An Overview of MaidSafe’s SAFE Network

Brief History

MaidSafe is the only cryptocurrency project I know of that is older than Bitcoin. It started in 2006, raising 5 million dollars to fund a 14-person team working towards the goal of decentralizing the internet. [1] Since then, the project has had more face-lifts than an aging D-list celebrity. Last year they even completely rewrote the C++ code into a new programming language called Rust. [2] The Maidsafe team is finally about to release the first version of their long awaited minimum viable product to the general public. [3] I can’t wait to try it out!

What is it?

The SAFE Network is going to compete with and complement the Internet that we love to hate today. Instead of data being relatively open and accessible, the SAFE Network has been designed to securely encrypt all data within the network. This will make privacy the default. If users want their information to be public that is of course no problem, but the way the network is designed, users will have to opt-out of privacy. [1,4,5]

This will be a completely brand new grassroots Internet. The massive privately owned server farms that own the data of today’s internet will be replaced by a decentralized network of computers that encrypt user’s files and divide them into many small parts that are duplicated and stored in many places all around the world. [6] Anyone can join the network anonymously by donating a portion of their hard drive space, computing power and bandwidth. [1] For contributing their computing resources, the users will receive safecoins and in order to use the computing resources of the network, users will need to have and spend safecoins. [4,7]

The SAFE Network will be able to do everything the Internet does today, but because it has such a different infrastructure, it will do it in a different way. [5] Here is a short list of some of the benefits of this restructuring:

Denial of service attacks will be useless, in fact the more people use the same websites, the better they will perform. [7]
Cloud storage will be completely private, relatively cheap and always accessible. [8]
Messages, email, and VOIP will be encrypted by default. [9]
Websites will never experience downtime and cannot be censored. [5]
Social networks’ data will be owned by the users and they can choose who has access to it. [10]
Mass surveillance on this network will be impossible; no one will be able to collect your browsing data. [5]
Underutilized computing resources can be monetized. [11]
Direct micropayment channels will be built in, so content producers will not have to advertise to their audience to raise funds. [9]

The SAFE Network will not be the better than the current internet in every way, especially in the beginning, for several reasons:

Browsing will likely be much slower, especially at the beginning, and especially for sites that don’t receive much traffic. [7]
There won’t be much to browse, as the normal internet will be inaccessible. [12]
It will be more expensive to use. Everything on today’s Internet is free, you just pay ISPs for access; to use the SAFE Network, users will still have to pay ISPs for access, but will also have to use safecoin to send and receive data. [11]
Until the network scales, there is a small possibility of data being lost forever due to a large contributor of computing resources leaving the network. [13]
Until the SAFE Network is up and running and safecoins are moving around in the ecosystem, we won’t know if the incentive structure is set-up correctly. [14]

What incentivizes the network to grow?

The most amazing thing about the SAFE Network is its incentive structure. Safecoin is the oil that greases the wheels of the SAFE Network and it is a very unique digital currency. [5] As opposed to the common Proof of Work or Proof of Stake token generation schemes that other cryptocurrencies use, safecoin uses Proof of Resource. [1,15] It is actually debatable if safecoin should be considered a cryptocurrency as it does not have a blockchain, coins cannot be subdivided into parts, and it will be difficult to trade safecoins in exchanges that don’t live on the SAFE Network, but it does use cryptography and safecoin’s proxy coin, MaidSafeCoin, is undoubtedly a cryptocurrency and is currently on exchanges. [16]

It is actually debatable if safecoin should be considered a cryptocurrency.

New Safecoins are generated by processes called “Farming” and “Building.” Farming is very similar to mining, a Farmer dedicates his hardware to do work for the network, but it is different in that the Farmer can donate his hard drive space, RAM, internet bandwidth, and other resources to earn tokens, as opposed to only one resource, hashing power. [11] Also, in bitcoin mining, the hashing power you provide has a linear reward correlation, as in, if you double your hashing rate, you double your mining reward (probabilistically). For Farming, the network compares your resources to the other Farmers and rewards you based on a curve, kind of like the grading scheme in a college math class. [17]

Predicted Safecoin Farming Speed The Sigmoid curve that determines a Farmer’s safecoin reward. [18]

Building is a very creative way to incentivize development of the platform. Builders develop apps that use the resources of Farmers to run on the SAFE Network. The app developers receive newly generated coins when their apps are utilized by the end users. There will only ever be 4.3 billion coins generated, and after that the network rewards will be funded by “recycling” coins that the network charges as usage fees. [19] The safecoin generation rates and methods are actually really complicated (core developers that fix bugs receive newly generated coins as well) and I’m not sure many people really understand it, and nobody can really predict how it will turn out because there are so many confounding variables. [1,14] If you want to try to understand it, I overly sourced this blog post. These links will send you down a deep rabbit hole, if you find a succinct source that describes the generation of new coins, please post it in the comments below!

The Controversial Crowdsale

Maidsafe’s currency by design can only exist on the SAFE Network, so to raise funds to build the SAFE Network, in mid-2014 they held a token crowdsale to pre-sell 10% of the safecoins that will ever be made. They used the Mastercoin protocol (now called OMNI) to create MaidSafeCoin which lives on the bitcoin blockchain and will be exchanged 1:1 for safecoins once the network has been built. The crowdsale was a huge success and a huge failure at the same time. Maidsafe needed mastercoins (the currency of the Mastercoin network) to issue their new token so they decided to hold a month long crowdsale and to raise funds using both mastercoin and bitcoin, they had planned on raising 75% of their funds in bitcoin and 25% in Mastercoin. The problem was that mastercoin was incredibly illiquid and Mastercoin’s initial investors were excited to diversify their holdings, especially since Maidsafe gave twice as many MaidSafeCoins for per dollar of mastercoin vs bitcoin. [1,20,21]

When the crowdsale began, mastercoin was overwhelmingly the largest source of funds; something went wrong and the cap at 25% did not hold, so Maidsafe had to close their sale after 5 hours ending up with millions of dollars worth of mastercoins and many people around the world failed to be able to participate. Luckily for Maidsafe, BitAngels, who helped create Mastercoin and this crowdsale debacle, loaned Maidsafe 3 million dollars worth of bitcoin. Maidsafe earned an estimated 5.5 million dollars from the 5 hour crowdsale, and even though much of it was stuck in a relatively useless currency, they still earned funding through 2017. They just lost a little some credibility in the process. [1,20,21]

And so it begins…

The SAFE Network is an incredible project that will change the world if it works. The release of the minimum viable product (MVP), which the community has been expecting for years, is likely to be available this month (fingers crossed). The MVP will allow people around the world without a programming background to try out the network. The team behind this project has overcome a lot of adversity so far; it will be very interesting to watch the network evolve and see what solutions come up for the problems that are found as the network begins to form. [3]

Citations

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