Is the Safecoin Economy Deflationary and would it be better with Inflation built in?

This will cause the value of Safecoin to rise causing more farmers to farm Safecoin.

Edit: The value of Safecoin is not some arbitrary number. Safecoin’s value is based on the value of the resources Safecoin can purchase from the SAFE Network.

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Not to worry, it wasn’t a separate coin in that sense, more like a built in exchange with 1 SC pegged by the network to 1,000 Milli SC.

So anyone at any time could surrender 1SC for 1,000 mSC. I think the were issues reversing the exchange, and if these could not be overcome them might have people reading mSC to get SC, but perhaps the system could be made bi-directional. There is a thread about this somewhere but I think it would be hard to find.

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Like I said - I don’t think there will be a shortage of farmers. The benefits of the network is ample reward itself.

Skype does fine without Bribes. Bittorent doesn’t hurt for usage. SAFE will be even more robust as it has all of the benefits you get from those networks plus some. The payment is a bonus. It is to prevent spam and abuse. If farmers make money that is fine - but that isn’t going to be the main reason people farm.

The investment is too low for the reward to be great. If farmers are well paid for handing over stuff that is abundant and free, then some bad economics is going on and bad economics will lead to trouble. I say network ought to pay its farmers as little as possible to maintain ample surplus resources for expected growth. As more are needed, the payments ought to go up. But in the end the market will always make farming a near break even endeavor. The payment and incentive is the network itself.

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But surely the value of safecoin will be determined by exchange markets? I can’t see how the safecoin value starts to increase just because farmers start to drop away. In fact, one reason for why farmers start to drop away may be because the value of safecoin has dropped, but in my example I assumed a constant safecoin value.

The safecoin price is determined by the markets, but the rewards are determined by the network.

Farming is going to be substantially different than bitcoin mining in that there is zero incentive to mine bitcoin unless you get paid. With SAFE farming is a method to allow yourself to use the network without having to deal with crytpoexchanges etc…

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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.

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I believe the amount of farming will mostly be determined by the farming reward. Too small farming reward, and farmers start to drop away. And increasing the farming reward when there are only recycled coins available will increase the cost of storing data.

In BitTorrent there is a sharing of resources. In the SAFE network, those storing data don’t need to be farmers. So there isn’t any automatic incentive for farmers to keep the network going other than the farming reward. In fact, when the network has matured and many people from the general public are using it, there may be a much smaller number of farmers than non-farming end users.

Thanks for that info happybeing. It is a worry if the aim is for Safecoin to become a unit of account outside storage allocation, I think this issue it is much more important than it may seem. I hope your right and there does become bi-directional, fixed and transparent “exchange” system in-built to simulate division. If it is not bi-directional then what we would have is separate coins that the market could price differently based on utility - i.e. not division. Also I still have not discovered why this seemingly more complicated system is being favoured, have yet to see any developers weigh in on the subject.

I disagree.

Most folks storing will be farming. Why not? Your hard drive is 2/3rds empty and your computer is on most all of the time.

Do you think SAFE will be widely adopted if you have to go buy bitcoin, take it to shapeshift.io then direct it to your SAFE account in order to save anything? Not likely. (That causes some tracibility issues in and of itself) People will Farm so they can use the network. Farming will be built in as a default behavior. It isn’t something you need to go build a rig to do. You can if you want, but you will be competing against a billion people who didn’t

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Safecoin’s value comes from its ability to buy, sell, and trade goods and services from the SAFE Network. Only Safecoin’s exchange rate for fiat currency is determined by exchange markets. This exchange rate is based on speculation of its ability to buy, sell, and trade goods and services. Do not confuse Safecoin’s value with its exchange rate.

Edit: Safecoin’s value and ability to buy, sell, and trade goods and services from the network will translate to its ability to buy, sell, and trade goods and services in the real world. For example, x Safecoin’s will buy y GBs of storage and z gallons of milk because the values of the resources are similar.

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The plan is not to support division unless necessary, and that will at least to an extent depend on how the network develops and what people want to use Safecoin for.

I agree you make what seems am important point, something to remember for the future debate on this.

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My example was about a scenario when all safecoins have been generated. So the adjustment of the farming reward is then solely dependent on the amount of recycled safecoins available. This means that in order to be able to increase the farming reward, the cost of storing data must be increased. And more expensive data storage means that less data will be stored. In other words, increasing the storage cost doesn’t automatically result in more ‘income’ because the decreased incentive for storing data (more expensive) leads to people storing less data. And without enough income the network is unable to adjust the farming reward to the required level.

Your confusing value again. A decrease in the storage capacity of the SAFE Network coupled with an increase in the cost to store data increases the value of Safecoin. This is basic supply and demand. This rise in value will increase the incentive to farm.

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I was thinking of the value of safecoin as precisely the exchange rate, such as what the cost of 1 safecoin is in U.S. dollars or euros etc. Other forms of values are just subjective opinions, are they not?

I don’t mean to be rude, but you don’t have basic understanding of economics. And you need a basic understaffing of economics to get what everyone is saying.

Edit: I can’t stress enough, I don’t mean to be rude.

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You must be joking. What is the current value of 1 bitcoin for example?

It’s value is based on it’s a ability to buy, sell and trade goods and services. Meaning that the more people accept it as a currency the greater its value. Safecoin is the same way, but it also has added value because of its built in ability to buy, sell, and trade SAFE Network resources.

Let me ask you this question. What gives fiat money value?

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I agree with that. And yet a coin without division cannot serve as a general purpose currency. However this thread is about a “Safecoin Economy”, merits of deflation and inflation in such an economy. Can you have an economy without a currency? It appears most people assume Safecoin will be a currency and not just a resource allocation token to serve the network as the white paper and developer comments suggest. This also impacts its final valuation enormously because as a currency it will have more utility.

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A SafeCoin has an actual numeric ID in the network, which is 32 bits long. 2 to the power of 32 is about 4.3 billion SafeCoins.

From the article,

One somewhat controversial property of Bitcoin is its fixed currency supply. There are currently 25 BTC being generated every 10 minutes, and this amount cuts in half every four years. All in all, there will never be more than 21 million BTC in existence. On the other hand, each bitcoin can be split into 100 million pieces (called “satoshis”), so it will not become difficult to use bitcoin if its value goes up the same way it would become problematic to trade with dollars if each penny was enough to buy a car. Thus, all in all, the total number of currency units that will ever exist stands at 2,100,000,000,000,000: 2.1 quadrillion, or about 2^50.899. In choosing this figure, Satoshi was much luckier, or wiser, than most people realize. First of all, the number is considerably less than 2^64-1, the largest integer that can be stored in a standard integer on a
computer - go above that, and the integers wrap around to zero like an odometer.

Shouldn’t we do what satoshi recommends? 2.1 quadrillion satoshis = 21 million bitcoins that is divisional up to 8 digits. 4.3 billion coins that is not divisional, that is quite marginally low. 7 billion people. Ouch, not even 2.7 billion people will have safecoins.

I want include that what makes currency viable is the division. There are good economic history on this particular reasoning.

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It’s acceptance as a token of exchange. You must realize that the bitcoin market cap today is insignificant compared to the market caps of the big fiat currencies. For safecoin to have any additional value to the exchange rate to speak of, its market cap must get YUGELY larger than bitcoin’s market cap today.