SOURCE:
https://www.reddit.com/r/factom/comments/47nyx0/thoughts_of_the_economic_model_of_factom_and/Fixed Factoid payments make servers care about the future. Sure, this would work technically. As per the division of factoids, they currently have 8 decimal places. If this were so much of a problem, I do not think the community would mind adding more decimal places if the price is too high You are right in that it would have no effect on the spam resistance/cost of entries from the customer perspective. Eliminating inflation would be fantastic for speculators. However, speculators are not the primary reason for the system.
(In Bitcoin speculation is the most important component, because bitcoins are money. The entire system fails if bitcoin value drops too low, since mining will be too expensive and security fades. Factoids are not money, just a decentralized value transfer mechanism. If the value drops too low, it corrects. See this. )
The Factoids also are a reward to the servers to pay for engineering time, server, and bandwidth costs. The current market price of ~1$ roughly corresponds to a steady state prediction of about 800 gigabytes/year being added to the system or about 27 TPS.
Lets analyze how much the servers would be paid for this. On average, the 32 federated servers and 32 audit servers would split the $876000/year with less the $14000 each. This is before bitcoin fees, server and bandwidth bills are paid. It is not enough to pay for a sysadmin to manage it full time. You are proposing to lower this compensation, so speculators can have a bigger share of the pie? Your proposal is better for some at the expense of others.
Paying a fixed amount of factoids reduces uncertainty, which is bad if you have fixed costs. (Bitcoin miners join pools to get smaller payouts over time even when they have the same long term payoff probabilities. They do this because they have constant costs, irrespective of winning a block.)
More importantly, it lengthens time horizons on the part of the servers. Fixed payments tend to have them match the incentives of speculators. Speculators will collectively set the market price at an amount corresponding to future usage expectations. If speculators think the system will be widely used in the future, then the price will reflect that expectation. If speculators think usage will fall, that gets priced in much more quickly than real time fees. With fixed rewards, the speculators define how much the servers are compensated. The users actually burning more or fewer factoids would slowly drive the speculated price back to the correct value (see the negative feedback article).
It is in the server's best interest to maximize the long term perceived usage of the system. That comes from running a high reliability system which users feel comfortable building upon. The servers are incentivized to serve the current customers well enough to keep the system growing, to keep speculators happy. The servers also have aligned incentives with the users. The servers are answerable to the users of the system. They are voted in and out of authority by users of the system. This is an even stronger incentive to the short term.
Clip from IB times article:Jack Lu, CTO of Factom, told IBTimes: "Factom is heading back to China this month to work on more official contracts and define the scope of current and future projects. Sensor data will be stored; so things like pollution sensors, traffic sensors, etc. Factom will have a full scope of what exactly in the next 6- 8 weeks. We will give you an update. We are building a custom "Factom China" in order to accommodate a vast amount of data we will be putting in."
Ye Yuping, executive VP & CTO of iSoftStone, said: "By applying Factom blockchain technology to our financial services, smart cities big data services, and construction of data exchange, we will drive more innovation in China. By leveraging the advantages of both parties, we look forward to seeing a brighter future. We are sure that the integration of Factom and smart cities will bring more development opportunities for both sides."
iSoftStone focuses on two major businesses: smart business, and information technology services. In its smart business sector, iSoftStone has launched strategic planning for more than 80 smart cities around the country; in its IT services sector, the company has accumulated extensive experiences in more than ten industries, including telecommunication, banking, insurance, power utilities, transportation, manufacturing and retail, it said.
SOURCE:
http://www.ibtimes.co.uk/factom-signs-smart-city-deal-roll-out-blockchain-verification-across-china-1542059
