i think coins are destroyed when they are spent to buy resources, if someone lose credentials the coins are not destroy.
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If someone permanently loses their account credentials then all of the safecoins in their account are unrecoverable and will never again circulate between the users and the network. Their utility has been destroyed. This is analogous to losing the private key to a btc wallet.
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This is true that their utility has been destroyed, though from the network’s perspective they’re still assigned, so make up a part of the 4.3bn max supply, effectively reducing the active supply.
So, if 20% of coins have been lost in dead accounts, the max active supply is reduced to around 3.4bn.
This is perhaps analogous to a reduction in the money supply of a fiat based economy, as those coins are out of circulation & have no active role.
I’ll try to get some thinking together on the ideas for simulations soon, as I like the idea, but I’m still lacking capacity right now. It should ease in a month or so & I’ll give it more time 
wrong.
When a coin is spent the network DESTROYs the coin The underlying MD no longer exists
The coins will still exist though. You could still read the contents of the coin’s MD even though the person may not have access to the keys to send them anywhere
SAFE is different to all blockchains. Each coin is its own MD and each coin will be destroyed when spent to the network. And will be recreated at some stage
Here is a simple simulation of coin issuance & recycling I’ve just done
- done on a monthly basis and simplifies farming rate to a range that the simulation randomly picks a value in
- The same for #gets and #puts done per client - Range and randomly chosen for each month
- note the #coins issued and #coins spent to buy resources (@jlpell that is they are destroyed)
- EDIT: Note that I have also ignore the dev rewards, but all that happens is that there are more coins available to upload data with and effective the result over time is that the #coins issued is higher and #coins spent for resources will be higher and a similar graph is expected. The point of this simulation is to show the much much higher # coins cycling than the actual #coin addresses available
EDIT: I also noted that during the linear growth phase that the coins existing also rises rather linearly over the years. And when SAFE is in the last phase that the coins existing could be rather flat and continue for a few more decades before being 99% issued. One reason for that is the scarcity factor slowing the issuance rate. Even so the coins will seem to be unlimited for decades 1, 2, 3 and maybe 4 & 5
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I view that as the network claiming ownership of the coin. I’m pushing the narrative to try and decouple the high level structure of how the economics operate from the low level functions of how the network does what it needs to do.
At a very high level when someone buys PUTs from the network, they spend a safecoin and transfer ownership of their coin to the network.
So you have a network pseudo function like :
Safecoin.chown(thiscoin_id, from_current_owner, to_network)
The details of how that ownership is transferred is up to the devs. Maybe it is far more secure as you say to just delete the MD, maybe there are benefits to leaving the MD and changing the ownership metadata to a root ID for the network.
The semantics are important to the untrained eye though, because stating that an infinite number of coins can be issued will confuse people. There are 2^32 safecoin ids forever and always(ignoring brute force divisibility 
) , any given id is either owned by the network or a person. When I go to the store/bakery to buy some bread, the person behind the counter doesn’t destroy my money and then issue some change out of thin air to pay the farmer who grew the wheat.
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BUT it is not.
The RFC relies on the MD being destroyed for its processing.
The scarcity algo simply looks to see if the address has a coin or not. Very quick processing and network time. If the coin was simply owned by the network then the time to check if the coin is owned by someone or the network involves reading the MD and checking the owner. So instead of a few milli seconds to see if it exists compared to upto a second to read the MD is of upmost importance.
So no matter how much you want something its not correct.
The narrative simply doesn’t have to mention that process at all for the beginner or casual reader. Such as the article @SarahPentland wrote. But whomever wants to write authoritative narratives will benefit greatly from knowing what actually happens.
One of the key differences of SAFE to other systems is the recycling and in product recycling we destroy the original product and rebirth other products from the materials - same for safe we destroy the MD and recreate it from the storage structure that is SAFE. In SAFE we destroy the coin and Recreate it for the farmers. It is a key selling point and one thing that makes SAFE unique. To have the network simply move coins around makes it like a blockchain where the coins are issued once and thats it. 4 billion and thats it. Even if you give them out more than once. To say you destroy the coin means people can understand how you are able to create more than 4 billion coins.
Thanks for the feedback everyone! It’s been really interesting looking into all these issues. We are working on an updated diagram as well
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Great job you did.
I suggest perhaps changing “10% of ALL” to something like “10% of what farmers receive” and similar for core devs. While not precisely accurate, it should be good enough for an introduction.