Power of the Crowd Series: Number Four

Image: Desi Mendoza
It has been a while since we shared our initial thinking around the challenges facing the internet and we have had some excellent reaction to the discussion so far. We very much appreciate the feedback and it is pleasing to see this is a timely discussion. Everyone from Sir Tim Berners-Lee, Wired and the Economist are all debating the impact and consequences that technology, particularly the Internet, is having on society. There have been many different solutions put forward as the best answer to deep rooted issues such as poverty, inequality and social mobility. We agree the current social and economic model, underpinned by the internet and other technologies, has not benefited everyone equally, but we are not convinced by the proposed solutions, such as universal basic income. Therefore, it is time to put forward our suggested response and open it up for further debate and improvement. As technologists we cannot solve all the complexities, but there are ways to use technology, especially an improved internet, to deliver a fairer, safer and inclusive society.

So how can improvements to our internet infrastructure benefit everyone?
At MaidSafe we believe the solution is community-led, hence why we talk about the Power of the Crowd; but for the crowd to be successful control has to shift from a handful of organisations to individual users and we have to develop an open, incentive-based economic model that rewards participation in a community. Technology will continue to play a sophisticated role, but it should be the enabler, not the source of problems and inequality. Above all those that develop the technology should not be allowed to retain an unhealthy level of control.

We believe this will go a long way to addressing the political/philosophical, rational and emotional debates outlined below.

The Political and Philosophical Challenge
No one has worked out how global societies should move forward in their relationship with technology. A lack of consensus means thinking is being informed by both rational and irrational ideas and uncertainty is becoming the only uncomfortable constant. As technologists we are excited by this uncertainty, but as humans we have instinctive responses to fear and threats, which should not be overlooked. While some describe a future that includes flying cars, autonomous vehicles and neural lace that blur the lines between robots and humans, others see no clear path forwards for themselves and their families. These people are what Guy Standing describes as the Precariat – a new class that has evolved as a result of the rapid advances in technology. This community has no job security, is burdened with debt and living in constant fear of social exclusion. They see robots and artificial intelligence as a threat. They look at the dominance of Google, Facebook and Amazon as unfair. Add to this the growing threat of cybercrime and desire for governments to use mass surveillance in the name of national security and it is easy to see why there is growing frustration. Inherent rights to self-determination, employment, privacy and security are being denied or stripped away.

The response of governments, policy makers and regulators are stuck in the 20th Century at best. They believe mass surveillance powers are the only way to combat cybercrime and terrorism, yet there is no evidence this approach works. To address the rapid address of technology they set up innovation funds to foster economic opportunities for future generations and commission academic bodies to analyse the social impact. Yet they skirt nervously around the big ugly question of control and ownership, particularly that exerted by the internet technology vendors. Jonathan Taplin argues that breaking up Google would lead to the same type of innovation explosion that accompanied the break-up of AT&T. Resorting to regulators always makes markets uneasy but you know there is a problem when even free market advocates like the Economist suggest regulation is required!

Rightly the Economist has identified that it is not technology that defines our current era. It is data and that ceding control of all our data to a few vendors is a bad idea. Furthermore the current regulatory model is not fit-for-purpose as it has failed to keep up with the pace of technological change. The answer is simple. We must switch control back to the user and give the individual the rights, education and skills to make informed decisions about how and when they engage with technology, and those providing products or services via the internet.

The Rational Problem
Perhaps where governments can effectively support this switch in control is to introduce regulation that changes the dynamics of the current internet-led economic model. The most radical answer would be a disbandment of existing intellectual property laws, which the likes of Guy Standing believe concentrate control in the hands of the few. Allowing a small number of companies to hold patents on crucial technologies enables them to defeat competition and maintain regular income flows. This is the key rational economic challenge to overcome. We have to ensure technology does not enhance disparity between the ‘haves and have nots’ but closes the gap.

At MaidSafe, we are sceptical regulation alone can address the economic disparity question. One idea would be that an international governing body oversees the internet and levies a tariff on internet companies, dividing the proceeds between countries to support the expansion of infrastructure and improvement of technical skills. This is unrealistic. Anyone observing the World Trade Organisation attempting to secure agreement on universal trade shows how hard countries find it to set aside national interests.

Another more radical approach is demanding greater adherence from internet companies to the principles of open source and the open web; in particular rebalancing what is considered intellectual property (IP), in order to improve accessibility. It is one of the main reasons why MaidSafe has made the underlying SAFE Network code available under the GPL license and transferred ownership of the underlying and defensive IP to the MaidSafe Foundation, a Scottish charity focussed on fostering education and innovation. Both Jonathan Taplin and Guy Standing talk about the internet companies being the landlords taking rent from those using their IP. We are not suggesting all protection for innovators be removed, but there is an argument that economically we have become over-reliant on patents and should reduce that dependency.

By encouraging the open sourcing of more critical infrastructure technologies it creates the potential for a more even playing field as a start point for those who want access to the internet. Of course the big technology companies will say their business models fundamentally rely on revenue streams from existing products to fund the next generation of products, but they appear to have forgotten that a lot of today’s products and services started out as publicly funded research projects. If commercial companies are going to secure a long-term revenue stream from rentable models then surely they must be encouraged to take a different approach to patents and IP.

More importantly, though it would show willingness from industry to address the even bigger issue of inclusion; despite technologists heralding ever growing numbers of people accessing the internet there are still far too many cut off from its opportunities. Ultimately, this is one issue the policy makers and governments have to address, but adopting a more open source approach can go some way to enabling greater access.
Image Slava Bowman

The Future is a Community-Led Movement
However, we believe the above options do not go far enough. Internet companies, particularly those obliged to report to Wall Street, will always struggle to balance commercial pressures against social good. That is why we have significant doubts about universal basic income, which the technology industry appears to be backing over-enthusiastically. On one level it appears arrogant, suggesting that ‘poor’ people should rely on a form of welfare system to make up for a lack of work. Perhaps we should all be grateful that the top 1% dole out hand outs, but the vast majority of people we know would be offended if their family and future generations had to rely on UBI to get by. It lacks innovative thinking – yes technology will take away jobs, but we also believe it will create new ones and new economic models. Frankly, UBI is not radical enough, borne of traditional approaches to the welfare state.

Our proposal is the network becomes a source of income and economic opportunity based on contribution and participation. Fundamentally it becomes a reward system, where individuals and communities can contribute and feel a sense of accomplishment based on their level of participation. Above all this should be a bottom up approach, led today by communities of like-minded individuals. Network technologies and reward mechanisms are being developed to empower communities to take control of their identities and be more fairly rewarded. This will mean we are less reliant on the dominant internet companies and not waiting for government policy to catch up.

It allows commercial companies still to profit, but it also means users and content producers get to share the spoils. We should be offering users a reward in return for access to their data and we should find innovative ways for users to monetise their computing resources. More and more households and communities will have sophisticated computing equipment which could be a source of capacity that could provide revenue streams when individuals are not working. For example, at MaidSafe we are developing Safecoin, which provides a fair reward and payment mechanism for access to data. Combined with the ability of the SAFE Network to identify the owner of each chunk of data it will be a better way for content producers (artists, bloggers and musicians alike) to receive payment, as well as paying users for access to their spare computing capacity.

The Emotional Challenge
We believe incentivising participation is crucial in addressing the final and most divisive challenge – the ambiguity that the rise of technology has created for many people. Understandably it has led many to react instinctively and angrily to the control of the internet oligarchy. People are worried machines will lead to widespread redundancies and ultimately long-term unemployment with no positive alternatives explained. The only way to address these concerns, which can become very emotive, is to create a community led response. Working together communities should be able to define opportunities, whether they are economic or social. The key is enablement and encouraging groups to work together, which again comes back to rewards and incentives. We already see a lot of this collaborative working in the SAFE Network Forum, which is moderated by members of the community, and MaidSafe is only a contributor.

Using incentives and open source technology will make participation both accessible and beneficial. It will allow groups to work through challenges and create very local solutions. For example, imagine a community-led computing facility that generated income to support the group by offering capacity to the SAFE Network. That income could be shared among the group or used in exchange for products and services with other communities via the platform.

Clearly it is hard to envisage this reality, while the SAFE Network is still in development, but the growth of the SAFE Network Forum emphasises the value of a community-led approach. There is a role for government in supporting these communities, making people aware of them and educating them on ways to participate. This is a central element of the inclusion issue. If governments and education institutions can provide the training and support to help citizens to understand the opportunities this model offers it will empower communities to find their own answers.

However, we should not wait for policy makers to catch up. We have left it to the politicians for too long to come up with the answers and they have failed. We will have far greater influence over our relationship with technology and how it affects our lives if we build a movement that mobilises around our needs. The vision is not one huge amorphous online community, but many different ones focused around common interests and needs, benefiting from open access, being rewarded for participation and being allowed far greater control of our personal data.

One final note to add. While this may seem like a huge and almost unmanageable challenge this is no different to any other stage in history where the pace of technological change has forced a rethink of our approach to society and economics. Take this example:

“The intensity and complexity of life, attendant upon advancing civilization, have rendered necessary some retreat from the world, and man, under the refining influence of culture, has become more sensitive to publicity, so that solitude and privacy have become more essential to the individual; but modern enterprise and invention have, through invasions upon his privacy, subjected him to mental pain and distress, far greater than could be inflicted by mere bodily injury.”

This was written in 1890 by Samuel D. Warren and Louis D. Brandeis in the Harvard Law Review. Similar to today’s technology, advances in photography in the late 19th century were seen as seen as hugely disruptive to society. We survived that inflection point. We got some things right and some things wrong. I’m sure with a willingness to take some brave decisions and a community-led approach we will get through this next stage in our relationship with technology.

The Next Generation Sharing Economy

The press has been deluged in recent times with reports about the surveillance and eaves dropping employed by intelligence and security agencies around the world. Barely a week goes by without a new revelation being announced. But it cannot be ignored that surveillance is big business and this is in fact the way in which many of the largest Internet companies make the vast majority of their revenue. These businesses don’t call it surveillance of course, they call it advertising.

Google generated revenue of $66 billion in 2014, 89.5% of which came through advertising, while Facebook generated 88.5% of their $12.5 billion revenue via the same source. As I said, selling access to us and our data is big business. American cryptographer Bruce Schneier summed the situation up very nicely advising that ‘surveillance is the business model of the Internet’. Informing us, as others did before him, that we are not the customers of these services, we are the product itself, the advertisers are the customers.

This model has been the dominant force for a number of years, but is it all the fault of the Google’s and Facebook’s of this world? Can we lay all the blame at their door? Maybe in part, but we were the all too willing recipients of the ‘free’ services. I suspect that only a small minority of us stopped to think that the seemingly complementary search, mail, maps and social networking platforms came with a higher price. Although most of us didn’t realise the extent of it at the time that price was and is our privacy.

But it is not only our freedom and liberty that is at stake. Our economic well being is also at great risk. This may seem a counter intuitive statement at first glance, how can free services be bad for our economic situation? It may be bad for our privacy, but surely it’s good for my wallet!

Companies such as Google and Facebook act as central intermediaries between us and our data. They pay a substantial amount on infrastructure costs (servers, data centres, support staff…etc…) which they use to host their platforms and our data. But when you think about it, how much information and useful content do they actually produce? The answer you quickly realise is very little. They are in fact aggregators and organisers of other people’s content.

So if you think about YouTube (owned of course by Google), Facebook or Google search, it is not their video’s, feeds and search results being shown, they are ours. We are the content creators here, yet how much are we financially benefiting from this arrangement? Very little of that $66 billion is coming our way.

So, this centralised architecture also centralises who benefits financially from the Internet, creating what technologist Jaron Lanier (in his excellent book Who Owns The Future terms ‘a winner take all economy’. Consider the following chart.


What this depicts is a minority of earners taking the vast majority of the revenue, concentrating the power and wealth in the hands of just a few. This is what the centralising architecture of the Internet currently creates and this is the economy we continue to choose to support when we use these services.

Our desire for free (in the monetary sense) content and free services will lead to an ever greater sphere of influence being harnessed by an elite group of people and companies, making decisions that improve their own financial well being, not ours. It should not escape our attention that many of these large Internet companies are public, significant as the law dictates that their duty is to increase the profitability of their shareholders which is likely only to exacerbate the problem.

As Lanier points out, there is an alternative to this winner take all economy, however, one that will improve the online distribution of wealth. That is to reward everyone that contributes to the Internet, directly compensating the content creators rather than channeling the incentives into the hands of just a few. It would seem like a much fairer and more sustainable system where we provide value to those who create it, rather than those who aggregate it. Don’t get me wrong, aggregation and the hosting of others data is a valuable service, but it should not receive 100% of the reward.

In this context, content creators could be a: blogger, journalist, artist, film maker, musicians, application developers, even end users with a social network account and a video camera. As my colleague Paige Peterson pointed out in an earlier post, the advent of crypto currencies like safecoin, with their almost zero transaction fees, enable almost instant micro payments and donations to take place.

Bloggers could be paid or tipped by users as their posts are read and enjoyed. News websites could function in the same way, or they could charge a subscription for providing well researched and useful information. Potentially, artists and film makers (this also includes those sharing funny home clips on YouTube) could make use of the SAFE Network’s optional watermarking system to ensure that they are rewarded as the originator of content and continue to be rewarded as snippets of their song or film are built upon and used by or aggregated by others. Digitally recording the content creators (through an anonymous ID) of each piece of work will enable the network to manage and pay out rewards without human intervention and without corruption.

Some content creators may earn slowly at first, but as their content is used over and over again and accessed by a global network of consumers, their income will grow. This will give rise to a possibility of migrating from a ‘winner take all economy’ to a more bell shaped distribution of wealth (depicted below) where income is much more evenly spread amongst a greater volume of earners. In this paradigm, power and wealth would not be focussed toward the elite minority creating a next generation sharing economy.


We may also find that under this new model the content itself will start to improve. The act of paying for something would increase user expectations and we would demand better material from creators who potentially have more time and effort to devote to their chosen area as the ‘real’ jobs used to pay the bills are no longer required.

You may be reading this in agreement with the concept of paying for content and the benefits it may bring, but believe the mindset and economic shift required to make this transition too big and unrealistic. Why would people voluntarily start paying for something that we currently get for free? If I was suggesting that people pay with existing FIAT currencies then I would be inclined to agree. But if users were rewarding content creators with safecoins that they earn by contributing their spare computing resources to the network then I believe you have something very exciting.

Safecoin will have a very low barrier to entry, making it possible for anyone with a standard commodity PC and an Internet connection to earn them. The SAFE Network also enables micro payments to occur at network speed with almost zero transaction fees. Content creators can then convert the safecoin they receive into another crypto currency or even into cash using decentralised exchanges

With the SAFE Network coming to fruition in the not too distant future, I anticipate that it is the beginning of the end of our reliance on advertising and surveillance as a business model. The technology companies of the future will be fairly compensated for the service they provide (1 x safecoin per hundred searches, or 1 safecoin for every 20 posts, for example) on a new Internet where creating valuable data will become the new dominant business model in an economy in which we all share.

A Teacher’s Perspective

Yesterday on the MaidSafe forum, we received one of the most touching posts I have seen since the forum started. It was from a unexpected source, a high school teacher in Brisbane, Australia. The text that follows is a complete copy and paste from the original post and explains the impact that the SAFE Network has had on a small group on the opposite side of the world.

Hi David, Nick and the entire MaidSafe family! smile

My name is Chris and I am a state high school teacher from a school near Brisbane, Australia. I just wanted to let you know what part of my typical day at school looks like, and provide you with some hopefully interesting insight that is almost certainly unique.

I arrive at around 7:30 in the morning (classes start at 8:30) to set up my classroom for the day. It doesn’t take long until around 10 or so of the early arriving students show up at the door with the same question every morning, “Have you updated the prices yet?” There is a large screen at the front of the room that permanently displays the price of MaidSafeCoins, with a graph tracking the price in AUD for the past 90 days. I update this manually each day, hence the question as the students don’t like to be left waiting, looking at yesterday’s outdated prices! lol

More students arrive over the next hour and there is a flurry of activity as they discuss the slightest movement in the price, or any relevant updates on the forum. By the time the bell rings for class enough discussion has gone on to give one of your team meetings a run for its money I suspect! wink The same thing happens during lunch break, when up to 30 or so students can regularly be found sitting around discussing MaidSafe in the classroom over lunch.

Currently 65 students, mostly Year 11 and 12 (16-17 year olds) have MaidSafeCoin balances that I am aware of, along with several other ex-students and staff. Collectively we would be sitting on over 1 million MaidSafeCoins. We only came onboard after the crowdsale, but we have been consistently accumulating ever since the second half of last year, particularly when the price takes a dip. New students get involved all the time, with some quite literally buying a few MaidSafeCoins with leftover money from their canteen purchases.

We don’t post on the forum (this post will be the first), but we certainly read, and decipher the technical aspects as best we can (we mostly focus on the weekly dev updates). We wait patiently for testnet 3 and have a lot of ideas lined up for how we will approach the beta launch and beyond (as investors and users).

Here are some insights that I would like to share:

  • Teenagers “get it” – they know what this technology could be, and the possible implications for them, and they want in!
  • Interestingly, they find this much easier to understand than Bitcoin (maybe I just explain it better?!?)
  • We are all hugely appreciative of the massive amounts of time and effort the team puts in to get this up and running as quickly as humanly possible, and the underlying intelligence of the concept and the way things are done by the team – David is our hero! (even though we often struggle to understand him through the accent when we watch the YouTube videos of him in interviews and such! hahaha)
  • We check out the Jira Dashboard every day, and hope that one day soon the green line will catch up to the red one! wink
  • The students think it is pretty funny when “proper adult investors” are less patient than they are – they don’t understand why everyone is in a such a rush for the price to go up – they like it to stay low because they can buy a lot more the longer it does (they realise they are racing against the clock to accumulate as much as possible as quickly as possible!)
  • The student’s naturally and automatically trade MaidSafeCoins with each other when they don’t have cash on them, without a second thought (imagine when the system is live and it is actually easy to do that!)
  • Their interest in this project and the levels of self-motivation surrounding it is very exciting to witness – they have learnt more about the world of investment and finance (they are getting to be almost expert chart readers!), as well as the other technical learning from the forums and videos surrounding the actual invention itself, than I could ever hope to otherwise teach them.
  • If this is what happens when a group of ordinary teenagers, from an ordinary school, do when they find out about MaidSafe… this thing is going to be bigger than any of us can even begin to comprehend! smile

Thanks for everything that you are doing, and know that some of your biggest fans and supporters are not visible on the forums. They include a group of kids playing around with the thought of using your invention one day soon, sitting in a classroom on the other side of the world.

Keeping Safecoin Decentralised

Vigilant readers of this blog will have noticed that MaidSafe is very focussed on decentralisation :). So much so in fact that we don’t use a blockchain for consensus and we are setting up remote developer pods to compete with us to maintain the underlying network code. It would therefore be unfortunate if safecoin farming became centralised, putting a large proportion of safecoin in the hands of just a few large groups. While other projects have attempted to tackle this issue technically, MaidSafe has taken a different approach and focussed on economics.

The following high level overview is taken from a section of the safecoin paper that we published a few weeks back. The reason for regurgitating it here is because not everyone likes to read papers and this is an area that many within the community have shown a particular interest in. While this information does not get us much closer to predicting how many safecoin you will earn for providing X resource, it does convey the over arching intention of the design.

As figure 1 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.

safecoin farming speed

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 them 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.

Consensus Without a Blockchain

A key requirement of distributed computer networks are consensus systems. Consensus systems enable a specific state or set of values to be agreed upon, without the need to trust or rely upon a centralised authority, even if nodes on the network start to fail or are compromised. This ability to overcome the Byzantine, or Two Generals Problem makes effective consensus networks highly fault tolerant.

Approaches to reaching consensus within distributed systems are likely to become an increasingly important issue as more and more decentralised networks and applications are born. IBM’s paper, Device Democracy, confirms that big blue envisions the computing platform powering the Internet of Things will be decentralised. A view that further validates what the Bitcoin and decentralised computing fraternity have known for some time, that decentralised networks offer an efficiency and robustness simply not possible in centrally controlled systems.

Why Not Use a Blockchain?

Almost all consensus based systems with the crypto currency community, Bitcoin included, use a blockchain. An immutable, append only, public ledger that maintains a database of all the transactions that have ever taken place. While the benefits this ledger provides are advantageous for many different types of operation, it also comes with its own set of challenges.

One of the most commonly cited issues is the problem of scalability. Specifically, that in order for the network to reach consensus, this increasingly large and centralising file must be distributed between all nodes. In the early days of the network this wasn’t such a major issue, however, as the network continues to increase in popularity the Bitcoin blockchain is now a 27GB file that must be synced between the network’s 6000 plus nodes.

So, if we move the concept of consensus into the context of a decentralised data and communications network, we can start to evaluate how effective the existing bitcoin consensus mechanism would be.

Within a data network, if an end users makes requests via the client, they expect to be able to set up their credentials, store or retrieve their data instantaneously and know that the operation has been carried out correctly. In essence, they require network consensus to be reached at network speed (in fractions of a second), a tricky problem to solve in a large decentralised network. Within the Bitcoin network, this first round of consensus occurs after 10 minutes, with each further block consolidating the transaction. This transaction speed is clearly unacceptable in a data network environment and any attempt to increase block speed to circumnavigate this issue will have significant negative consequences on security.

Close Groups

What we need is a decentralised consensus mechanism that is both fast and secure. But, how do you reach consensus rapidly on an increasingly large group of decentralised nodes without compromising security?

The answer lies within close groups. Close group consensus comprises utilising a small group, a fraction of the network size, to state a position for the whole network. This removes the need for the network to communicate with all nodes. Within the SAFE Network the close group size is 32 with a quorum of 28 required to enable a specific action to be taken. An example may help explain this point.

Lets assume that Alice was to store a new photo. As Alice stores the image it is encrypted and broken up into chunks as part of the self encryption process and passed to a close group of Client Managers. This close group are comprised of the closest vault IDs to the users vault ID in terms of XOR distance. This is distance measured in the mathematical sense as opposed to the geographical sense. The Client managers then pass the chunks to thirty two Data Managers, chosen by the network as their IDs are closest to the IDs of the data chunk, so the chunk ID also determines it’s location on the network.

Once consensus is reached, the Data Manager passes the chunks to thirty two Data Holder Managers, who in turn pass the chunks for storage with Data Holders. If a Data Holder Manager reports that a Data Holder has gone offline, the Data Manager decides, based on rankings assigned to vaults, into which other vault to put the chunk of data. This way the chunks of data from the original file are constantly being monitored and supported to ensure the original data can be accessed and decrypted by the original user.

A client trying to store a piece of data that currently has no consensus because they don’t have enough safecoin, for example, would be refused.

Cryptographic Signatures

This use of close group consensus is not used for every operation however. Utilising this complexity for every operation would be inefficient and put an unnecessary load on the network. Close group consensus is only used for putting data on the SAFE Network, such as a file, a message, or in time, computation. For making amendments to data, such as changing the contents of a file (creating a version), or sending a safecoin to another user, cryptographic signatures are used to authorise the action.

Cryptographic signatures were first conceptualised 50 years ago and products containing their use were first widely marketed in the late 1980’s. The SAFE Network utilises RSA 4096, a very well established and tested algorithm.  Cryptographic signatures mathematically validate the owner of any piece of data and can prove this beyond any doubt, provided the user has kept their private key safe. If the end user is the owner of any piece of data and can demonstrate this fact, by digitally signing their request with their private key, the network permits them access to change the data.

Avoiding the double spend

The lack of blockchain raises one additional question though. With a distributed immutable ledger, how do you eliminate the problem of the double spend? This is something managed so effectively by the Bitcoin network, which verifies each and every transaction and records it on the blockchain.

Safecoin, the currency of the SAFE network, is generated in response to network use. As data is stored, 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, highlighting the importance of having a 2 ^512 address space.

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 sending of data (coins) between users is contrary to the Bitcoin protocol where bitcoins aren’t actually sent to another user, rather bitcoin clients send signed transaction data to the blockchain.

This is not an attack on blockchains

The lack of blockchain means that it is not possible to scrutinise all the transactions that have ever taken place or follow the journey of a specific coin. In this respect safecoin should be thought of as digital cash, where only the existing and previous owners are known. Users who value their anonymity will see this as a distinct advantage and it should not be ignored that this enables an unlimited number of transactions to occur at network speed.

However, this blockchain-less (yes a new word) consensus mechanism does not provide the scrutiny and transparency desirable in some financial systems, or in general record keeping. This raises an important point. It is not the intention here to suggest that one consensus mechanism is better than the other, or that there is one consensus mechanism to rule them all. Instead, we should consider that each is better suited for a different purpose. This is why the incredibly bright future for distributed consensus will come in many forms, with each iteration better than the last.

To find out more about the SAFE Network and how it works, please visit our System Docs.

Rebrand safecoin, the digital currency of the decentralised network

MaidSafe are seeking talented designers to take part in a competition to design a logo for safecoin, the crypto currency of the SAFE Network. Potentially seen by millions, safecoin is the oil in the engine of the network, encouraging end users to provide their spare computing resource while incentivising developers to create great applications.

Safecoins will be used to access the network and use any of the services on it, such as messaging, VOIP, storage, exchange platforms, media streaming…etc…

Announced by Coin Telegraph, the competition went live today on design platform 99 Designs and in addition to the site prize, the winner will also receive 5000 safecoins, once the network is publicly launched later this year.

Safecoin differs from many other currencies as it does not use the block chain, instead running on the SAFE network transaction manager, which enables millions of transactions per second with transaction confirmations occurring at network speed (in seconds). On SAFE, the transactions are not chained, only retaining the existing and previous owner, and therefore providing each users with complete anonymity.

The winner will be chosen by both MaidSafe and the SAFE Network community members. MaidSafe will judge the opening round, reducing all entrants to a short list of no more than six. The SAFE community members will then judge the final round, picking the winner by voting on the community forum.

The Economics of Safecoin

Great, another crypto currency! (heavy hint of sarcasm)

When the idea of incorporating a crypto currency onto the SAFE network was first formed, it did not take too long for it to be accepted as the way forward. Not only had David (our founder) invented a crypto currency (Perpetual Coin) as part of the original network design way back in 2006, but we could also see how it could serve to incentivise all stake holders across the network.

Farmers would be paid (by the network) for providing their computing resources (Proof of Resource) to the network. Third party app developers (called Builders in SAFE network speak) would code their safecoin wallet address into their apps and be paid by the network depending on how much their app is utilised by ends users, a gauge of the apps usefulness.

Safecoins would also be used to compensate developers working on the core code in return for making continual improvements to the underlying SAFE network. Initially this is likely to be predominantly core MaidSafe engineers and in time this work to will be taken up by third parties via the MaidSafe developer pods.

However, safecoin, now the chameleon currency, has roles to fulfil out with incentivising network behaviour, it must also act as a store of value with a payment mechanism while also functioning well as an investment. Safecoins were used to provide early funding to the MaidSafe Foundation from backers supporting the SAFE network who bought safecoins using other crypto currencies (bitcoin and mastercoin). Some safecoins will also be set aside for the initial equity investors in MaidSafe who took significant risk and believed in the project from a very early stage. These investors could swap some or all of their investment in return for safecoins at a later date should they choose to do so.

So, it is clear that safecoin has some difficult ground to cover.

What about free use?

One of the most important things for any new platform is that it requires early adopters and lots of them. While the MaidSafe Foundation will be using some of the funds raised from the crowd sale to seed the network, real users will provide the oxygen for a strong, healthy and robust network. It is therefore desirable to put as little as possible in the way of new users picking up the technology and using it.

‘Let them join and use the network, including storage, free of charge!’

At first glance this may seem like an illogical approach, it certainly did to me when I first heard it. I thought the long days and even longer nights were truly starting to take their toll on David when he first suggested it. If truth be told, I thought he was a few fries short of a Happy Meal! The community on our mailing list and in our forums also voiced and debated a number of concerns with the approach, including:

  • Tragedy of the commons 
  • Devaluation of safecoin

Tragedy of the Commons is an interesting problem. From a SAFE network perspective the concern is that some users may choose to store huge amounts of data on the network, way beyond what they are able to provide. Should enough users try to take advantage of the system in this way, the network will essentially run out of resource. This social dilemma has been witnessed across all aspects of human endeavour including; population growth, pollution and even spam email!

There are however aspects to the network that lessen the impact of a Tragedy of the Commons. To save space, the system keeps only 4 live copies of any piece of data. It is able to do this by using the unique hash of each chunk to identify other identical pieces of the data on the network. So, if 10,000 copies of The Beatles ‘A Day in the Life’ are uploaded, the network will identify that they are identical and update the subscriber count to 10,000, but keep only 4 copies of each file. This process is called de duplication, and while it works more efficiently with very commonly used pieces of data, like songs or books, it is not as effective for media rich bespoke data, like family photo’s or home movies. That said, very efficient de duplication algorithms can expect savings of up to 95% across all types of data and rarely less than 50%.

Another feature of the network is that Farmers are only rewarded with safecoins as data is retrieved (get requests) from their vault, not when it is stored. The frequency of these requests define the mining speed. The more data stored the more likely a request will occur and it will not be possible for nodes to selectively store data, they either store it or lose it. Losing data reduces rank and mining speed. The nodes will mine at greater rates as they store more data.

If people were to try and game the system by providing farmers to store data and then switch them off, they will simply remove their ability to earn. At some time in the future it is envisaged the network will be able to detect such data and remove it from the network. In the meantime, this kind of attack is costly to the perpetrators as their earning potential is adversely affected by their actions.

Safecoin must have a purpose

So, tragedy of the commons may be less of an issue than first thought. However, a second and potentially more serious issue is: If access to the network is free, then what purpose does safecoin serve? Without a purpose it will be valueless, not only to the Farmers and Builders, but also to the crowd sale participants who parted with hard earned crypto currency to get involved. While the network doesn’t need safecoin to exist, a lack of purpose for safecoin would devalue the currency and seriously reduce the incentivisation aspect of the coin.

Lets charge a micro payment for basic access to the network!

The problem with this approach is only 10% of all safe coins have been generated at this point, with the rest being generated by the Farmers providing resource and the Builders providing applications. Safecoins will be scarce, relatively speaking. If everyone needed safecoin to access to the network it would limit the number of early users. It may put more demand pressure on exchanges opening up to facilitate new users acquiring the coin (this would likely to lead to an increase in the price of safecoin as an investment), however it will still limit access to the network.

Make access to the network free and users pay safecoin for other services

Now I think we are starting to get some where. With this approach we are starting to edge toward a freemium model, where users are able to access the network without safecoin and store a certain level of data, but will need the currency to access third party applications, or for extra storage space, such as storage space above the network average. Both bandwidth and storage are scarce resources after all. Using this method, users who only utilise the SAFE network as a large disk without using any of the other applications sitting on top of it will need safecoins to store a large volume of data. This method will also help to reduce the possibility of a Tragedy of the Commons situation.

In addition to safecoin payments for third party applications (it is possible to develop any of the services that exist on the current Internet and more on the SAFE network), organisations and businesses may also use the SAFE network for high performance computing, a super computer on demand, much like Amazon’s EC2 service, MapReduce or Hadoop clusters. So, for analysis of very large data sets, such as Genomics, health records, astronomic data or credit card fraud information, for example, organisations would be able to harness the power of the SAFE network. As there are no infrastructure costs it would be possible to provide these services, using safecoin of course, for way less than the competition. These businesses would need to buy safecoins for this purpose using one of the many online exchanges that are likely to open up (we are already speaking with one provider and expect more to follow suit).

Now that we have utility and are creating demand for a finite resource, it would seem reasonable to expect the safecoin price to rise. This will reward the crowd sale backers for their early support, Farmers for providing resource and motivating them to provide more and to Builders for making highly useable and useful applications. From this perspective safecoin can now potentially function as a good investment.

It is also worth noting at this point that safecoin will initially be the only currency on the SAFE network. It is currently only technically possible to have one, although it will be feasible to add others in the future. I think that not having multiple currencies on SAFE goes against the grain of what MaidSafe is all about, inclusion and freedom, and the competition of competing coins will ensure ongoing currency innovation. However, safecoin will have first mover advantage and will be the dominant currency initially.

Safecoin is like digital cash

Once safecoins value on the network is established, the value of the transaction mechanism within the network (the SAFE network’s version of the block chain) can be seen. Capable of processing millions of transactions per second and able to confirm transactions at network speed, the SAFE network utilises an unchained ledger. This means that only the previous and current owners of each coin are known and in this respect safecoin can be thought of as digital cash. Instantly redeemable, secure and with greater anonymity and because the safecoin transfer mechanism is also full distributed, like any other piece of data on the network, there are no scaling issues or block chain bloat. David wrote about this earlier:

So, what are we left with?

I think a crypto currency with real utility. One that incentivises each user group on the network, and oils the engine of exchange. I think it is also important to recognise that we are no longer paying for Internet services with our privacy, as we do today. We are paying with safecoin, which is a secure, anonymous and efficient mechanism that will run in the background of many network transactions. Not only will this lead to a more freedom, it will also provide a better user experience with no reason for adverts (unless the advertisers pay you safecoin!).

I also hope that we are left with a strong currency in it’s own right, one that can be used for buying products and services as varied as storage, big data computation and sand shoes! I also think we will have a currency that performs well as a flexible and accessible store of value, that also represents a good investment for it’s initial backers. However, like any currency its use as a method of exchange is what will really drive its usefulness and value.

The other important thing to recognise here is how we go about implementing safecoin. You will notice I used the word ‘we’, as in all of us. The recent crowd sale signified MaidSafe handing over the network to the people and the responsibility is on all of us to make this work. Feedback from the community have got the implementation this far and more feedback will be required as we discuss and debate the finer points of the technical implementation. So, if you have managed to make it to the end of this post I congratulate you, it was one of the longer ones. The fact that you did means that you are passionate about the SAFE network and if you have not already done so, jump into our community run forums ( and and contribute your thoughts on the economics of safecoin.