Safecoin and stable pricing


#1

I am a novice so forgive the nativity.

My experience is with bitcoin whose speculative fluctuations make stable pricing impossible. I am assuming Safecoin would be open to fluctuating currency values as well.

The problem is pinning the price of ebooks so that each sale provides the same royalty value to the author. Obviously the author’s wallet may change radically in terms of exchange. However, I want to receipt each transaction not just with the Maidcoin fraction, but also selected currencies, and ‘metal prices’ at the time of the transaction.

In my naivety I see this as basket full-of-currencies to average buying power over a selection of real world objects (gold, copper, etc in miniscule amounts), that are updated perhaps four times a day:

(UD$1 = US%0.75, etc) = (average value in selected metals) = Maidcoin 0.1 = Pricecoin 1
(UD$0.50 = US%1, etc) = (average value in selected metals) = Maidcoin 1.0 = Pricecoin 1

Pricecoin is always the same the ebook costs Pricecoin 2. This means that whatever the exchange rate for Maidcoin, the value of Pricecoin in national currency is relatively the same; it is literally the purchase power in tiny amounts of gold, copper, gems etc without any actual exchange Maidcoin.

The same ebook costs different amounts of Maidcoin, but at the time of transaction it holds, more or less, the same value is put into the authors’ wallet, where hopefully it can be automatically dispersed into a basket-of-crypto-currencies, or exchanged in currency wallet awaiting payout.

This may seem a small matter, but at the height of Bitcoin pricing I remember some site offering its goods for 1 bitcoin — somehow I did not think I would pay nearly $20,000 for a $50 download.


#2

I would think that a module in your store site/APP would handle how many SAFEcoin is needed for x$. Thus when you sell the ebook from your store site/app that the current conversion rate would apply and you receive that amount of SAFEcoin for the $cost of the ebook

On another note, SAFEcoin is not a speculative coin like nearly all the blockchain coins are, but rather a utility coin used to buy and sell network resources and as such the price should be somewhat more stable without the massive jumps we’ve seen in bitcoin. There will still be ups and downs against fiat but at least they will (hopefully) be minor compared to bitcoin.

As to pricecoin, well personally I cannot see much difference in the effects of price fluctuation on it and SAFEcoin. May as well just work in SAFEcoin and apply the current rate to it. Remember all SAFE sites can include javascript code that can do the conversion for you. Just like sites today handle the foreign exchange rates for international sites.


#3

Thanks neo, I cannot disagree with anything you have said. And indeed SAFEcoin should be less speculative.

I have read but not fully comprehended SAFEcoin, I know it can be traded and earned, but I have not quite got the buying part clear, I assume it can be bought if it is traded, but if a George Soros comes around as he just has with crypto-currency investments after being part of effort to depress the prices, I see problems in a wider economic sense.

I can see, as you suggest, that a simple JavaScript would do the trick, but if Pricecoin is the amount that people think when they buy through SAFEnet it would be better to have an inbuilt mechanism to reliably calculate. I am thinking here that there must be some faith in the actual value at the time of transaction throughout SAFEnet.

At the moment this may seem to be overkill, but once millions start using it they have to be able to think that the coin is always worth so much. Perhaps the values need to be entered into a block-chain as a common reference of value as it changed overtime. The economics for SAFEcoin look fine to me, in fact it is very well thought out in terms of maintaining SAFEnet, but I am not sure if will work as price exchange mechanism if it is not mediated by the cost of real world objects.

I agree that SAFEcoin should be the transaction basis, but the transaction representation should present the world as a single unit of value. My view is that SAFEnet is capable of becoming the bourse for most things, in the long run.

Many thanks for your kind reply.


#4

Doesn’t having pricecoin just shift the issue from one point to another. People have to buy/sell pricecoin against the market value and its value will move as SAFEcoin moves and in a more unpredictable way. With just SAFEcoin its like a skipping rope where one end is moving the rope up and down (market fluctuation) and then with pricecoin you now have the skipping rope being moved in different directions at each end.

People will end up trading both SAFEcoin and pricecoin on the markets.


#5

Maker DAI on Ethereum is the state of the art in stable coins. It’s uses an ETH collateralized debt obligation smart contact to create stable DAI tokens. A similar approach could be taken in SAFE once there is support for smart contracts.


#6

But fundamentally you still have to exchange fiat for a coin at some stage then use the coin to pay for a fixed price (in fiat) object.

So once you buy a coin then its open to market changes and thus you get market changes.

So unless you have a coin that is FIXED to fiat operating on SAFE network without involving SAFEcoin then its open to fluctuation. Of course it is then open to the fiat exchange markets and again you have instability if product bought by a currency that is undergoing hyperinflation.

You have the fundamental problem of going from fiat<–>fiat<–>crypto.

Basically I do not understand how long term any system can survive that makes exchanging currency and currency to coin stable. It runs the risk of failing at sometime down the track. USDT is only pegging the coin to USD$ and even that simple task has had some real problems short term.


#7

neo I am afraid I have muddied the waters with calling a unit “Pricecoin”.

On the working assumption that the universal means of exchange on SAFEnet is SAFEcoin (it does not have to be but it simplifies things). The Pricecoin is simply a unit of calculation; how much SAFEcoin for a real-world value.

A unit is never exchanged, it is not a fiat currency, or even a crypto currency, its blockchain is simply a record of its fluctuations a means of back-checking accounts as to whether a SAFEcoin wallet is what is expected from sales receipts (a trivial task).

When you use the USD$ as an example, the problem fiat currency +++, despite its exchange value still being high, unlike the Yuan and Rouble, there is nothing behind it now that OPEC has gone under.

I thought previously of using a Rouble or Yuan (both have exchangeable gold reserves), or even the current value of gold as a means of setting units, but they all suffer from political oscillation that can occur at anytime. and possible speculative manipulations (gold especially).

Credit Cards don’t work when the SWIFT system decides to sanction this or that vendor of country. The new clearance house helps but nothing guarantees transactions except a distributed system where problems can be tunnelled around if need be, and exchanges set up that internal to the network.

Using an average of say 50 currencies buying power over a mix of metals and other goods, simply delivers a fairly stable unit of measure.

This cannot make exchanges between currency and to cryptocoin stable, the only stability is that a royalty worth $2 today at 12.00pm will roughly bring the value in 100 years time to about the same amount, in other words it may in real currency be $1,000, but it will have the value of 100 mg of Lead, 5 mg of gold, 20 mg of copper.

The problem to be solved is that an two authors whose royalties are the same, one in the UK where USD$2 will not buy a cup of coffee, one in Egypt where USD$2 will buy breakfast, lunch and dinner. This is the aim that it be world wide and stable over long periods of time.


#8

neo please see reply below, pricecoin was a misnomer, it is just a unit of measure — there is no intention of it existing as any sort of coin.


#9

I am not sure you can make a long term stable measure out of anything. Gold jumped many years ago to many times its more stable path and then dropped again. How do we know gold will remain at its current relative value that society/markets put on it over the next 10 or 20 or 100 years. Maybe electronics will move to another metal that is just as stable and electrical equivalence. And what is to say that society might not move to another metal for fashion purposes. The same for any other metal. We only can use past performance of these metals and they historical shown that their relative values changes against each other and the value society puts on them. The only constant in life is change.

Diamonds for instance can now be made dirt cheap in comparison to the real diamonds with identical qualities and if some group decides to break away from the diamond cartel and make cheap diamonds available then all those engagement rings drop from $1000s to a couple of hundred depending on the markups sellers place on them.

And what is to say that in 20 years with particle physics that we won’t find an easy/cheap way to make designer atoms in mass quantities with something like a hobby 3d printer complexity.

My point is that whatever you use to try and make a stable thing of value will not have certainty till the world agrees on something to have that relative value. Then what if that item you are selling is undercut by another person. Then no stable coin will stop you from having to lower the “price” of what you sell. In other words the issue of instability in value goes beyong the medium of exchange to the items being sold.

tl;dr

We live in a world of constantly changing values and we have to live with that without attempting to make the world stable so we can have a “stable value coin”. Rather attempt to have something that smooths out the short term variance in the “medium of exchange” but recognises that the market value will move. Thus we need to set our price accordingly and utilise what we receive from the sale into something that we perceive to have longer term value for us in our situation.

Some will utilise what they receive for the item immediately and some will go to the gold/silver merchant and buy gold or silver and some will … What is done will be varied and make it hard to have a “stable exchange medium” to suit all.


#10

neo, not one article, but many, so much diamond, so much ruby, so much gold etc, gives a rough average that is all, gold goes up copper goes down, does not have to even out perfectly, but does not depend on anyone ‘commodity’.

Gold is appreciating because people are hedging with it, but iron is dropping because manufacturing is declining. The various amounts of different commodities makes the average value. The national currencies have relative exchange-values so many yen for a dollar. Any convenient currency within the basket, USD or Yuan does not matter, they give a figure that can be related to every other currency and produce a table of proportional relationships — so much USD is worth so much AUD (any currency can be used and the relative value translated into the currency of the buyer).

I set the ebook price at 2.5 pc, it is that virtually forever. it will rise and fall in relatively around the same value, so long as the basket of commodities is large and diverse.

I see the price in Australia as

The Book of the Dead 2.5 pc 5 Sc, AUD$3.15

I come back a three years later and it is:

The Book of the Dead 2.5 pc 10 Sc, AUD$1.15

The pc price is stable for everyone no matter where they are. I look at my SAFEcoin wallet 2,500 Sc gives me 250 pc to spend, three years earlier it was 500 pc, the SAFEcoin are still 2,500 Sc. their value has fallen. In this sense as a unit of measure it changes nothing it stabilising nothing.

The only problem it cures is being a safe way of transferring value from the customer to the vendor and then to the creator. Otherwise why would the creator trust me to be surrendering the same value no matter what the fluctuation the currencies — so long as they see 2.5 pc they know it is put on the market at the agreed price.

As SAFEnet is international in the first instance, should the fixed price be SAFEcoin that if it inflates cheats the author? Or should it float determined by the vendor? or should it be fixed to currency that may hyper-inflate?

With authors they should rightly expect royalties for their entire life 2.5 pc is what they get when measured in so much gold, iron, etc.,.

For instance lets make the commodity a metric ton and fix this as being 1,000,000 pc, take a launch currency like USD$ at say $500,000.

  1. the weight is given, the amount to fill it set by the money, but the the proportion and kind of commodities needs to be figured out — let it be 100 commodities.

  2. starting with an imaginary purchase on the international market of of 50 Kilos of wheat, and 50 kilos of rice, add in 100 kilos of iron, a hand full of diamonds, of so many carets, etc until, we have a hundred things that cost today USD$500,000. This gives us the proportions.

  3. 1 pc has an exchange rate of (1 ton commodity mix) / 1,000,000

Now things can fluctuate and they do, but they do not do so in the same direction; that is the averaging mechanism a spread of commodities. for instance 100 different commodities from three distinct resources, refined mining products, agriculture, and energy.

In 100 years time 1,000,000 pc is a metric ton of 100 commodities, what was USD$500,000 in 2018 is in 2118 USD$1,000,000,000, but the author still get 2.5 pc of value a little more or a little less than in 2018.

Let everything fluctuate but just as a the metre measure in Paris is made of a mix of metals so that its length is almost stable regardless of the temperature, the same can be said of a pc it will move, but only a little.


#11

My point was that all things can change with one breakthrough in particle physics. We have seen a number of these happen in history. Stones, shells, etc once was the stable items of value. And there have been a number of these reinventions of value.

The issue with diamonds affects most jewels as the technology improves. Metals will change. My grandchildren do not see gold as having value. It will not take a generation before gold does not have the special value it has now (same for all metals)

tl;dr

My point was that any attempt at “averaging” to get a reasonable measure of value is only good for relatively small time frames and insecure for greater than say 10-20 years. As you say gold is increasing in relative value currently so then it too would not be part of the equation since it unfairly raises value, should use more base metals.

But as I pointed out before, we are changing in what we consider to be of value and its better to keep your sales values (very) short term and move the received amount to what we feel is a suitable store of value for ourselves. That way we can move with the times and maintain value.

So the issue is to keep value stable over terms of weeks (or a week) for our shops and move the amount received to another store of value we consider suitable


#12

neo I am not in any disagreement, but at the time when all commodities lose value together, why would it matter when what is made out of these resources are basically what we consume. The value matters because we can buy a certain proportion of consumer commodities.

This is not seeking some idealised forever fixed value, but retain a proportional relation between a price agreed on now and received payment at the end of a lifetime. It reflects an abstract relationship between different products of labour, all of which are effected by technical improvements and actual increased productivity (less labour per item).

The pc is only semi-stable, but actual exchanges are wildly unstable.

Gold has some use value, but its exchange value reflects the cost in average labour time to procure it, like everything else. However, the gold market has been manipulated to stay low, by issuing gold certificates that are just exchange notes (no actual stored gold behind them — a promise to pay-out at Gold’s present value), this has been world wide attempt to keep US bonds high. Gold has been bought on the cheap for the last 10 years or so by Russia, China and India.

The value raising in regard to other commodities of gold is a recovery, it is not technical developments that distort values (everything being relative) but market manipulations — that is the problem that needs amelioration, by averaging.

The way to look at it is not the official figures for GNP, but actual things. In a country so many resources consumed. X a lot and Y a little, insofar as a rough proportion of these resources can be made into a measure then Y benefits more than X. This means if I give 2pc to someone in X their share of the resource pie is relatively small. if I give 2pc to someone in Y, a poorer country their share of the resource pie is relatively high.

2pc has more spending power in the poorer country, it represents a larger value part of the resource GNP.

Notice that in marinating a proportional value has a disproportionate effect. Then imagine this changing over time, like the rise of China. The same would happen if it was USD$1, except the political economy that applies to one currency is capable of massive change, whereas the GNP of resources world wide is relatively stable, even when the individual countries are not.

Iron is good base metal, but 3D printing could in a relativity short space of time drastically reduce the amount of iron consumed, lowing ore prices accordingly, and closing many mines. However, the change from bulk ore to refining is is hardly effected, so the price of refined iron per kilo will only shift a bit despite being less used — it has to be worked and therefore must cover its costs. So a big change in use does not mean a huge change in price.

Technology will change the amounts of refined base metals, objects made of iron will be much cheaper because they have the strength but much less iron, but iron itself will only get a bit cheaper per kilo.

Gold is an offset, it is also a useful metal industrially and its proportion should be based on that use (that is tiny), industrial diamonds, rare earths, gems etc likewise. if a metric ton is no enough then use more, if 100 commodities is not enough use more — it is a fictional amount abstractly divided.

If we seriously took it on, various contingencies could be preplanned, perfection is not needed just that between now and then 2pc still maintains a proportionality of the world economy as reflected through resource exchange. The value is maintained by a relationship of resources to the products of consumption.

The pc is a holder of varying prices. what people actually pay varies moment to moment, what the author receives depends on when they cash-out, all I am after is a simple agreed measure so that the author is looked after. Otherwise we are stuck with currency amounts which vary for many reasons and much faster than any actual change in technology.


#13

The problem of stable pricing is absolutely not some new problem, nor related to cryptos.
Many commodities have unstable prices, since very long, and since very long free market have developed efficient solutions.
If safenet works well and allows those solutions, and if there is a sufficient market, then some people will offer solutions. I would not worry too much about that.
I would also not worry too much about being constructivists and willing to anticipate everything. The main challenge imho is to implement a good and robust general framework for liberty. Once that achieved, the rest will follow.
(… but the reciprocal is also true.)


#14

I think Greg’s idea is a good one. Others are placing too much emphasis on one or two changing commodities. However, properly diversified, commodity backed currencies could be incredibly stable. The only way they would destabilize, long term, is if the world economy collapses, and then you have bigger problems.

The problem I have with the idea, is you can’t just have a tracking coin. I believe you would actually need to have an ICO, use that money to purchase the commodities on an exchange, and then, the coins would have actual real world value tied to them. SafeCoin also has real world value/utility tied to it in the form of storage space. While better than most coins, a scientific breakthrough could see storage space exponentially grow, particularly with quantum computing storage. With a large enough adoption rate, it’s possible SafeCoin could decouple itself from storage space, so that there value does not directly track it’s buying power of storage space alone, but then it enters the speculative market, like all other currencies.


#15

I like this idea because it could help improve Safecoin as a utility coin rather than a speculative one, and hopefully that’s one of the ways it can really go beyond the current generation of crypto currencies. Of course then, as mentioned, the more it becomes a utility coin the more the value will settle down, and the quicker that happens the better, so personally I’m hoping there are lots more ideas like this around, and people with the time and skills to make them happen!


#16

I really like the solution Factom have implemented with their two token system:

"the Founders of Factom realized that many businesses will want to use their protocol BUT there would be two problems with this:

  1. Many companies cannot hold cryptocurrencies for regulatory or internal policy reasons.

  2. Cryptocurrencies tend to be highly volatile and companies need to be able to budget effectively to use something like the Factom Protocol. If the token you use is $5.00 one day, $30.00 a week later, and $2.00 a month later, you can’t effectively budget.

As such, the Founders came up with an absolutely brilliant solution. They created Entry Credits (EC) in addition to Factoids thus inventing the two-token system and, “Isolat[ing] use of the protocol from [the] tradable token”. It is ENTRY CREDITS that allow you to enter data into the Factom Protocol. One EC allows you to enter up to 1kb of data and costs .001 at present. Note it’s not .001 FCT, but .001. You receive EC by burning FCT and that FCT (and all fees) are removed completely thus reducing future inflation. To reinforce the fact that EC are priced in dollars, not FCT, note that:

If one FCT is worth $1.00 and you burn it, you get 1,000 EC

If one FCT is worth $10.00 and you burn it, you get 10,000 EC

EC are not transferable and you can’t turn them back into FCT, HOWEVER, you CAN purchase EC and have a service like this one acquire and burn the FCT on your behalf. You pay a premium to them for that service, but you don’t have to hold or deal with cryptocurrency.

This solves the two problems:

  1. Companies don’t have to hold cryptocurrency if they don’t want to or can’t.

  2. Companies can effectively budget for the cost of using the protocol because the cost for EC will effectively be $.001 each."

You’ll find the rest of the article here:

https://factomize.com/the-genius-of-the-factom-two-token-system/


#17

This seems very similar to the SafeNetwork which has also 2 levels of currency: Safecoins + Units in the user put balance, the latter being like Factom entry credits (allowing insertion of data but non-transferable).


#18

oh wow, I didn’t realise the safenetwork was going to have a similar kind of system. Great to hear. Thanks. Will the amount of units be bought by safecoin? and the amount a user can buy will vary depending on the Safecoin price?


#19

The amount of units bought with 1 safecoin will depend on state of the network, not on the price of safecoin. Then each unit will allow to store a 1MB chunk of data. There is a RFC that describes the process but it isn’t up to date.


#20

If the network remained the same while the Safecoin price doubled, the number of put credits you’d get per Safecoin would double, so the amount a user can buy for a given amount of Safecoin will vary depending on the Safecoin price, and will be subject to the conditions of the network as TFA has said (if resource scarcity increases / decreases, prices will adjust to move the network towards an equilibrium with a target level of spare resources).

Assuming farmers make decisions based around the cost of providing resources to the network, the price per put credit is likely to remain relatively more stable than the price of Safecoin, which isn’t linked to resource cost.