Vitalik Buterin explains benefits of a high Ethereum price

The co-founder of Ethereum, Vitalik Buterin discussed how high Ether prices will benefit cryptocurrency’s entire network and ecosystem development.

March 22, 2019. | AtoZ Markets – Vitalik explained this concept during an interview at the Columbia Graduate School of Journalism on Wednesday. Since Ethereum peaked at $1,400 in January 2018, it has dropped massively below $400. Despite the bear run, Vitalik believes high Ether prices is needed to have and maintain both a healthy ecosystem development and a secure network. In a live stream discussion host, Laura Shin asked Vitalik whether cryptocurrency project leaders and protocol designers should focus on the question of cryptocurrency price. Vitalik responded that the Ethereum team, unlike many others, decided to be far from the value and pricing of Ethereum to minimize legal risks among other reasons. He said: 

”In part, it was counter-signaling to distinguish ourselves (Ethereum) from other crypto projects that do pumping and lambo-ing way too much. But it was also about minimizing legal risk by basically trying to make the project seem more distant from something that would be covered by financial regulation”

Vitalik added that since the release of Ethereum in July 2015, the cryptocurrency market landscape has changed. In today’s context, regulators are more open-minded with cryptocurrency and blockchain projects unlike in 2015 and earlier when people had wrong perceptions about the industry. However, he argued that the regulators are going to see through crypto price actions despite the negligence of projects developers who claim not to be focused on price. He then continued by sharing his view on the importance of higher crypto prices.

Higher prices good for security and ecosystem

The first reason why prices should be higher is to ensure network security. According to him, the security of the network will be loose if prices slump to zero. He said:

”I can tell you what things are clearly important about why the price being higher than lower is good. One of them is obviously security. If the price is zero, then the network can’t be secure. That’s true in proof-of-work and proof-of-stake”

His second argument was focused on ecosystem development. He said that the participants and developers of projects within a crypto ecosystem tend to have a stake in its token. If the prices of the crypto get higher, they are in a better position to get funds needed to develop their projects. This will, in turn, helps the ecosystem to grow.

The interview ended with an audience poll. The live audience was asked: ”Are Ethereum developers focused enough on the price of Ethereum?”. In the end, 38% answered they ‘don’t care’ while 23% responded with a ‘Yes’ and 19% with a ‘No’.

Vitalik, in conclusion, reiterated the need to keep prices afloat. Developers should be careful and abstain from doing things that could drag prices to zero.

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