I would like to see a realistic, adult discussion on the economics of safecoin and the MaidSafe network. I’ve been following the discussion on the Google groups development thread, and I feel that there are a number of topics that we should debate seriously. It’s better to do that here than on the development list.
There were obviously some things that didn’t go too well during the crowd sale; for example, the early selling out of Maidsafecoin available for purchase with Mastercoin. I was highly skeptical from early on that Mastercoin was up to the task, but we’ll save that for another discussion. I feel that the Maidsafe founders have earned some negative karma with early investors already, so it will be important for them to demonstrate some responsibility towards the remaining ones who were able to successfully invest.
Here is my major concern. There is talk of making storage on the network unlimited and free for everyone. This invites a tragedy of the commons and a devaluation of safecoin. Why would I need safecoin if I can have unlimited storage for free? Contrary to what some people claim on the development list, storage is a scarce resource. Information is not, but storage certainly is. In order for someone to offer space to the network, they need to leave their computer or NAS device powered up, in most cases by consuming non-renewable energy. Neither spinning platter disks nor flash drives last forever, and there is both an acquisition cost and a depreciation. There is also the cost of network bandwidth, which I don’t see going to zero anytime soon.
I don’t feel that anyone who is in favor of free, unlimited storage has adequately defended their position. Most of the arguments I’ve heard are naive and childish, along the lines of “Imagine what it would mean to offer free storage to people in the third world,” or “We’re doing something totally unprecedented here and shouldn’t rely on the principles elucidated in textbooks written by long-dead authors.” I bet if a piano were falling on your head, you wouldn’t dismiss the law of gravity just because it was conceived by Isaac Newton.
Anonymous, encrypted storage seems like the killer service offered by the Maidsafe network, but I know that there are other types of services under consideration. Which of these services do you feel add economic value to safecoin and the Maidsafe network?
Given the fact that Maidsafecoins are already trading significantly under the IPO price, I’d say that critics of Maidsafe’s economic policies (like mmason from the development list) are not the ones who need to justify their positions, by reference to long-dead authors or otherwise.
Arguments for free storage for everyone:
I personally have a 14 TB media server that I run all the time as well as a 25/10 Mb internet connection that is always on. I don’t get charged more for sharing either of these (less a negligible amount for moving the heads on the drives a bit more while other people use the drives). For me, it will have nearly no effect of my computing needs (possibly internet throughput which I can throttle at my router and/or server)
I love the concept of this project, encrypted, redundant and massive amounts of storage. Even without any type of repayment I would most likely run this software when it came out. I know I’m not the only person in my position. While people like me are not going to make this project go “big time” I think there are enough of us that we could all share and make it work.
Arguments for a for-pay system.
As an early investor (not huge compared to some of the amounts I’ve seen thrown at the crowd addresses, but more than I’ve invested in any other single company at any one time before) I would love to see a return on my coins. The only way this is going to happen is if the value of SafeCoin goes up. In order for this to happen, there has to be a practical use for the coin. Saying “the marked will set the value of the coin. The coin has value because the network has value” yet the coin isn’t USED for anything in the network… It has no value to the market, and therefore no value at all.
There was much talk (and I believe they started implementing) that farmers who offer more than the network average resource get bonus coin generation (or something to that effect). Why shouldn’t this apply to consumers as well?
(I’m going to use small numbers for simplicity)
Eg: If the network average offering by a farmer is 1 TB and someone is farming on 2 TB, they get a 10% increase on coin generation (as an example)
If the network average space used per consumer is 100GB, anyone storing less than 100GB gets that space for free. If big-shot-bill comes along wanting to store 500GB of HD movies, he should have to pay a market set price - distributed to the farmers et al - as a “network bonus” if you will. This would go to all farmers, not just those above the network average. As a result of this, the network average for consumers comes up and big-shot-bill pays a little less, as he is now not quite as high above the network average. As more people move data into the system pushing this cap (assuming everyone will store as much as they can for free) we find a true average of where people are willing to start paying for storage.
In the early stages most people will be paying for storage as the average rises, but also, it will be quite easy to farm in the early stages too. People wont mind because their own personal farming will (should) cover their cost of storage they’re using on the network.
As an end result, SafeCoin has value because you do actually need it for a purpose within the network. You can use it to store more space if you need above the average. If you don’t need to store that much, you can sell it to someone who wants to store more.
I did invite Malcolm to join this forum to discuss economics.
The truth is, I’m not interested in who’s theory is more convincing. I’m interested in what works in practice. Everyone should have a chance to help the SAFE Project even if their idea is unpopular.
Crypto currency evolution is like the evolution of mouse traps.
In the beginning, the traps were crude and barbaric. Did it catch mice? Yes.
Then came better traps made of springs. Did it catch mice? Yes.
Then came sticky paper traps. Did it catch mice? Yes.
Through innovation we made better mouse traps. We are doing the same with crypto currencies. I don’t expect safecoin to live forever, but if we do a good job and create a well designed platform, our future generations could benefit from it.
I love the concept of this project, encrypted, redundant and massive amounts of storage.
Even without any type of repayment I would most likely run this software
when it came out. I know I’m not the only person in my position.
I agree with you 100%. I already run nodes for a number of disruptive platforms, simply because I support the goals of those projects. However, even though they are throttled in one way or another, they already consume about 5X the bandwidth I use personally. There’s a limit to what my upstream ISP will tolerate before charging me more or giving me the boot. They fully understand the economic value of scarce resources.
I like your idea of charging only for more than the average space used. Just to make my position clear, I’m not totally against offering some level of service for free. Just connecting to the Maidsafe network and forwarding packets represents a contribution wth economic value and should be rewarded appropriately. Thanks for sharing your thoughts.
What metrics should we use to judge the project’s success? Here are two that I can think of off the top of my head:
A functional network which offers secure, reliable, encrypted storage at a reasonable cost, with low latency and resistance to abuse.
A reasonable return on investment to those who participated in the crowd sale.
Regarding point 1, I would think that free, unlimited storage could be easily abused by sending an endless stream of random data (that couldn’t be deduplicated) out to the network.
Absolutely. I’m not a man of many words and I’ll just say this:
It’s obvious that the current developers of MaidSafe are not good at economics, otherwise they wouldn’t have given their Safecoins away so cheaply to the owners of Mastercoins.
It would be an even bigger blunder not to require Safecoins to pay for storage on the network.
MaidSafe has HUGE potential IF you get the economics right, but it will fail miserably if you don’t.
I’m quite persuaded by this idea. However above-average uploaders would have to be prevented from using multiple ‘accounts’ to make it seem like they are lots of little guys which would be an obvious way to game the system.
It seems to me that there are a few key things that are being overlooked by most of the posters so far.
While farming of safecoin is based upon proof of resource, disk space is not the real issue. Most of us already have quite a bit more disk space than we generally need. And, from what I’ve been able to grok from fairly extensive reading and listening to David Irvine, the Maidsafe software does a lot to reduce that footprint of what data is stored on the network, despite redundancies. But even without reductions, it’s far easier to provide more resource than one uses, and most people will without any sweat.
In case there really does develop a “tragedy of the commons” type situation (which I think is rather unlikely) there is another token which is ready to implement to allow for covering that contingency. I personally doubt this will need to be implemented, but it’s there in case.
The value of the network goes so far beyond free, secure storage that it’s hard to calculate the value. Secure, unblockable, untappable communications is priceless, for instance. And that’s just the start.
Open API for developers also makes the future possibilities nearly endless.
The attributes of safecoin are in its utility and its scarcity. It will be relatively easy to farm early on and get harder. Earning it buy farming is one thing that most anyone can do. Building apps is another. Providing popular content is yet another. But on the spending side, only between the two parties to an exchange and no other. There is not blockchain history to follow. It is secured by the same network attributes that secure our identities, our data, our communications. The market will determine its value when the network is in use. Till then its completely speculative.
I’m sure Maidsafe made a miscalculation regarding the Mastercoin purchases and incentives, but they remedied it in the way most in line with their philosopy, once they saw the mistake unfolding. I’m sure there will be some “safecoin” millionaires, but they made an effort to open it up to as many individuals as possible, and I think they succeeded pretty well at that, though I’m sure they’d have preferred to see it play out differently.
The important thing is that Maidsafe made what they needed on the crowd sale to make their investors whole and to proceed with the final implementation.
I invested a small amount, what little I could afford, not because I knew I’d make a huge return, but because I got the vision of the network and wanted to be a part of it. I’ll be farming for the same reasons. And I think that’s really the point here. There’s a lot more at stake than whether safecoin is a good investment financially.
I don’t have irrefutable evidence that the David and Maidsafe team know what they are doing, or will always get it right, but I have confidence from what I’ve seen and heard to think that they’re sincere and really think they can pull off what they’ve proposed.
If the network can be gotten up and running, I think the economics will work themselves out. I’m pretty sure there’s not a good historical model for how this could play out. Bitcoin has shown us some interesting possibilities and will no doubt continue to do so; I think the SAFE project will do so even more.
(I’d love any feedback from the Maidsafe team as to whether I got any facts wrong or missed any key points.)
If the end goal is achieve a “SAFE” thriving internet for users, farmers, and builders now and into the future… We should make the platform as friendly as possible. Nothing is without it’s flaws, but a great user experience really helps smooth over the rough edges. This should give us time to “iron out the wrinkles.”
I have highlighted this discussion on the mailing list too. Bitcoin proves that the software itself doesn’t need to provide something to spend bitcoin on. However, we can imagine that it would help to bootstrap Safecoin and provide a immediate damping mechanism for the price.
Moreover, you need a way to account for what you use vs what you provide, even with this simple solution. That adds complexity to the system, which I understand want to be bypassed by the team until required.
As for setting how much free space someone should get, I don’t think this should be hard coded into the protocol. It would be better for every farmer to choose how much space they wish to give away as charity. Perhaps this coule even be a vote to ensure everyone pulls their weight?
I fully understand where the op is coming from. I also think that Maidsafe will respond with a solution if/when the network needs it. For the time being, Safecoin is the first fully cash like cryptocurrency and there will be much charitable support for the network - these will likely be enough for the first while after the system goes live.