What I’m posting here is purely my opinion based on the facts I know about the Safe network so far. If there are any errors please let me know. Well let’s begin.
Bitcoin is a speculative and volatile currency, that is due to the fact that it’s price is determined by what the market is willing to pay for it, and that it is not backed by any commodity. Safecoin on the other hand is backed by a commidity, that being our computer resources (CPU, bandwidth, storage space etc.). Due to this Safecoin’s price will not be as volatile as Bitcoin’s price, and is also not speculative as it is backed by a real commodity.
What this also means is that we will never see major increases in Safecoin’s price. Let me explain :
The SAFE network will have a total supply of 4.2 Billion Safecoins, Currently there are just over 420 Million “Safecoins” in existence. The distribution of Safecoins will take place roughly in this manner :
Now there are two key points here :
- As the number of nodes increase, so do the number of coins being distributed
- There is no “difficulty” as in Bitcoin. Each node receives a fixed amount of Safecoin, regardless of the number of farmers
- This is the opposite of what happens in Bitcoin where as “difficulty” increases due to growth in the network, the number of coins being distributed decrease. (This is why we see the price of Bitcoin rising - Supply/Demand)
Since there is a fixed amount of Safecoin being distributed to each node, the price has to remain constant to keep both the farmers and the users balanced. If the price of 1 Safecoin were to increase, the nodes will be making large profits, while users looking to store their stuff will have to pay extra fees (possibly higher than alternatives like Google Drive, Dropbox). Why?
Becuase there is no difficulty for Safecoin farming, therefore :
(X) amount of farming will always produce (Y) Safecoins regardless of the the number of farmers on the network
Whereas in Bitcoin, as the number of miners increase and subsequently difficulty increase, the number of coins each miner receives will decrease. Therefore in Bitcoin
If there is 1M Miners in the Bitcooin network (X) amount of mining will produce (Y) Bitcoins
If there is 4M Miners in the Bitcooin network (X) amount of mining will produce (1/4Y) Bitcoins
As the rate of supply decreases and the demand increases, Bitcoin’s price can go higher. Safecoin on the other hand has a fixed supply rate, which means farmers will always receive the same amount of Safecoins regardless of the total number of farmers on the network. This is what makes it virtually impossible for the price of a single Safecoin to increase without losing incentive for users to actually use the network.
*Please note I’m not bashing Safecoin, I’m just trying to view this from the eyes of a Bitcoin user. Hopefully this will cause some constructive discussion about the price of Safecoin.
EDIT : My views on this matter has been swayed. The factors which affect the price of Safecoin were incorrect in my post. Therefore I believe that the price of Safecoin will increase quite dramatically in the future. Read the posts below to see the corrections which lead to my new view on the price of Safecoin