useless.

Reignbeau · December 20, 2014, 4:38pm

Far be it for me to correct someone who insults other people, calls out them out, tells them to go read a microeconomic textbook, and then has the nerve to accuse ME of a diatribe, but…

The day one allocation IS the prefarm.

Future performance doesn’t exist since the technology hasn’t even been invented yet and all value thus far is speculative based on future events. There isn’t even a current performance to reference it to.
Unexpected accidents? All accidents are unexpected and you were asking about the effect of single a known event in the future and not a bazillion unknowns. This should be a simple matter for an obvious economics genius like yourself.

I already answered all your questions in my previous post. Useless, Diatribe, people who actually understand. Hypocrisy much? Such insults are infantile. I care not for your opinion of me nor your lack of economics understandings, but the other forum posters DESERVE better treatment than what you have given them.

piluso · December 20, 2014, 5:59pm

You do realize your comments are irrelevant because you simply restated what I said, in fact you seem to be oblivious that based on your non-answer you are ironically implying that we are on the same side contradicting yourself from the first comment.

BTW how does the prefarming work if it is based on PoR? Someone has to set up a data center for the issuance of the SafeCoins?
Going back to the main question: how will it issue 30% of all safecoins at day one?

Seneca · December 20, 2014, 6:04pm

Yes, it will be pre-farmed. I imagine the MaidSafe dev team will configure that all manually in their own vaults right in their internal SAFE network before the official launch, and when it’s all set up as intended it gets opened up to the internet. That’s the moment of launch, and everyone can then connect and join that SAFE network. Network ‘churn’ will then automatically start taking care of spreading that data from MaidSafe’s vaults over the entire public network.

As for the 10% that is currently represented by MaidSafeCoins, I think that’s all in an account of MaidSafe initially. They’ll probably run some sort of server with a program on it that monitors the MaidSafeCoin burn address, and to which you can in advance tell from which address you’re going to send MaidSafeCoin and to which SAFE account it should then send the corresponding SafeCoin.

Anyway, I believe that’s the gist of it. I might very will have missed or be wrong on certain aspects of it.

piluso · December 20, 2014, 6:16pm

Then it would mean that at day 1 there will be instantly an extra 20% of safecoins in the market, which would be equivalent of instantly having 200% inflation at launch (10% is the current market cap). Is this interpretation correct?
It may not be “fully opening the dam”, but it will be quite a blow.
Not quite gradual as I would have expected (like gradually saving safecoins on a developers fund from PoR like a temporary tax)

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SafeCoin supply -> Market Cap shrinkage

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