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Comment by maxcoder4 | Hacker News Reader

I'll rephrase a bit for the HN crowd: "The Ethereum currency (Ether) value proposition is that it is used to pay for decentralized apps on the Ethereum Blockchain. The more application and users are there, the more Ether is needed and hence it's value goes up". At least that's how I understand it.

OPs point is that most cryptocurrency advocates go for "but my token and hold, it is sure to grow 10x in a few months" and I (like probably OP) consider it misleading baseless hope at best, fraud usually.

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Should you not want the price to be stable? If an arcade game’s price went from 50 cents per play to 5 dollars per play because more people are using a delivery application on the other side of the world that doesn’t make much sense from a consumer perspective.

There are definitely bitcoin diehards out there who look at the price of everything relative to bitcoin.

From a practical standpoint, I think most people would prefer it if the currency used by their country of residence increased in value relative to other global currencies, rather than just staying stable (though for hyperinflationary countries, even that would be a major improvement).

Although stability relative to another currency (see https://en.wikipedia.org/wiki/Fixed_exchange_rate_system) is considered (by many) disadvantageous for countries with strong economies, because you strip away the central bank's power to manage the supply. This is basically the whole Gold Standard debate.

For blockchain users who want reduced volatility and stability relative to a fiat currency, there are always stablecoins.

But the argument is that the grandparent comment is making is that you should build your application on the ethereum network, eth is the “oil” of this machine, and the more people who use it the higher the value of eth is.

So if I make a game, or an uber for dog walkers, or a global shipping service, or some SaaS app on the ethereum blockchain, then my customers will have to pay more or less (or my costs will be higher or lower) depending on how active the network is.

That makes no sense. Day to day price and gas fee fluctuations make it hard to long term plan. Just saying that if you want price stability use a stablecoin doesn’t address that issue because we are not building the app on the blockchain of the stablecoin. There isn’t an eth stable coin that is always 1 blip to 1 eth exchange rate.

> or a global shipping service, or some SaaS app on the ethereum blockchain, then my customers will have to pay more or less (or my costs will be higher or lower) depending on how active the network is.

Only if you want to have these applications fully running on the base layer, which is frankly nonsense.

To give you one practical example: Storj can provide a object storage service at AWS scale, and its pricing has nothing to do network activity and the price of storage does not change based on the amount of transactions per minute. Unless you want to be paid in real-time and account for every byte that you are storing and transmitting, there is no need to put all of the business logic in the blockchain.

Does Storj use a blockchain at all? It just looks like cloud storage, denominated in dollars.

For the consumer, yes, but for those running the storage nodes, there is some blockchain stuff.

- storage nodes getting audits and the results being stored in a smart contract.

- calculation of payouts.

- payouts to storage nodes with their token.

I don't agree with this, but also think you're arguing a different point.

My point was that prices being "stable" isn't actually what's desirable, prices being nonvolatile is.

> So if I make a game, or an uber for dog walkers, or a global shipping service

I mean this is exactly how many of these things work. Uber pricing fluctuates based on demand. So do global shipping prices in many cases. So do game prices on Steam.

Even if the price was the same in the currency you're using (say USD), the value of USD is constantly changing.

> and the more people who use it the higher the value of eth is.

And I'm not sure how this follows. The more people who purchase ETH, the higher the value is.

But using the ethereum network doesn't require you to transact in ETH, only that you pay for the transaction fee (the network cost that makes it possible to to store and execute your transaction essentially) in ETH

If the stakes of the arcade game were so high that people wanted to have its logic running on the base-layer - e.g, high prizes for winners, or the possibility of using power ups obtained in other games - then the price to play would have to depend on the network activity.

But because these games don't, it should be totally fine to delegate this application to a layer-2 system like a roll-up or a payment channel.

But does the layer 2 coin have a stable exchange rate with the layer 1 coin?

And again, we are talking about just to pay to play the game. Today an arcade that uses dollars may charge you 50 cents for a life. Or the equivalent in tokens (layer 2). If suddenly the value of 50 cents could pay for 10 lives, do I need to now charge customers more tokens to play? How do I plan long term with hiring or my utilities if the price I could be paying month to month can fluctuate as much as cryptocurrency does?

Why not just use a stable currency to price your "game token"? Once you are out of the base layer, there is no need to tie any transaction costs to the base layer token.

So, in your example, the game company could easily just say "pay us X amount of dollars however you want, and you will receive the exact same amount on the layer-2 to play".

I feel like we are right back to why even bother using cryptocurrency for this if the fundamentals of it aren’t stable enough for day to day transactions.

My example was talking about using a layer 2 token. Now you’re telling me that it’s simple just use a completely different currency to buy tokens?

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