The “price” of safecoin on external markets has no direct link to how many PUTs one safecoin will buy. The amount of PUTs is an internal network metric based upon available resources, + or -. The resulting “price” of PUTs in safecoin is just one lever on the market price of safecoin in relation to other currencies, fiat or otherwise. Fluidity, accessibility and acceptance in the broader world will be big factors. Also the features, such as speed of transaction, programmability anonymity, etc., will be big factors in the market price. Plus just straight speculative impulses. All those factors, and more no doubt, will have to interact to find whatever the level works out to be.
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@SilverPin, and anyone else who might be struggling with all the different factors: if you want to put in some time to get a better grasp, I recommend the SAFE Network School podcast series.
A few things have changed in terms of network details and design since the series was done, but nothing foundational. It is designed to walk one through the basics from different angles, and examine how they interrelate to form the whole picture. It’s hard to take pieces and examine them in isolation, but you’ve got to start somewhere and then put them together.
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Yes, I got that bit. That is actually the problem. If the price skyrockets on the external market, then people will not want to use their safecoin to purchase PUTs if there is no flexibility in the quantity of safecoin needed to purchase each PUT. A dramatic increase on the external market effectively causes a dramatic increase in the price of a PUT.
If 10 bitcoins could buy a pizza in 2009, that would be one hell of an expensive pizza now if no one could adjust the number of bitcoins required to buy the pizza.
Thanks for the podcast recommendation. I will check it out!
Another potential problem with free PUTs is that a farmer can then use the SAFE network as the file system on which to store chunks on, i.e. cannibalize on the network itself. Not good.
If that’s the case then there MUST be a cost for all PUTs. Is it possible that the current model will make the safecoin price pegged (as an overall smooth average) to the actual storage cost in terms of fiat value? If not, is it possible to modify the algorithm to make such peg, while still keeping the 4.3 billion cap? That’s a bit boring solution perhaps in cryptocurrency terms but it will be a stable solution that also will work after all 4.3 billion safecoins have been farmed, since then the cost of PUTs will be exactly the same as the amount of safecoins farmed (only recycled safecoins will be available for farming).
EDIT: I read somewhere that farmers who can deliver chunks quicker will get a higher ranking. Then it’s possible to set a threshold for cheating farmers who cannibalize on the SAFE network! Because such cheating will always result in much slower delivery of chunks, below the threshold for getting any ranking at all. And the threshold can be a percentage of the average network chunk delivery speed so it will continue to work in the future as the speed of chunk delivery (communication, computation and storage) improves because of exponential technological progress. In other words: free PUTs are then possible!
No way to peg it externally. The network doesn’t have control of values external to itself. What external value would it peg to?
I think that if safecoin is awarded in exchange for useful resources provided, at a rate determined by objective network needs (scarcity/abundance of provided resource), an equilibrium will assert itself. Can I track all the inputs and outputs or predict how it will be? No. I don’t think anyone can. That’s why it’s just an internal network function.
So the price in safecoin per PUT is actually variable? Someone will have control over that and be able to adjust it according to changes in the external market? That is the important thing that I am trying to determine. It won’t just be 1safecoin.= 1PUT and that is it?
Yes, I meant that there will be an equilibrium which will be the actual cost of storage in fiat value terms. So it’s an indirect peg. The SAFE network will have no knowledge about what happens on the exchange markets, but the equilibrium will be an indirect peg. Is it possible to achieve that?
PUTs per safecoin is determined by the network, autonomously, at the time of purchase, according to abundance/scarcity of network resources available.
My understanding is that purchase of PUTs is on an as-needed basis, deducting from your wallet balance as you need them to use them. Can’t buy up huge quantities in advance, just one safecoin’s-worth at a time. Price of PUTs is dynamic, per network algorithm that monitors resources availability and adjusts accordingly. It’s not “someone.” It’s autonomously adjusted on the fly, with NO consideration as to market value of safecoin outside of the network.
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“Peg” is probably not the right term, because the rate will be fluid, and calculated according to the data available to the consensus group controlling the transaction at the time. So there will likely be variability in the price in different address ranges of the network at any one time, but because of how the network is balanced, those variables should be small, at least on average.
Please don’t take what I say as any sort of authority. I’m not a coder or network architect. I have, however, been round and round with David Irvine and others and gotten a high-altitude view, which may be lacking in the fine points or technical details. I’m pretty sure on the theory, though.
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Instead of the safecoin value reaching an equilibrium it’s much more exciting from a cryptocurrency perspective to have the value of safecoin be determined directly by exchange markets. Sure, the value of safecoin can then become very volatile in the beginning but the safecoin market cap then has the potential to become hugely larger than the fiat value of the mere raw data storage.
And to really make the SAFE network competitive free PUTs are excellent. The problem I posted about earlier can be solved like this: Farmers who deliver chunks quicker will get a higher ranking. And it’s possible to set a threshold for cheating farmers who cannibalize on the SAFE network. Because such cheating will always result in much slower delivery of chunks, below the threshold for getting any ranking at all. And the threshold can be a percentage of the average network chunk delivery speed so it will continue to work in the future as the speed of chunk delivery (communication, computation and storage retrieval [safecoins are issued for GETs]) improves because of exponential technological progress. In other words: free PUTs are then possible.
Well, if that really turns out to be a problem, that would suck, because how coins are farmed is a pretty fundamental part of the network.
It’s 100% true. However, the coins you’re paying for PUTs are the same coins you’re making with your vault. In effect, if Safecoins go to the moon, the value of the network as a whole to the moon.
Things may be a bit more complex than that. Higher Safecoin prices would incentivize the operating of vaults, so more people would flock in, which would make storage more abundant, which would drive the Safecoin (and, with that, Bitcoin/USD/etc) cost of PUTs down. I guess that’s a negative feedback for you. EDIT: there is flexibility to how much Safecoins a PUT is cost, but it’s dependent on how much of the available space is used, not on external factors, such as exchange rates; somebody pls correct me if I’m wrong 
Also, there’s this thing called “Pay the Producer” (or PtP) which used to be a subject of much debate a while back; focus has shifted to other things, but I’m certain it will again be a hot topic when Safecoins are closer to be introduced.
PtP means the person who uploads data could add their wallet address, and then get some fraction of the newly farmed coins. If you think your content would become popular, it would make sense to upload it even if the up-front cost is somewhat higher, because it could be offset by the PtP proceeds.
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Ah, that makes all the difference. If the price of PUTs is determined by a market-based variable (i.e. the supply of PUTs) then that is a very good thing. As you say, as the price of safecoin increases, presumably supply of PUTs increases, depressing the price of PUTs.
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Extreme price swings are characteristic of emerging technology. Safenet is not even a newborn yet! These violent price “heartbeats” will soften with time as the network matures and real utility switches on. Then speculators (financial capital) goes away to look for other more exciting investment opportunities. At that point changes in price will be more gradual and that will give more time for vaults to respond to the market forces (by switching on/off depending on price direction).
At least that`s what I think 
If the demand curve for Safe network resources & the available supply of Safe network resources are assumed to be constant in the very short term, a sharp increase in the price of Safecoin would trigger a downward shift in the price per put in real time as the network matches the price per put to reach the point on the demand curve that utilises available network resources optimally.
E.g. if:
demand = 10gb per hour at $1 per gb
supply = 10gb per hour in exchange for $1 per gb
put price = 1 Safecoin
… then a rapid doubling of the fiat price of Safecoin would lead to a drop to 0.5 Safecoin per put so that demand = supply.
The network will drop the Safecoin price per put as soon as the rate of puts drops below the 10gb per hour that is being made available.
This means that the price of Safecoin could multiply by 10 without necessarily increasing the price per put, or what farmers receive in fiat terms.
So the price per put decreases in Safecoin terms due to algorithms matching demand to supply, rather than a put supply increase. The fiat price per put should be relatively unaffected.
The short term price per put (in fiat terms) and price of Safecoin (in fiat terms) should not be linked.
The price per put (in Safecoin) will be inversely linked (by the market + Safe’s algorithms) to changes in the fiat price of Safecoin, keeping the fiat price of network resources relatively constant in the short term.
(this is how I think it’s supposed to work, but could be wrong - I don’t have in-depth knowledge of the network - just chipping in ).
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