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

You can, but only if the network supports two way exchange between them.

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Good point, but is it provable? If a subset of people trade Safecoins for various different alt-Safecoin “divisions”, but other significant group of people using some killer app all concentrate on trading their Safecoins for just one type of alt-Safecoin, would this not skew the supply/demand - even if two way exchange is possible? If in 10 years most of the economy is in the Alt-Safecoins, then the small demand and high availability of the original Safecoin may reduce its value Vs the alt-Safecoins as it has lower utility value in the economy. There are so many red flags here…

I’m not sure. My thinking is that if there is a guaranteed exchange rate on the network, any other trading would be kept very close to that rate.

If one denomination becomes in high demand, it effectively creates demand for the other denomination because the latter can be covered to the formed at a guaranteed rate. So I don’t see how your flags get waving in this scenario! Demand for one becomes demand for the other.

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I’m in favor of “all” not “a lot”.

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why exactly does 1 SafeCent has to be an alt-coin …? couldn’t you just use an overlay for the user …? Oo … like using tons, kg, g, mg, µg, … nobody would try to come up with a new definition for 1µg Oo …

…and “mBTC” is no alt-coin too …

That is the problem: Once launched it is decentralised market forces that set the rates depending on the utility of each alt-Safecoin per my previous example. If we are all trading between them (and now I have thought it through more) your open to market forces regardless of one or two way exchange between them, it makes no difference. Fiat uses legal tender laws to enforce the fixed market rate between dollars and cents (although many shops usually hate accepting many low denomination coins, in most countries it is still illegal for them to refuse or ask for a extra fee, and the criminal underworld is known to exchange more for their 500 Euro notes than their 50 Euro notes I have read - it has more utility for them)

This is not correct because you cannot guarantee a rate between separately traded alt-Safecoins either up nor down on the “division” scale. If any one or more of the alt-safecoins becomes rare for any reason, e.g. has more utility for use by popular killer app(s), on average is bought up by speculators and hoarded slightly more etc etc then all the other alt-Safecoins above and below it on the pseudo division scale cannot have a guaranteed exchange rate. This could come about in a perfectly bottom-up decentralised way as the invisible market hand - many people saying: I am not willing to trade my 100 SafeCents for 1000 SafeMilliCents because most of my current apps only use SafeCents. If I receive any other Alt/Safecoin then I am going to try and trade it for SafeCents ASAP where I can use it (or it appreciates in value more - a self fulfilling prophesy). Certainly hoarders and maybe even certain App makers will prefer this market “distortion” as it increases the profits generated by their App and decreases the incentive to accept other Alt-Safecoin types in a kind of feedback loop.

[quote=“happybeing, post:235, topic:4799, full:true”]
So I don’t see how your flags get waving in this scenario! Demand for one becomes demand for the other.[/quote]

Red Flag: How are we going to peg the exchange rate in a decentralised way to guarantee exchange between the Alt-Safecoins - assuming they all have fixed supply and can be owned by individuals?

Maybe Maidsafe foundation plans to setup a deep pocket slush fund that monitors the alt-Safecoin exchange market and increases/decreases supply of each alt-Safecoin using a hopefully large enough reserve fund so that the peg holds and a illusion of division is maintained.

Bitcoin and all other alt-coins that I am aware of avoid the complexity of this system altogether. When you own 1 Bitcoin you also already own all the possible divisions, so there is no market forces in play to distort valuations. Simple, elegant, no slush funds or legal tender laws required. At the end of the day this whole system of using alt-Safecoins to simulate division really needs to be grilled extra thoroughly and then some, because it a totally unproven concept. AFAIK there is no similar digital market economy/alt-coin that uses this kind of system, and the World of Warcraft type games that do use it are very limited digital markets with very narrow choice of good and services, shadows of real economies.

Because that is the currently favoured proposal. 32 bit approx 4 billion undividable Safecoins. Divisions are simulated by adding other lower valued “Alt-Safecoins” that can be traded for Safecoins. However head over to the the Safecoin Divisibility thread to better get up to speed and discuss more about that there.

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“as mentioned several times, we, as a community, will have time to implement a second coin of fixed smaller denomination” (BenMS from your link sorry - 2stupid to quote from another thread)

ooookay maybe i got it wrong but as I understood the comments in this threat it is like this:

as soon as 1SC becomes too valuable there is introduced a smaller coin. -> if necessary the coin is “destroyed” and broken into 4 billion nano-coins. There is no need to guarantee a fixed exchange-rate, because 1SC from this moment on now consist by definition of 4 billion nano-coins. There you have your fixed exchange-rate with low complexity and no manual exchanging is necessary -> no scarcity of special alt-coins and therefore no “market forces” creating any imbalance anywhere Oo

…but maybe i got it all wrong and you are right … then we might have a problem - yes :wink:

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This is called Divisibility and its awesome!

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The same is true with a divided Safecoin. Safecents converting to a Safecoin would not be like converting an altcoin to a bitcoin. A Safecent would be created, traded, recycled, and swapped for Safecoin by the SAFE Network. Thier values are directly linked, because the SAFE Network will always exchange them at the same rate. Because the exchange rate to swap the coins are locked in stone by the SAFE Network there are no market forces effecting the exchange rate to swap the coins.

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This exchange rate would be set by the network. Just like the cost to store data is set by the network.

It’s not a user generated altcoin. It’s a SAFE Network generated coin that is directly correlated to the division of a Safecoin.

This is absolutely correct. The exchange rate to swap Safecoin and Safecents would be hard coded in to SAFE Network.

The user might not be willing to accept that exchange rate but the SAFE Network always will.

Your logic is flawed for the above reason.

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They also use a ledger system. Bitcoin is nothing more than numbers written on a digital ledger. Safecoin is an actually piece of digital data that can not be divided on a ledger.

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I like the idea.

There was a post about having gbcoin, mbcoin, and so forth. This could interpolate to what he proposed.

But the question remains is the transaction manager, will it use the core or will it have it’s own?

Yeah, see?

So u guys don’t have to worry about this.

Arbitrage is what keeps these things in check. No worries, isn’t 100% perfect 100% of the time, but what is?

Should definitely work as intended.

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Ok - I had time to think about it and now I’m sure: I hate inflation!

And I’ll tell you why :wink:
With inflation you don’t only take money from the evil rich people but e.g. from NGO-accounts too; so it doesn’t only target “the bad guys”

When I was a kid I was totally confused why inflation had to happen … and since I realized there is inflation I don’t understand why salary isn’t simply coupled to inflation, so you’d negotiate a fair payment once and everybody can be happy for all eternity :open_mouth:
…since this seems to be no option in our world I think inflation is bad … initially a fair share is negotiated and then product prices always are adapted to inflation but salary isn’t … until the “small guy” can’t afford to pay for his bread and then negotiation starts again …

without inflation a stable price could be achieved - as long as price movements are implemented by design there will always be a winner side on this movement … in the past the winners always where the rich guys and therefore I don’t like inflation by design! …

The correct thing to say is that Bitcoin uses 64 bit int/float to represent coins, enabling them to be divided down to 2.1 quadrillian satoshis covering 99% of the needs of any digital economy at current valuations. That you bring up the blockchain ledger is besides the point/not relevant.

Ahh you are running with the central bank slush fund idea. Ok so now the majority of the Safecents are tied up, owned by private individuals and exchanged between them 1:1 for other goods and services in the digital economy - the safe network no longer has access to them (remember there is a fixed supply). The safe network cannot magically “recycle” them because they are part of the digital economy outside storage space allocation, where most of the economic activity will naturally be if Safe Network is successful. Your “hard coded” secondary market exchange system is now broken - it does not have access to enough SafeCents to support the demand at your pegged fixed exchange rate, and it can’t just mint more of them. If on average the flow into SafeCents is even slightly lop-sided, it is only a matter of time before your slush fund bankrupts. Or are you proposing that Safe Network can go and expropriate Safecents from individual owners to keep the recycling mechanism going? That would be scary.

Recycling of the alt-Safecoin that your trading for Safecents also makes absolutely no difference to this basic problem with the World of Warcraft coins idea, and in WoW like a central bank they can just create/delete coins at a whim to address any imbalance. Safe Network does not have that luxury (thankfully). Claiming that enough Safecents will be recycled to support demand for Safecents also seems like a load of wishful thinking hand waving. Economies are complex and a fragile pegged exchange rate system is being proposed to simulate division on the back of fixed supply alt-Safecoins that are not owned by the network. I am making the case that any imbalance is going to break it eventually - if I am wrong please explain in detail why.

It is merely an approximation of division, and I can see no working example proving that it can support a vibrant digital economy outside of space storage allocation. You also have to plan ahead and create an alt-safecoin for all possible divisions that all sectors of a digital economy may require (which is much bigger than space allocation… see my IoT post for one example of many). It is complex and as I have made the case here, fragile Vs the Bitcoin method. So to repeat/refine:

Red Flag: How are we going to peg the exchange rate in a decentralised way to always guaranteed fixed exchange between the Alt-Safecoins?
Given:

  • All alt-Safecoin “divisions” have fixed supply and can be owned by individuals.
  • Most of the economy will be outside of Space allocation if the Safe Network is successful, i.e. people trading for other goods and services.
  • Recycling does not happen in any economy outside of Space allocation.

have you read my post earlier …? …when safeCents are introduced the safeCoin vanishes and there are 4billion safeCents instead of this coin … for every “broken” coin there come (up to) 4 billion cents into existance - there won’t be an “exchange”

…since nobody corrected me i’m pretty sure my statement was right

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This is not how I understand it is proposed to work, but if so that raises more interesting questions. Vanishes, litrally, never to return - really? Or is recycled? Both options create more problems related to supply and demand that we could go into…