Safecoins (How it works)
Safecoins can be earned, traded or purchased. The value of safecoins will be determined by the market, through the combination of supply and demand.
The number of safecoins in circulation will increase based on network use. Almost all early safecoin holders will be farmers, with this supply of resource creating both liquidity and distribution of wealth. It is anticipated that almost all Users will possess at least a few safecoins in their wallet.
Users may trade their safecoin for services on the network, or for cash (or another digital currency) using an exchange. The ratio of safecoin being saved (left in wallets) versus the ratio being issued to Farmers will produce a price point. This point will be the market value of safecoin.
Resources and currency
Safecoins are used to access services on the SAFE Network. This encourages constant reuse which results in increasing demand for a finite resource. As a result, the value of the safecoins increases over time. While the coins themselves increase in value, the amount of network services (resources) they buy also increases. This is shown in figure 1.
Farming is a process whereby participants provide resource (storage space, CPU and bandwidth) to the network, and earn safecoins in exchange.
As Figure 2 demonstrates, the safecoin earning algorithm is based on a Sigmoid curve, in that all Vaults earn, slowly at first and the rate increases as the Farmer stores up to the network average. The earning rate also takes into account the rank of the Vault, a process whereby the network scores the usefulness of each node from 0 (being the worst) to 1 (the best). The safecoin farming rate is ultimately the result of the network rate, a balance of the demand and supply on the network, multiplied by the vault rank. The network rate will start to level at 20% above average, thus discouraging massive vaults which would bring centralisation to the network’s farming process. Safecoin is allocated to Farmers by the network and is paid to the successful node as data is retrieved from it (GETS), as opposed to when it is stored (PUTS).
The network automatically increases farming rewards as space is required and reduces them as space becomes abundant. Data is evenly distributed on the network and therefore farmers looking to maximise their earnings may do so by running several average-performance nodes rather than one high-specification node.
Safecoin transfer mechanism
Unlike bitcoin, the SAFE Network does not use a blockchain to manage ownership of coins. Conversely, the SAFE Network’s Transaction Managers are unchained, meaning that only the past and current coin owner is known. It is helpful to think of safecoin as digital cash in this respect.
One of the major problems any virtual currency or coin must overcome is the ability to avoid double spending. Within the SAFE Network, transfer of data, safecoin included, is atomic, using a cryptographic signature to transfer ownership.
Safecoin, the currency of the SAFE network, is generated in response to network use. As stored data is retrieved, or as apps are created and used, the network generates safecoins, each with their own unique ID. As these coins are divisible, each new denomination is allocated a new and completely unique ID.
As the coins are allocated to Users by the network, only that specific User can transfer ownership of that coin by cryptographic signature. For illustrative purposes, when Alice pays a coin to Bob via the Client, she submits a payment request. The Transaction Managers check that Alice is the current owner of the coin by retrieving her public key and confirming that it has been signed by the correct and corresponding private key. The Transaction Managers will only accept a signed message from the existing owner. This proves beyond doubt that Alice is the owner of the coin and the ownership of that specific coin is then transferred to Bob and now only Bob is able to transfer that coin to another user. This process is highlighted in figure 3.