Today is the first day I have come across Maidsafe - it is a really interesting concept and I certainly think it has merit. The future will be built on decentralised technologies, I am certain of it.
However I am scratching my head over the Safe Coin. I understand that it is given to reward farming, but why would people then use it as a unit exchange or a store of value? What merits does the coin have that will make me want to have it? Why is it better than other coins in the top 10 like Bitcoin, Monero or Dash?
For it to be a reward it has to be something that people outside of the Safe Network want. I am keen to hear what you guys have to say.
Safecoin is required to use the resources of the Safe network. Safecoin will always have value as long as there is demand for storage / hosting / computing power etc on the Safe network.
As well as being âbackedâ by the value of Safe network resources, Safecoin will likely not have transaction fees, will be very fast (no waiting minutes for confirmations), should be highly scalable (many thousands of transactions per second), and will be completely untraceable. These are big advantages over the other top 10 crypto currencies (though itâs not yet available).
So Safecoinâs value will largely depend on the demand for safe network resources, and its utility as a general cryptocurrency.
It works as a reward for offering services to the network, because you can use generated Safecoin to use network resources yourself or sell the Safecoin to other who want to buy network resources.
most super-simple answer for safecoin value: they let you upload your files to a permanent, globally-backed-up, unhackable network forever, called the SAFE Network
âŚ& extra credit: you can even earn back $$$$ (safecoin) from your files once theyâre on SAFE, if you make them public and they get popular, with the PtP system!
I have just read your article, Fergish. It was very good!
Why are there only 28 nodes? Who owns them?
My immediate instinct would be to say that anyone who is running a farm should also be a node, as this is more in keeping with the decentralised nature of the network.
What I still donât get is how the safecoin market cap is related to the SAFE storage. Letâs say as a hypothetical example (for simplicity) that the total amount of safecoins issued at a certain point in time is 1 million and there is 1,000 petabyte SAFE storage. If then suddenly the safecoin value doubles on exchange markets because of some news, then how does the SAFE network know how to regulate the cost of PUTs?
Many confuse any out of network price fluctuation would in fact alter the network balancing process, in fact it is unrelated as the balance simply increases reward when space is needed and reduces when space is abundant. There is no relation to the cost of safecoin and network balancing, as long as a safecoin can change hands for a cost then the number of safecoin per unit of fiat is handled by the network.
Anders, that is something which can happen with any medium of exchange. I think if safecoin were to become truly established then the volatility would decrease. But if there are big swings in value of the currency you just change the price of the commodity. Here in the UK we just lost about 20% off the value of the pound, so Apple put there prices up, as are many other companies that export to the UK.
If the value of safecoin goes up, then the numerical value needed to purchase each unit of storage decreases. This is the nature of market capitalism. Prices generally correct themselves.
Iâm not sure where the 28 is coming from; I see 32 mentioned as a consensus group. Though I believe things have been (or are being) changed about how groups work.
But the point is, thatâs not the number of nodes on the network, but the number of nodes that validate a specific transaction. Itâs a different set of nodes for each such transactions.
Basically, most (maybe all) things on the network are done by using agreement between a relatively large number of nodes, and those nodes are picked deterministically, based on the node ids.
An important thing to note is that node ids are NOT set by the nodes in question, but they are randomly picked for them by the network; in effect, nobody can decide if theyâre gonna be part of a specific group (e.g. because they are planning to manipulate the group consensus about a specific transaction.)
And this is the exact idea We already had such a network to play with, but the storage component of the thing (we call them vaults) went back under intense development recently, required by some important changes to how things work. As a result, to make things easier for the devs, all vaults are run by Maidsafe itself at the moment, but itâs temporary.
I believe (really; Iâm not saying itâs actually true) that once the network is operational, and Safecoins have an actual value (i.e. 1 Safecoin = x GB) exchanges will no longer have to (or even can!) set the value of Safecoin.
Things will work in the opposite direction than how you assume: if thereâs news and the price of Safecoin goes up 100%, that means âstorage on the SAFE network is now worth doubleâ not âwe have to adjust PUT costs.â
The cost of PUTs is NOT regulated by exchanges. It should not be, and it can not be.
The question about âhow should we correct the cost of PUTsâ simply doesnât (and canât) come up: itâs still the same amount of Safecoins to store something and the same amount of Safecoins farmed. Itâs set by the basic mechanics of how storage is allocated and how Safecoins are farmed, and it is not (can not) be affected by how much Bitcoins you can exchange it for on Poloniex or wherever.
I have no idea where I got the 28 from either - weâll write that off as an early morning blunder!
I see, so the whole network does not have to validate a transaction, but rather a specific number of nodes. That was thing go through faster. I guess that those nodes later sync with the rest of the network?
Nope. Once something is authorized, it is authorized. If the rest of the network sees something was accepted by a group consensus, it treats it as fact, period.
The tricky part is understanding just how strong a requirement a group consensus really is: to tamper with it, one would need to own a ridiculously large portion of the network (or have astronomical luck.)
This network will be revolutionary because it is designed with the assumptions that no single node should ever be trusted, yet we must be able to reach very high levels of trust from how the nodes work together. No cutting corners, no compromise: itâs very hard, so no surprise nobody has done it before.
Ok, the cost of PUTs only depends on the amount of available storage on SAFE. But exchange markets can make the (fiat) value of safecoin go up and down a lot within days if not hours. If there is a sudden jump up in the value of safecoin then more people will start to farm but that takes time, and until the available storage goes up significantly, the price in safecoins for a PUT will remain almost the same, such as 1 safecoin = x GB, which means in fiat terms that the PUTs suddenly become much more expensive.
To put it another way, the inertia of total farming capacity on SAFE going up and down is much more (sluggish) than the fiat value of safecoin which can go up and down much more quickly because itâs determined by exchange markets outside of SAFE. It seems to me that the fiat cost of PUTs will be very volatile and unpredictable.
I meant more that it will be shared with the other nodes in order to update their ledgers, not that it will ask the rest of the network for authorisation. Thanks for helping to clear this up for me!
What youâre talking about here is called elasticity. When one economic variable is slow to respond to changes in another economic variable, it is said to have low elasticity. When that economic variable changes rapidly according to changes in another economic variable, it has high elasticity.
I think youâre right that there should be a mechanism at which the price of storage can be adjusted to market conditions. It needs to be able to respond. If the price of each PUT per safecoin canât change, then it would hamstring the whole project if the value of that safecoin went up significantly over time. People would look for cheaper options elsewhere for their cloud storage, regardless of how innovative or good the technology is. In this scenario the total supply of storage space is irrelevant if the price is so high as to inhibit demand. If there is no demand, then the supply would drop, the output from farmers would decrease and price of safecoin would push even higher due to relative scarcity.
The units of PUT per safecoin needs to be able to adjust to market conditions. One way of doing this would be to allow individual farmers to set the price of their storage, so competition would drive down the market rate.
The ethos of decentralisation would remain and the supply and demand of storage space would gain significant elasticity.
I think there is a technical problem with that solution since when a PUT is done, there is no way of telling beforehand which farmers will store the data chunks. The addresses are determined with XOR. And for security reasons the chunks have to be spread out (pseudo) randomly among all the farmers.
One solution is to make all PUTs free and still have the same farming reward in safecoins dependent on the total available storage capacity on the SAFE network. Then the elasticity difference between farming capacity and market fiat value of safecoin will still be there, but it wouldnât effect the PUT incentive.
That would certainly encourage people to use the network. The higher the demand, the greater the reward for farming. I think it could work.
This may slightly undermine the desirability of the coins, however. As was noted by DavidMc0 above, part of the appeal of safecoin is its use in the network. The coin would have to rely solely on its other characteristics, which may be enough if what I have read so far is true.
I do think this is a weakness in the project. I need to research this more carefully. Iâll be monitoring any news coming out of Maidsafe very closely.
The thing is, there are no ledgers. That is, no trails of transactions are kept. No blockchain, no public ledger. This doesnât mean one couldnât keep track of transactions, only that itâs not part of how payments are being done.
Safecoins are actual data blocks on the network, and owning the block means owning the coin. Payments are, therefore, as simple as transferring ownership. In the current design, all you can see is the current owner and the previous owner (I canât tell from the top of my head why we can see the previous owner), so this is much more private than e.g. Bitcoin.
The one-coin-is-one-block thing, by the way, makes things somewhat complicated when we want to work with fractional coins, so thatâs an active area of research and development; if you have ideas, they are very welcome!
Another problem is that free PUTs remove the recycling of safecoins, which will become a problem when the total amount of safecoins has been farmed. The IPO is based on a limit to how many safecoins will be issued (4.3 billion).
As for the value of safecoin with free PUTs, I think it actually has a potential to gain more fiat value, because people will mostly hoard and trade safecoins in the beginning, and then later safecoin may be used even more than bitcoin for buying and selling products and services, which will ensure an even higher fiat value of safecoin in the future.
And how will other storage solutions such as Storj, Dropbox, Google Cloud, Amazon and Microsoft Azure etc compete with free PUTs? They canât! The SAFE network will with free PUTs completely blow away that competition basically.
If itâs legally possible I recommend changing the Safecoin inflation rate to an unending flat one, like Dogecoin. Everybody except competitors will benefit from a flat inflation rate, including the IPO participants.
We already had such a network to play with, but the storage component of the thing (we call them vaults) went back under intense development recently, required by some important changes to how things work. As a result, to make things easier for the devs, all vaults are run by Maidsafe itself at the moment, but itâs temporary.