Snow: “The token supply can grow (if speculators drive up the price) until the price stabilizes. And the token supply can fall (if speculators drive the price down) until the price stabilizes. But in both cases, the stable price is when the value of the token matches the money real applications are spending to buy Entry Credits in order to put data into the protocol. That is because the 73K factoids generated each year naturally trends to the value of the factoids drained from the supply to write into the protocol. If people are spending 1 million dollars to put data into factom per year, then 73K factoids should be worth 1 million dollars.”
Can you link to where this quote is please?
It's from an AMA:
https://forum.bitcoin.com/ama-ask-me-anything/i-am-paul-snow-the-architect-of-factom-and-chair-of-the-texas-bitcoin-conference-ask-me-anything-t4026.htmlActually this is an interesting quote to zero in on. We've been discussing off-and-on what a "natural" or fair price for FCT would be in the future, and this quote seems to provide a strong clue. Given the price-stabilization that Paul Snow mentions, it should, I believe, be possible to deduce a FCT price based on various level of system-use. Fsr I'm having a tough time wrapping my mind around how exactly to do this ... but if someone could provide test examples of moderate/reasonable Factom use in the future—based on current usage trends, etc.—it should be possible to reverse-engineer what the prices of FCT would be in order to maintain the price stability Snow mentions. So with light / medium / heavy use over the next, say 5-10 years, FCT should be worth X / Y / or Z. Thanks to anyone able to give this calculation a crack.
I just see that P. Snow made a mistake there: "73K factoids generated each year" - it's per month. Or I'm wrong and that would be very good news. ;-)
Indeed, the FCT inflation is set at 73K per month or 876K per year.
From Brian Deery (
https://www.reddit.com/r/factom/comments/436cj9/entry_credits_and_factoids/ ) :
"In contrast to many other projects, Factoids are not trying to be money. We already have internet money, and that is bitcoin. Factoids are a tool to pay the servers in a scalable decentralized way, coupled with a way to provably show that value was destroyed.
Entry Credits are the embodiment of that sacrificed value. They cannot be traded, so I would not call them a token per se. All they can do is pay for data to go into factom.
The two stage (Factoid / Entry Credit) system is to allow for a predictable cost of adding data into the system while the market price of the factoid fluctuate.
To pay for the server+engineering time, new factoids would be created at a rate of 20%/year of the token sale amount. 4379795.611338 factoids were sold, which corresponds to 875959.1222676 per year or 72996.5935223 per month.
On the other had to purchase entry credits, factoids are removed from circulation. These factoids are not recaptured by the servers, and are gone forever. This rate depends entirely on how many people are adding data into factom.
The federated servers goal is to make each unit they are granted become more valuable. The best way they have of doing this is to increase the amount of value people are sacrificing to place data into the blockchain. The more people are using the system, the more demand there is for the tokens, and the higher the market price.
The closed loop feedback nature of the system means in the long term (absent speculation), the dollar amount of the factoid inflation will match the dollar amount of entry credits being purchased. Speculation thrown into this will drive the dollar price up or down from this equilibrium. Now when we have this mismatch between the source (inflation) and the sink (entry credit purchases) then the increased or decreased supply will tend to correct the price towards equilibrium.
There is no way to tell how many factoids there will be in the future, since it depends on usage of the system. There is a ceiling, though, which is the existing amount + inflation."
