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

This becomes a question of simple math.

I would say once x = 100k is when the community will have to seriously start to think about either dividing or inflating Safecoin. Because once the SAFE Network reachs a million plus user, it will start to lose its oil like properties and eventually the engine well seize.

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hmhmm - i’d say as soon as 1 SC is worth 20 cents you could think about a split … not being able to make smaller transactions than 20 cents could be pretty annoying (think about buying transistors in china or micropayments for music/film-streaming …)

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I wonder how many people/future users have Maidsafecoin right now?

Actually there would be more than one factor to consider. For example if it reached 20 cents before the coin was used/accepted anywhere then its rather mute, because you would have to exchange it anyhow.

The thread on divisibility was quite involved and discussed many things. From that thread I came away confident that the issue of divisibility would be addressed before it became a problem.

Of course if the idea of built in inflation floated earlier today was adopted (I doubt it :smile:) then divisibility would not be ever needed inflation of the coin would keep the value very low and thus usable, until that is you need 1,000,000 coins to buy that transistor, 4,000,000,000 to stream that movie once.

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You are absolutely right. Both, divisibility or inflation will solve this problem. But only one will solve it with out stealing value from users.

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hmhmmm - yes you are probably right :smiley: many factors to consider (but better being able to split slightly too early than too late ; ) … and not really the point i worry most about :wink: … first SC need to sustain for a while and prove that a local consensus can be good enough if implemented the right way =) … and before that we need a launcher and hole-punching :slight_smile:

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Key points:
Inflation is theft.
Divisibility is the only way to maintain value.

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Well the good thing is that once we get even close to the point where we gotta start dividing, we’ll have like 100,000x times as much money and as many people coding SAFE as we do today, so all sort of great ideas and inventions will appear

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My question is if 4.5 billion safe coin are held in accounts in the future and if people are manly using the safe network to download content, this would create a shortage of safe coin in the network and at times there maybe no safe coin being recycled in the network, we would see farmer winning awards but not being paid.

Is this possible?
would this increase the cost of storage so much that no one would want to upload content to the network?

As long as divisibility is possible then this is not a problem. Cost of storage will rise, but so will the value of Safecoin. Each dived coin will also have more purchasing power as storage cost rises. Even if there is only one Safecoin left and it can be divided, then that one Safecoin is all the SAFE Network needs to pay farmers and enable users to make transactions.

Edit: I would like to reiterate that the perfect amount of any currency is any amount as long as it can be divided.

The cost of storage would go up, but so would the farming reward. The network’s supply and demand algorithms will even this out before this becomes an issue. But, if for some reason it does not, divisibility will keep the network functioning.

This topic is freaking hilarious.

Something as obvious as this must be discussed ad nauseam although both the theory and practice clearly indicates that inflation is useless and that even the famous 2% “target” inflation rate has no basis in practice (or theory).
Despite all that there’s this 200 comment battle going on, just like in the fiat world.

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If everyone understood basic economics the world would be a better place.

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It’s not a question of whether division will be necessary, but when it will be necessary.

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hmhmm are you sure …? yesterday i was thinking maybe the 2% are important for governments being able to borrow and paying back depts with newly borrowed money for all eternity …? Oo (of course this only works as long as they are the ones printing the money :smiley: )

Yes, inflation is very useful, for some!

That makes me think - maybe Anders’ account is actually owned by Ben Bernanke or some other current or former central banker?

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Inflation has negative effects if someone can use it as a political tool while all other’s have to comply. Aside from that it’s really a matter of perspective. on a local scale we have several good running currencies with demurrage in Germany and its DE facto a good property if you want a currency that cannot be hoarded/is supposed to circle. I get that some people prefer money (primarily) as storage over money (primarily) as medium, but its not true that (money supply) inflation is necessarily bad.

  • It is bad because unlike tax, which is transparent taking (for those who dislike the theft word), inflation is hidden taking.
  • the same effect (of 2% inflation) could be achieved by collecting more tax, but the sneaker way is chosen over a more straightforward approach
  • the effect (and goal) of both tax and inflation is redistribution, which is also bad as it wastes resources and negatively impacts the overall standard of living
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Zero inflation in economic terms means that the money supply grows and shrinks exactly proportional to the growth and decline of the total market.

It’s interesting how Bitcoin’s artificial slowing down (halving) of the minting of new coins has failed to cause economic deflation. During the first years there was a large deflation and the bitcoin value increased a lot, but in later years the bitcoin value has declined!

Even more interesting is that in 2015, dogecoin, with a flat increase of coins going on forever, has been able to keep its value basically as stable as bitcoin.

So, at least when cryptocurrencies have relatively small market caps compared to fiat currencies, then the inflation model in terms of coin supply may be less important in reality than what is expected when making predictions based on traditional economic theories.