The Economics of Safecoin

so my name is Joel and I've been working here at the at the Embassy for the last few months studying up on crypto currencies and I'm excited to present a little bit more into the economics of safe coin and examine some of the future models that could be built on top of that going forward so as founder David Ervine alluded to in the clip we just heard the fundamental problem we're dealing with here is centralized data structures and this presents three problems for us one is control points or surveillance two is failure points or security and three is traffic points and speed so inherently the current structure of the Internet requires us to sacrifice surveillance security and speed to some degree and that is naturally a problem the reason it's a problem is because data is the most valuable commodity in the world it's so fundamental to the way that we communicate and it's something that even beyond it being a commodity just to us but for human to human interaction across the internet it's something that is essentially priceless recently even the World Economic Forum classified data as an asset so another way that we look at it it's in our best interest to protect it the current revenue model of the internet however is based on selling data and profits flowing to centralize and entities so future models need to put users at the heart of the equation and incentivize more collective network behaviors so the solution as proposed by made safe is a secure decentralized data storage network and the architecture is designed to constantly circulate small bits of encrypted data throughout a decentralized network of distributed computers to make this a success and to reach a state where the network becomes fundamentally stable secure and lightning-quick but you need to be able to scale it to millions of users and so to accomplish that you need an incentive and volunteer incentives are not enough to facilitate continued Network growth I mean I think it's at the beginning lots of people would say oh this is great I want to join you know what can I do help and not may get it to a certain level but not to the level that David Irvine and the team it made safe and you know everyone who's participating in it wants to get it – and that's why economic incentives are necessary and that is that's the genesis of safe coin which I'm about to get into the creation of a token or a cryptocurrency to incentivize network behaviors and facilitate continuous network growth so the safe coin is a token that represents data resources so fundamentally there's going to be 4.3 billion coins produced during the life of the network but obviously those won't all be released at once and the safe coin can only exist on safe Network and its distribution is handled entirely on a per user basis through mechanisms that will that I'll talk about further into the presentation it utilizes a proof of resource mechanism so the network is continually validating which nodes are providing it resources in a mathematically viable way so the nodes will be all the computers and devices that are connected to it in this kind of ever-expanding network and the for the people that actually I mean in Bitcoin it's mining in it's farming and so farmers will be paid by the network for providing computer resources to the network so that's that's the economic incentive that we talk about but it's all fundamentally backed by data and I think that's one of the things when we start to look at the whole economic model that makes safe coin unique and because we have such a big incentive to protect that data in in this world that's what makes it a really a very you know economic model so to speak and while incentivizing this network behavior is the primary role of safe coin there's also kind of emerging roles that will come that will become inherent to safe coin over time such as a store of value or a payment mechanism as the ecosystem of wolves and that's why it can truly become a real currency in the in the sense of how we normally think about currencies so there's all there's a lot of similarities between safe corn Bitcoin and that both are decentralized autonomous currencies secured by math I think those are the the main three off the bat but there's there's some there's some differences between the way that they're structured in design how many people here know what the Bitcoin blockchain is okay so most people so that is a public ledger to record transactions and prevent the double spend problem that's that's the backbone of Bitcoin so safe coin has a different mechanism which is called group consensus which I'll talk a little bit more about on the next slide but while bitcoin is a public ledger safe coin is anonymous in that the transactions are all processed in groups rather than across an entire the entire network and the big characteristic as a result of that is that safe coins confirmation time is basically instantaneous and that's part of the vision that this will become this kind of digital cache essentially where it can all move it's you know instantaneously so obviously that that's that's different to to Bitcoin in terms of confirmation time the ledger system and the blockchain consensus but both are designed fundamentally to function as as crypto currencies so group consensus without going into like too many details about it basically on the safe network as a whole you'll have these closed groups and each group will contain 32 members and consensus much must be reached by 28 of those members for a certain action to be taken place now the groupings are determined completely mathematically it's not by geography or by social by friends or whatever so when a transaction takes place through within safe Network it's it's done by cryptographic signatures to authorize the transaction and the process itself is governed by what's called a transaction manager so on the left here this would be the users computer and they log in through the the safe the safe client and this is the vault and the vault is where on every individuals every individual machine was where the data is stored now within the vault you have what's called these personas and the persona essentially just plays a role for safe network in this case the role that we're looking at or the persona is the transaction manager who ensures that this transaction goes through properly and so in this case we have Alice here on the left and and Bob on the right and so the transaction manager will check that alice is the current owner of the key by retrieving her public key and confirming it has been signed by the correct and corresponding private key so transaction manager is governing this cryptographic signature process and the transaction manager will only accept a signed transaction from the current owner so I didn't get a very kind of granular level that's that's fundamentally how it works obviously again the big difference when compared to two Bitcoin is is the blockchain and so not everyone in the network will see this transaction the transaction manager is concerned with the current owner and the the proceeding owner only and this this makes it an anonymous transaction so in terms of the breakdown of where the safe coins will be distributed so core developers are those who are developing the actual core code of the network out builder would be someone who would be building a third party up of any type really in the network I mean I think Francis had a few examples of you know Dropbox tile things messaging video chat whatever but the majority will be distributed by farmers and that's – there's a number of reasons why that is but that's to kind of distribute this wealth in terms of you think about about the whole kind of safe economy and and so yeah basically core developers will get 5% out Builders 10% and farmers 70% but that's not released all at the beginning it's released over time because the actual release of safe coins is is is directly correlated to the demand for data on the network so it's not like a bunch or release arbitrarily at the beginning it's all based on data demand and that's represented here so this is how farming fundamentally works this is what's called a a sigmoid curve and the idea is that vaults will earn slowly over time and then the rate increases as the farmer stores up to the network average so here we see the Network average so at the beginning it it's slow and then once you get to this Network average point basically your reward increases exponentially and then once you get to that point they're 20% above average it flattens out and that that's by design so vaults are ranked on their usefulness from zero to one and not determines their earning power and the safe coin farming rate is ultimately the result of the network rate which is a balance of supply and demand like I said for data on the network multiplied by the vault rank so a vault will be ranked from zero to one and that's correlated to the actual network demand and that will determine the network reward ratio so the reason that this is is is represented in this way and this is a sigmoid curve and the incentives are designed this way it's prevent centralization of mining and to ensure that that safe coin are distributed as much as possible throughout the network because the vision is that everyone who is part of safe whether they're small participants or big participants will be able to participate in the the farming upside so there won't be like specialized hardware devices and and huge you know like farming data centers it's going to be more I guess democratic for a lack of a better term and it will be better in in the safe Network if you're a farmer it will be better to have multiple devices as opposed to like one big specialized device so now this this one we're starting to look at the actual economics and the pricing of of safe coin and you can see here market initial value so ten percent of safe coin was sold in a crowd sale last year so there is there's an active market already established for it's called made safe coin right now because it trades over a over third party exchanges but once the safe network launches then this will trade within safe Network and so the price is a result of supply and demand set by the market purely and the number of safe coins in use will increase based on the network use as I've said and because almost all safe coin holders will be farmers this will create this kind of liquidity and distribution of wealth within the network so this part where we see the price increasing over time is based on the idea that as the number of opps grow safe coin apps and the utility of the coin increases the supply of safe coin will also increase in the sense and we would expect the price of the safe coin to increase at the same time the cost of resources that curve is representing the cost to actually store data on the network and so that even coming out of the gate that is anticipated to be less than the cost that you would pay on something like cloud computing but because we expect this this this kind of exponential growth of the network you expect that curve to come down to you know not zero but very low over time as well so I think that the way that this could unfold as this ecosystem grows is initially like I said previously it's a it's it's big some data it's based on the demand for the data within the network that will determine the value of the safe coin but as more apps come on there and people use it and and it's utility ultimately increases that will also release more safe coins so there'll be more farmers farming and those farmers will have a continuously greater incentive over time to continue farming it's just kind of it is that will continue to build and build and build and as a consequence the price would also go up so they'll be hopefully many reasons to spend safe coin through third-party apps on the network but also to hold safe coin on the network as well and I think that's the economic model that works best to achieve the vision that's been laid out which is to create this very you know secure stable and unsafe network where everyone feels that they ultimately at at the end of the day their data is protected and they're incentivized to to grow their their businesses or their activities within that network so just in summary safe safe coin will be and safe network will be surveillance free the data will be fundamentally secured and the speed of transactions will be instantaneous and that in and of itself again if successful would enable just a mind-blowing array of possibilities when we think of where this could be applied or what kind of new models could emerge out of this ecosystem so I think kind of it's like looking at the future potential it's kind of the we can kind of blue sky and and see some some pretty incredible things that could result if this was all successful you

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