Rabbits VS Turtles - The future of Safecoin


#1


PART 1 (Speed or Stability)

This is an old debate on the dev list. I’ve seen some new discussions on this forum, asking the same questions, and adding new solutions. I would like to lay it out and break it down so we can get a better understanding about the function of Safecoin.

For this discussion, we need to clearly define the difference between a RABBIT and a TURTLE. It may be obvious but I’ll spell it out anyway.

  • A rabbit crypto coin rises or lowers in fiat value quickly. It jumps around a lot.
  • A turtle crypto coin rises or lowers in fiat value slowly. It crawls at a steady pace.

Most Investors/Traders want rabbits…
Most Consumers/Merchants want turtles…

We all want to have our cake and eat it too!

IMO, most crytpo currencies are setup like rabbits. Tell a potential adopter your alt coin can go from $0.01 to $1.00 in less than a year. Their eyes glaze over and they no longer hear anything else. China bans Bitcoin from the banking institutions, and the price falls. MtGox goes bankrupt, and the price falls even further. A new company accepts Bitcoin, and the price rises again. Without a valuation anchor, the crypto coin ship wanders with the FUD current.

Safecoin has the rare opportunity to implement a valuation anchor. But do we really want it?
As an Investor, I say "hell no!"
As a Consumer, I say “yes please!”

Right now, Bitcoin has reached a critical level of adoption. And the Bitcoin Foundation is hoping the fiat price will stabilize. Why would they want it to stabilize? Because they want consumers and merchants to adopt it as a real alternative currency. Instead of constantly switching out to fiat currencies, people remain in the Bitcoin ecosystem and complete the “production to consumption” cycle. Is this possible? Not likely without a valuation anchor.

Valuation Anchor: is a fixed measurement of cost for resources. We can use SAFE storage space as the first example of a valuation anchor. I will attempt to simulate this example in a technical format. If you have read this far, take a break and come back to Part 2 below.



PART 2 (Network Average Model)

This is a simplified hypothetical simulation for the purpose of discussion, not meant for exact Network behavior/performance.

Safecoin = Rabbits
SAFE Storage = Turtles (Valuation Anchor)
The SAFE Network uses Rabbits to buy Turtles.

~~ FIRST 30 DAYS ~~

Magic Number Assumptions: Initially, there should be more famers than free users when the Network launches. Let’s say there are 70% farmers and 30% free users out of a population of 1000 accounts. And the average storage space farmers provided is 1000Gb. We will assume the Average Data Stored is comparable to most cloud storage, which is around 100Gb of unique data. The ADS will have to be set by the first farming node. Otherwise there will be no data to farm and therefore no Safecoin to pay out. For simplicity sake, I’m going to ignore the de-duplication function.

700 Farmers = 700,000 Gb of storage.
ADS (Average Data Stored) = 100Gb FREE.
Space allocated for FREE = 1000 accounts x 100Gb x 4 copies = 400,000Gb
Space available for Safecoin purchase = 300,000Gb

If the average farming rate is 1 coin per 2 hours, we get 360 coins per Month per Farmer.
360 coins x 700 farmers = 252,000 Safecoins able to buy 300,000Gb of storage.
Therefore, 0.84 Safecoin = 1Gb of storage.

We are already giving away more FREE storage (100Gb) than anyone else. Let’s also compare the purchasing prices below…

Price Comparison (100Gb)

  1. Safecoin 1Gb = $0.013 (As of 6/5/14 - http://coinmarketcap.com/)
  2. Google Drive 1Gb = $0.02
  3. Microsoft OneDrive 1Gb = $0.04
  4. Dropbox 1Gb = $0.10

Price Comparison Reference Link

~~ DAY 60 ~~

If the SAFE Network proves to be reliable and fast, and given the huge cost benefit, let’s assume mass adoption takes effect.

Magic Number Assumptions: Now we should see a more free users join for obvious reasons. This would shift our ratio to: 50% farmers and 50% free users out of a population of 10,000 accounts. We’ll keep average storage space provided at 1000Gb and upgrade the ADS to 150Gb of unique data, due to Safecoin being used to buy extra storage. There should be more Safecoin trading on exchanges as well as more data being uploaded to the Network.

5000 Farmers = 5,000,000Gb of storage.
ADS (Average Data Stored) = 150Gb FREE.
Space allocated for FREE = 10,000 accounts x 150Gb x 4 copies = 6,000,000Gb
Space available for Safecoin purchase = -1,000,000Gb (Uh Oh!)

I looks like we hit a wall and storage space is sold out.
Let’s add 3 (maybe) variables.

  1. Maybe the farmers will increase the average storage provided to 2000Gb.
  2. Maybe no one used Safecoin to buy storage because it was cheaper just to create a 2nd account.
  3. Maybe farmers will max the farming rate of 1 coin per hour. We get 720 coins per Month per Farmer.

5000 Farmers = 10,000,000Gb of storage.
ADS (Average Data Stored) = 100Gb FREE.
Space allocated for FREE = 10,000 accounts x 100Gb x 4 copies = 4,000,000Gb
Space available for Safecoin purchase = 6,000,000Gb

720 coins x 5,000 farmers = 3,600,000 Safecoins able to buy 6,000,000Gb of storage.
Therefore, 0.6 Safecoin = 1Gb of storage.

If this trend continues it would be a very promising future. However, I had to add 3 maybe variables to get this result. This makes it messy and unpredictable.

*Safecoin’s storage purchasing power rises if more storage becomes available compared to the total amount of Safecoin in circulation. It’s a race between the Safecoin generation rate and the total amount of storage being added to the Network. Safecoin (rabbit) is designed to start quickly then slow down as it reaches the 4.3 billion cap. This would guarantee the storage space (turtle) to catch up and overtake it in the long run, if it hasn’t done so already. After the cap, Safecoin would keep increasing in storage purchasing power as long as more storage is being added. This is your valuation anchor. :smile: *

Take a break and then review the Farm Rank Model in Part 3.



Part 3 (Farm Rank Model)

The Network Average Model should work but I feel it is unstable. This is a backup model if the original fails. Instead of giving everyone the same FREE amount based on the ADS (Average Data Stored), we will give them based on their Vault Rank. Same simulation applied.

Farm Ranking System
Rank 0 = ADS x 0.25 (Users is not contributing any resources)
Rank 1 = ADS x 0.5 (Small Farms)
Rank 2 = ADS x 1(Average Data Stored) (Common Farms)
Rank 3 = ADS x 2 (Reliable Large Farm)
Rank 4 = ADS x 4 (Specialized Super Farm, Vital for the Network)

~~ FIRST 30 DAYS ~~

Magic Number Assumptions: Initially, there should be more famers than free users when the Network launches. Let’s say there are 70% farmers and 30% free users out of a population of 1000 accounts. And the average storage space farmers provided is 1000Gb. We will assume the Average Data Stored is comparable to most cloud storage, which is around 100Gb of unique data. The ADS will have to be set by the first farming node. Otherwise there will be no data to farm and therefore no Safecoin to pay out. For simplicity sake, I’m going to ignore the de-duplication function.

700 Farmers = 700,000 Gb of storage.
ADS (Average Data Stored) = 100Gb.

Farm Ranking System
30% Accounts Rank 0 = ADS x 0.25 = 25Gb x 300 = 7,500Gb
25% Accounts Rank 1 = ADS x 0.5 = 50Gb x 250 = 12,500Gb
30% Accounts Rank 2 = ADS x 1 = 100Gb x 300 = 30,000Gb
10% Accounts Rank 3 = ADS x 2 = 200Gb x 100 = 20,000Gb
5% Accounts Rank 4 = ADS x 4 = 400Gb x 50 = 20,000Gb
Space allocated for FREE = 90,000Gb x 4 copies = 360,000Gb
Space available for Safecoin purchase = 340,000Gb

If the average farming rate is 1 coin per 2 hours, we get 360 coins per Month per Farmer.
360 coins x 700 farmers = 252,000 Safecoins able to buy 340,000Gb of storage.
Therefore, 0.74 Safecoin = 1Gb of storage.

We are still giving more FREE storage AND encouraging users to become farmers. This is essential for the Network to grow and become sustainable. Let’s also compare the purchasing prices below…

Price Comparison (100Gb)

  1. Safecoin 1Gb = $0.011 (As of 6/5/14 - http://coinmarketcap.com/)
  2. Google Drive 1Gb = $0.02
  3. Microsoft OneDrive 1Gb = $0.04
  4. Dropbox 1Gb = $0.10

Price Comparison Reference Link

~~ DAY 60 ~~

If the SAFE Network proves to be reliable and fast, and given the huge cost benefit, let’s assume mass adoption takes effect.

Magic Number Assumptions: Now we should see a more free users join for obvious reasons. This would shift our ratio to: 50% farmers and 50% free users out of a population of 10,000 accounts. We’ll keep average storage space provided at 1000Gb and upgrade the ADS to 150Gb of unique data, due to Safecoin being used to buy extra storage. There should be more Safecoin trading on exchanges as well as more data being uploaded to the Network.

5000 Farmers = 5,000,000Gb of storage.
ADS (Average Data Stored) = 150Gb.

Farm Ranking System
50% Accounts Rank 0 = ADS x 0.25 =  37.5Gb x 5000 = 187,500Gb
20% Accounts Rank 1 = ADS x 0.5 = 75Gb x 2000 = 150,000Gb
15% Accounts Rank 2 = ADS x 1 = 150Gb x 1500 = 225,000Gb
10% Accounts Rank 3 = ADS x 2 =  300Gb x 1000 = 300,000Gb
5% Accounts Rank 4 = ADS x 4 = 600Gb x 500 = 300,000Gb
Space allocated for FREE = 1,162,500Gb x 4 copies = 4,650,000
Space available for Safecoin purchase = 350,000Gb

Max Farm Rate 720 coins x 5,000 farmers = 3,600,000 Safecoins able to buy 350,00Gb of storage.
Therefore, 10.28 Safecoin = 1Gb of storage.

The drastic reduction in Safecoin’s storage purchasing power is reflected by the increased amount of free users compared to farmers. Even in this situation, the Network remains functional. However, it is still not economical for Safecoin. Let’s take it a step further and see if it will hold up in an extreme situation. We’ll make the amount of free users 70% and farmers 30%.

3000 Farmers = 3,000,000Gb of storage.
ADS (Average Data Stored) = 150Gb.

Farm Ranking System
70% Accounts Rank 0 = ADS x 0.25 =  37.5Gb x 7000 = 262,500Gb
14% Accounts Rank 1 = ADS x 0.5 = 75Gb x 1400 = 105,000Gb
10% Accounts Rank 2 = ADS x 1 = 150Gb x 1000 = 150,000Gb
5% Accounts Rank 3 = ADS x 2 =  300Gb x 500 = 150,000Gb
1% Accounts Rank 4 = ADS x 4 = 600Gb x 100 = 60,000Gb
Space allocated for FREE = 727,500Gb x 4 copies = 2,910,000Gb
Space available for Safecoin purchase = 90,000Gb

Max Farm Rate 720 coins x 5,000 farmers = 3,600,000 Safecoins able to buy 90,000Gb of storage.
Therefore, 40 Safecoin = 1Gb of storage.

While the Network remains functional, Safecoin’s storage purchasing power is not economical. Obviously this is an extreme situation and we are making some broad assumptions. The idea is to look at what might be some problem areas. How can we fix those potential land mines?

I know this is a really long read and appreciate if you have made it this far. So take a break and review my summary in Part 4.



Part 4 (Summary and Solutions)

During our hypothetical simulation, we discovered the following “potential” issues. Keep in mind it took me all day to make this post. If any of my math or theory is wrong, please point it out and I’ll correct it.

SUMMARY

  1. 4 copies of unique data present a complication in storage space calculations.
  2. If Safecoin’s generation rate exceeds the amount of storage space being added, it causes Safecoin’s Network value to plummet. This is directly related to lack of growth in farmer population. Although, this issue should resolve itself as Safecoin approaches the cap in 10 years, and assuming more storage will be added over time.
  3. We did ignore data de-duplication to simulate worst case scenarios.
  4. Neither model (Network Average & Farm Rank) was able to stabilize Safecoin’s storage purchasing power. I don’t know Safecoin’s actual generation rate, so it was based on max farming rate and number of farmers.
  5. The Farm Rank model seemed more capable in handling excessive free users.

SOLUTIONS

  1. We need to calculate the 4 copies as part of the storage space used. So 1Gb upload would actually cost the user 4Gb. This accurately reflects the amount of storage being occupied by the user.
  2. AFAIK, Safecoin’s generation rate is not linked to storage increases. This makes it very unstable to valuate Safecoin when being used to buy storage. Perhaps we could “anchor” the generation rate to increase tandem with the storage rate. If total storage increased by 20% per month, Safecoin generation would increase by 19% per month. In this way, there would always be an increasing amount of storage compared to Safecoin. You could actually force Safecoin’s Network value to increases by 12% per year, using this method. Buying storage would always get cheaper.
  3. In order for the Network to remain functional long term, I think it is necessary to incentivize farmers/builders as much as possible.
  4. If storage approaches a RED Level, the Network should activate a garbage cleaning protocol. This is similar to Network maintenance, where the oldest data is removed.
  5. If Safecoin can be valuated by it’s own Network, then it no longer needs to be converted into Fiat. Everyone will know what 1 Safecoin is worth, measured by the storage space it can buy.

Normally, I would do a Q&A but I’m too tired at this point. Feel free to add ideas, or debate this post. A good discussion is the point and we should look at every angle.

Thanks for reading.




Apps and App Data
Safecoin divisibility
A Proposal: A New, Fair Internet Model to Restore Economic Balance
The value of safecoin farmed
Safecoin Divisibility vs Inflation "Ideology"
Network protection against garbage
#2

It is definitely unpredictable. Glad your analysis. maybe we can get some hint or clue. thanks a lot. : ) But I think One is for sure. If it is success, No matter the value of safecoin or the network of Maidsafe never grows as linearity trend. The trend must be very fluctuate. I personally think it will be fluctuate as bitcoin or any other alticoin…


#3

David, can I just say (and it’s 6 am so bed calls) that your effort and analysis is hugely important and greatly appreciated by us. It may seem like the maidsafe team are ignoring things here, but I am not and its amazing.

We had a board meeting tonight and everything is running great in house lots to come. The concern is I am not at the desk helping the devs. I am in interviews and answering Internet questions a lot. You are helping in ways that are incalculable to me.

So this is me saying I really will be working with the devs in house much more, it seems that is essential and we have a couple of amazing community members over this couple of weeks who are probing attack vectors to learn the system. Their input is amazing to and there will be parts of the system designed by them for sure (its their network). That also takes my time though. My worry is when folk do not see me here they will wonder what’s happened to us back in Troon. Could you make sure please that people know we are not lost or ignoring them but are head deep in getting the logic and all attack vectors covered. We are a tiny team for this job really, but capable enough, but there are less hours in the days for me now.

So I am about and we will have others in the office trying to keep up to date with the conversations here and I will try and read as much as possible. In terms of the economics we will have it all sorted in this community before launch and these conversations and analysis are perfect for us as you guys are taking that part away and analysing it just now. I very much appreciate it all and cannot thank the community enough, but I will be more quiet now as I need to fill my head with some logic and I am rubbish when I do that.

Thanks again though, I just had to say how much we all appreciate your work and thought process.


#4

The second variable is not seen in the number of accounts. Only the ADS is reduced, the number of accounts stays at 10,000. If people create multiple accounts to get more free storage, the space allocated for free number must by necessity rise, not fall as in this example.

I think the ‘ADS for free’ system is inherently flawed. It’s a matter of time until easy ways to set up and manage multiple accounts have become widespread. I think the system should be designed in such a way that no multiple account exploits exist. Systems like ‘what you give is what you get’ or unlimited storage for free but extra costs for redundancy and better download speeds as I proposed a short while ago don’t have multiple account exploits:


#5

very glad you do inside jobs more: ) lost in code never come back lol


#6

Is this not an idea that would likely be rejected by community for net neutrality reasons?


#7

I don’t think so, the SAFE network is like a server host, not an internet service provider. None is complaining that hosting companies charge more for servers with more bandwidth capacity.


#8

Sorry, even that’s over my head:

Would it result in some people being more equal than others within the Safe network, dependent on capacity to pay; the corollary being that less affluent have slower download speeds. If not then no complaints, if so then I’d probably complain…a lot


#9

Thanks for that analysis, it’s still sinking in :wink: One quick first remark though. If applied, this should only be true for unique data though. Are there any statistics how much the average dropbox or google drive user uses of their free storage? I really doubt that people will use 100GB storage with unique data. The biggest data chunks will probably be movies, music and those are most likely not unique.

What do you guys think will happen if the warez scene finds out about this? I think this is really attractive to these guys and if successful, likely that it will picture us as the bad guys. But maybe this is not really related to this topic, but I just thought about it.


#10

This isn’t the issue for me.[quote=“dyamanaka, post:1, topic:405”]
As an Investor, I say "hell no!"As a Consumer, I say “yes please!”
[/quote]

As an app dev or merchant I’d say “hell no” too.[quote=“dyamanaka, post:1, topic:405”]
We all want to have our cake and eat it too!
[/quote]

I think we can

Here is where my problem lies.
Specifically, storage costs have fallen 38% annually since 1992, compute costs have declined 33% a year since 1990, and bandwidth costs have dropped 27% a year since 1999. Therefore, the resource you are pinning value to Safecoin on is losing value at an annual rate of around say 30%. Any other value ie apps etc has to compensate at least for this 30% from the word go with a clear explanation given that a layman can understand as to why Safecoin will at least retain value and not by design necessarily deflate. Any other coin operating within the ecosytem would also by implication have a 30% advantage over Safecoin annually that we’d also have to overcome. Failure appears to be inherent to the design to my mind.[quote=“dyamanaka, post:1, topic:405”]
If the SAFE Network proves to be reliable and fast, and given the huge cost benefit, let’s assume mass adoption takes effect.
[/quote]

Again, this is not the issue for me. What I mean is, the bad PR and trolling would have killed it at launch. You have to agree (don’t you?) that if it is even perceived that Safecoin is set up to deflate or clear explanations as to why this will not be the case are not publicised everywhere, then the trolling will commence and all Safecoins will be dumped at launch. This seems only logical if you can buy it cheaper later. Safecoin would be perceived as not having a function and it is the functionality that gives it value. In my opinion the main functionality should be commerce, apps etc, not storage space, bandwidth or computing power. These give the network value, but not the coin- at least not initially and we need to address the “initially” bit. If you use Euros in Europe then why not Safecoins in Safenet land? This could then become a much bigger global currency than Bitcoin. Please consider the potential benefits - and you are not being greedy,unfair or detracting from other projects but giving the world a whole new eco-system and global currency.If there is a reason to give away so much, or let other crypto’s have such an advantage, then it has to be hugely important because the potential loss to humanity seems way too high to gamble in any way.

You appear to be comparing Safecoin value to how much resources it buys you, but the same thing applies to the dollar or bitcoin, except they haven’t the 30% brick tied to their leg.

Please specify the particular part of your response that addresses these issues so I/layman can understand the concepts a bit better. Many thanks


#11

Almost. The current redundancy/download speed is a given, it’s determined by the fact every piece of data is duplicated 4 times. My proposal is to raise that duplication count for those willing to pay. From that perspective, the less affluent won’t have slower download speeds, it’ll stay the same for them. Those who pay merely get more, and not at the cost of the others.


#12

Is that not just semantics? Are you really Snowball from Animal Farm?


#13

No problem @dirvine. I am aware of how hard it is to run a project while at the same time keeping up with social communities. Compartmentalization is very helpful in this situation. Right now you’re the man of many hats, and I hope you can reduce your number of hats as time goes on. We (the community) will do what we can to ease the burden and help make this dream come true.


#14

@Al_Kafir, I think you misinterpret dyamanaka’s post concerning the prices. He doesn’t mean that SafeCoin is pinned at a fixed rate per resource unit, those examples were just points in time under particular circumstances. So SafeCoin won’t inflate like storage space.

Ask yourself this, why is it okay if people pay for more storage while it would be wrong if they pay for more bandwidth? I think the comparison with net neutrality is off the mark, net neutrality is about not discriminating certain types of data, which is not the issue here. Just like you and I need to pay our ISP more for higher bandwidth to our homes or mobile phones, it’s not a strange or bad thing if the SAFE network charges more for higher bandwidth.


#15

Thanks for pointing it out.

I did reduce the ADS amount from 150 to 100 to reflect “no change” from no one buying extra storage. I could have increased the number of accounts, which I was too lazy to do.

I agree, the ADS free system is flawed. This brings us back to why we are trying to make POUH (Proof of Unique Human). Personally, I’m not smart enough to conceive a better system than “what you give is what you get. POR (Proof of Resource).” I really wish I was, so others who do not have resources can benefit in some small way. The only other way I know how to bring resources to others is by charity.


#16

That is correct. Unique Data Only.

The way de-duplication works is based on meta tags. If you upload a music/video file that has already been uploaded. The Network will just create a meta tag for your account, pointing to that file. As a result, this should not cost you any storage at all.

For the purpose of worst case scenario, I purposely ignored de-duplication in order to test the system under extreme conditions.


#17

Ok Guys I’ll do some further reading to try and understand things a bit clearer before coming back. I know Safecoin price not fixed to resource but at least related to it isn’t it? Anyway, I’m sure you’re right and its something I’m not getting. What me and other non-techies are looking for are simple snappy answers to questions. For example if someone asks me "What prevents Safecoin from inherently devaluing as the value of resources diminishes exponentially?
Answer: Something to do with de-duplication or something. (only much clearer. This will help spread a positive message and stop fud.


#18

Yes, storage and bandwith costs are getting cheaper. This is a good because it enables “common” users to join the Network. Drive Space, Bandwith, and Online Time are components of the end product. When a manufacturer can produce a car with cheaper parts, they make a profit and lower their price. The community can buy more cars. This is a big incentive for network growth.

I’m valuing the “end product” within the Network Ecosystem, not by the cost of its components. Safecoin & SAFE Storage is an end product of those components. In addition, Safecoin also brings several other benefits.

  • Faster Transaction Time
  • Better Anonymity
  • Reduced Energy Costs
  • Native Ecosystem unique to Safecoin
  • Many others as the Network grows

Any currency, no matter what form is based on what it can buy. SAFE Storage is just the first of many things that Safecoin will buy. More things will be added as builders create them.

Is SAFE Storage just a hard drive? No
Is SAFE Storage just a bandwith? No
Is SAFE Storage just a Cloud Storage? No
Is SAFE Storage just a cost for applications? No

SAFE Storage is all of these things and more. It is the end product of all those components. :smiley:
When you look at your iPhone or Droid, you don’t see how much the circuits costs. You see how it is useful to you. And based on that usefulness, consumers value it.

EDIT: The reason I would like to link (Safecoin generation rate) to the (Storage increase rate) is to stabilize the storage purchasing power. Farmers are not able to sell storage directly to users, allowing the free market to determine Safecoin to Storage pricing. As a consequence, the Network has to manage this part. The best way to do that is to keep rates at a similar pace, making Safecoin’s growth slower than Storage. Buying storage on the SAFE Network is not the same as buying storage on other cloud services. I already gave examples above.


#19

You keep telling me the advantages of the network and I understand those and I understand the incentives for mass adoption. What you are saying is that at some point in the future, given a certain set of circumstances, the value is likely to rise. (This is exactly what Mastercoin are saying and look where it has got them PR wise). It is unclear from what has been said what stops Safecoin from devaluing, not the value of the network.
I think we may be getting cross wires as to what my issue is. Let me have a think on it and come back. Cheers
Basically, what stops it devaluing immediately before all the bells and whistles are functioning? This is my issue, alongside why devs wouldn’t just accept bitcoin instead if all cryptos allowed, which would stop the only value as I see it.


#20

To put it bluntly,

Nothing can stop Safecoin from devaluing in Fiat terms. I get what you’re saying about Mastercoin and negative PR. I’m not a spin doctor that can sway public opinion. All I can do is be honest about what this product can do and if people find it useful, they will use it.

Personally, at the rate Fiat is going, I wouldn’t want my Safecoin to be valued in Fiat if at all possible. It would be like tying your boat to a sinking ship. I would like to see Safecoin as a currency on its own. This has been one of my pet peeves about how people value cryptos. By having a Native Network, our own little cyber nation, we have an opportunity to value Safecoin without a Fiat conversion. As far as I know, you can only buy SAFE Storage with Safecoin. So other alt coins cannot dethrone this particular function.