Economist: The Price Of Ethereum Is Falling Due To The Lack Of Active dApps
Nouriel Roubini, a well-known economist and professor at Stern School, said that the decline in Ethereum price was expected due to the lack of active decentralized applications (dApps).
Counterargument: The Ethereum Network Is Still At An Early Stage Of Development
In the early days of the Internet and the network the vast majority of platforms and websites were extremely simple applications, such as e-mail and data processing services, which were unable to achieve anything meaningful.
Over decades, the infrastructure, supporting the Internet and including computer hardware, has improved significantly. The network has evolved into a basic protocol for data exchange, providing almost everything from video streaming to financial services.
Cryptocurrencies as an asset class and the Ethereum protocol as a decentralized computing network are still in their infancy. Ethereum can handle from 10 to 12 transactions per second on its network and, thus, the type of services provided by dApps is limited.
Protocol-level improvements are implemented at an exponential rate. Vitalik Buterin, the co-founder of the cryptocurrency, said that the implementation of second-level solutions – Sharding and Plasma – could potentially increase the capacity of the network to a million transactions per second. This will help to support the IoT and financial networks.
Currently, dApps with simple concepts like CryptoKitties dominate, and decentralized cryptocurrency exchanges cannot compete with centralized platforms.
However, decentralized computing ecosystems and smart contract protocols based on public blockchains such as Ethereum, Cardano and EOS have been around for less than three years.
Already now dApps such as Brave Browser has more than three million users.
The improvement of underlying protocol would allow ETH to function as a storage of value like Bitcoin.
Given that Brave Browser and several other dApps experienced rapid growth last year, despite Ethereum’s limitations on scalability, dApps will become more efficient in processing information due to with the development of the underlying protocol.
Rubini’s argument about the long-term decline of Ethereum is based on the assumption that decentralized applications will stand still, and the systems will not attract new users’ attention.
However, the study found that a half of the US millionaires are interested exclusively in using cryptocurrencies, which would be reasonable, given the decline in level of credibility of traditional financial systems.
What Will Happen, If dApps Gain Popularity?
If decentralized applications start to increase the number of active users, the arguments of Rubini and other economists about the use of cryptocurrencies will become unfounded.