Maidsafe, the SAFE Network and safecoin explained

Maidsafe's safecoin crowd sale sold out in only 5 hours! Read about it here.

Maidsafe is a company that is developing the SAFE network which is a proposed peer to peer storage and communication platform that could completely change how we use the internet.

Bold claim, broad scope. Maidsafe appear not to deal with timidity.

I hear you ask, ‘but what’s wrong with the features of our current Internet? I can buy stuff, build stuff, share stuff and pleasure myself using it. I can’t imagine it being much better.’

I see where you’re coming from, and I must say, compared to what existed before the internet (very little?), it seems trivial to try and improve a technology that has made arguably the greatest contribution to the freedom and wealth of individuals on this planet.

Then Maidsafe struts in and proposes that it is designing the next logical internet iteration, suggesting our current product is far from its potential.

What’s the investment relevance? If you bear with me, I’ll build you up to it.

What is the Internet?

The internet is just billions of computers, connected by cables and wireless signals that allow the computers to talk to each other. There are several ways these connections allow for information retrieval. The most popular application is the World Wide Web. The take away point; the internet and the Web are not the same thing.

What is the World Wide Web?

The Web is a large collection of digital pages built on top of internet hardware, view-able using web browsers. You’re using the Web to access this page.

Simply put, to access this site you either clicked on a link or submitted the address URL. This sends a request to the server where this website’s files are stored. The server (basically just a computer that stores websites and handles viewing requests) receives this request and sends you the information. Your web browser interprets this information and displays it as a page.

I don’t own or operate the server this page is hosted on, I don’t even know where in the world it exists. The server is owned by a third party that leases space to me.

This setup is pretty much true of all the pages that exist on the Web. We can call it a client-server relationship, the web is centralized, we have to entrust third parties to manage our data.

What else uses the internet?

I’ve said the web is just the most popular application of the internet; there are other applications with different functions that use the internet in a different manner. This includes technologies such as email, Skype, file transfer, as well as peer to peer technologies such as Bitcoin or Bittorrent.

Peer to peer?

Peer to peer is where the action’s at. Peer to peer describes an application that allows information to be passed person to person (peer to peer) as opposed to the traditional client-server model of the web that has been discussed above.

The first popular use of peer to peer technology was the music file sharing network, Napster. At the time (1999), Napster was very special because it allowed people to download music files directly from other people on the network. Napster was a revolutionary concept that was able to scale quickly due to the fact that resources were supplied by participants in the network, not massive, centralized server farms. Unfortunately Napster was not fully decentralized; it still relied on servers for indexing content (helping people find the song they are looking for). Because of this the network was still very vulnerable to legal action. Napster was ordered to shut down for facilitating the transfer of copyrighted material in 2001.

Then smart people improved on Napster’s model and released Gnutella. Gnutella is a pure peer to peer network, with no central reliance whatsoever, accessible using clients such as LimeWire. Discovery of resources is completely managed by peers within the decentralized system. Essentially Gnutella is a Napster that is extremely difficult to shut down, due to there being no single point of failure.

But we’ve still got a few problems. These peer to peer networks aren’t practical for downloading large files, as a traditional internet connection allows for high download but low upload speed, which imposes a cap on the speed of which a downloader can obtain a file.

Then smart people solve this problem with the introduction of Bittorrent. Bittorrent is a hybrid peer to peer network that allows for large files to be downloaded quickly as files are split into little pieces and downloaded in an unordered fashion from many different peers that have the file. That means when you download a file using Bittorrent, you get many small parts thrown at you from other participants, which are reassembled by the Bittorrent client on your computer. This innovation allows for incredibly quick download speeds. Interestingly, the more popular a file becomes, the quicker you will be able to obtain it, this is in direct contrast with the client-server relationship of the web, where the more popular a resource becomes, the slower it responds.

Bittorrent is great, but still has imperfections, due to its reliance upon centralized components, such as the Web for helping people locate torrent files.

Given the above, what does Maidsafe propose to do?

Once again, Maidsafe is a company. The company was founded eight years ago by David Irvine, a Scottish bloke hungry for freedom.

David Irvine: William Wallace reborn?

Yup

Maidsafe has secured around $5 million in funding over the past few years, which it has used to develop ideas and acquire patents that will be used defensively if necessary.

Maidsafe proposes to release a project called the SAFE network (secure access for everyone). The SAFE network will be a peer to peer network of users, communicating through distributed, self-encryption technology.

Maidsafe has made the entire project open source so anyone can inspect the code or use it for their own purposes if they wish. When the SAFE network is launched, Maidsafe will operate as a not for profit foundation that holds patents and promotes use and improvement of the network. The project will be truly open source, owned by no one, accessible by anyone.

People will join the network using internet connected devices, downloading the application and signing in. The application will allocate some of their device’s storage, bandwidth and processing power to the SAFE network. These resources are made available to users wanting to store data.

When someone stores a file on the SAFE network, the file is broken into many small chunks (similar to Bittorrent). Each of these chunks is encrypted, multiple copies are made, and the pieces are sent off to different locations within the SAFE network. This means at any one time, your home video of your dog dragging its rump across the carpet is stored communally by many different users like yourself. Each person only stores a small fraction of the entire file and cannot access it because it is encrypted; only you have the key. When you want to access your file, you simply sign into the network on any device, and the SAFE network retrieves the files constituent pieces, reassembles them, decrypts them and displays them. Cool beans.

That’s about it. From there, a huge and diverse range of things can be built on top of this base, such as:

  • A peer to peer DropBox.
  • A peer to peer Youtube and Facebook.
  • A peer to peer web. Because files can be made publicly accessible if desired, it is completely possible for a web-like network to spring up on the platform. This data will be able to be indexed as search engines do on our current web.
  • A single sign on system, eliminating the need for a different account for every internet service.
  • Encrypted, anonymous messaging systems.
  • A safer, more secure digital currency (this is what we’re interested in).

These features will be decentralized, scalable, anonymous, fast and efficient with no vulnerability to DDoS attacks or server outages. You’ll be able to access your data on any internet connected device, anywhere, anytime. The best part? The network will be completely censorship resistant and no one will be able to snoop on you or your data.

Hot dog.

Safecoin

Participants of the SAFE network, whether they be developers who create applications, or ‘Farmers’ that provide storage space will have an economic incentive to do so. This will be made possible using the native currency of the SAFE network, safecoin. It is proposed that ‘Vault Farmers’ who supply storage space to the SAFE network will be rewarded by ‘harvesting’ safecoins, in a similar manner to the bitcoin ecosystem where coins are minted through mining. Developers who develop useful services within the SAFE network will be rewarded in safecoin also, but paid directly from the SAFE network that will hold a pool of funds.

There will be a cap of 4.3 billion safecoins, 30% of which will be (indirectly) allocated on day one (9am GMT 22 April 2014). My understanding of the 30% allocation is as follows:

  • 5% will be laid aside in exchange for the shares of the current investors of Maidsafe. The Maidsafe Foundation will hold the safecoin for these shareholders. Current shareholders will be able to exchange their shares at any time for safecoin. If they decide to do so, they will cease being owners of Maidsafe in favor of ownership of (hopefully absurdly valuable) safecoin.
  • Up to 10% will be made available through a 30 day crowd sale where investors can exchange bitcoins or mastercoins for a proxy token, MaidSafeCoin that will be redeemable for safecoin on a 1:1 basis when the SAFE network is launched.
  • 5% will be held by the Maidsafe foundation to allocate to core developers.
  • The final 10% will be allocated by the network itself to developers who create applications that people use.

The remainder of the coins will be harvested by Vault Farmers over time in an asymptotic fashion that approaches a limit of 4.3 billion units.

Safecoin is like bitcoin, but with a few advantages. Safecoin will operate more like encrypted messaging, where the sole content of the message is the transfer of safecoin. Unlike bitcoin, there will be no distributed ledger with transactions embedded in a blockchain, no more waiting for a block for confirmations. Safecoin transactions will be instant, anonymous and much more resistant to theft than bitcoin.

But will safecoins be able to hold a value? I reckon they will. I think people are getting used to the idea that something completely abstract can be worth something. Bitcoin has certainly helped people come to terms with the idea of a completely digital currency. On top of this, safecoins will have a strong link to monetary value because they are generated through a process of contributing useful resources to the network. This is in contrast with traditional crypto-currency mining, which is inherently wasteful. Finally, there will be a psychological link to worth given by the initial exchange rate of the crowd sale.

How do I buy safecoin?

The following applied to Maidsafe's crowd sale of MaidSafeCoin, which has since closed. Go to Masterxchange if you want to buy some.

Well, you don’t, you actually buy MaidSafeCoin, then redeem these for safecoin when the network is up and running. Once again, anyone and everyone has the opportunity to purchase MaidSafeCoin at 9am GMT 22 April 2014. This crowd sale will last either for 30 days or until approximately 430 million MaidSafeCoins are sold, whatever comes first.

You purchase MaidSafeCoin by sending bitcoin or mastercoin to an address that will soon be announced. There will be two addresses announced, one that bitcoins can be sent to and one that mastercoins can be sent to. MaidSafeCoins will be sent back to the address you sent payment from. You will receive 17,000 MaidSafeCoins per bitcoin or 3,400 MaidSafeCoins per mastercoin.

Early backers will receive additional MaidSafeCoins for their purchase on the following scale:

  • First week – 40%
  • Second week – 30%
  • Third week – 20%
  • Fourth week – 10%

In the background, MaidSafeCoins will actually represent a ‘smart property token’ on the Mastercoin Protocol. Like any other asset on the mastercoin network these MaidSafeCoins will be able to be traded for mastercoins on the distributed exchange. This means exchange is possible without the trust of a third party, and a market price will be quickly established.

Keep it simple, stupid. You will be able to buy and sell MaidSafeCoins after the crowd sale, using mastercoin.

Should you buy?

If the full number of MaidSafeCoins are sold, approximately $8 million USD will be raised. Assuming safecoin value is representative of the project’s success, this means 10% of the project is valued at $8 million, so logically the entire venture will be valued at $80 million. The question then is; is the SAFE network going to be worth more than $80 million in the future?

The answer is, if it works, almost certainly. The contingency remains, will it work, will it perform to expectations? All I can say is, when a project attracts attention from Andreesen Horowitz and BitAngels, you best be paying attention.

Similar projects:

  • Bitcloud – seems like a lot of talk and not enough walk. No real development progress from them. I’ll keep an eye on these guys.
  • Freenet – not as broad in its scope as SAFE, basically just a publishing platform. It works, and provides proof of concept, but it’s not monetized.
  • Twister – a microblogging platform. Very cool, very niche.

6 Comments

  1. Anonymous

    May 13, 2014 at

    Explained very well 🙂

  2. Anonymous

    May 14, 2014 at

    Who will be buying the Safecoins from the investors and developers?

  3. BEST EXPLANATION OF MAIDSAFE THAT I CAN FIND ANYWHERE!!

    Bless you 🙂

    an historic moment in the universe, to be certain!

  4. Good job

  5. This was truly a complex explanation made easy. I appreciate the efforts that you have put in to prepare this rigorous blog. Reading it in 2017 & still makes sense, Cheers 😎

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