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If I am not mistaking, application developers need to pay using ether coins to have their application hosted on the ethereum network. So if the price of ether keeps going up like it is now, doesn't it mean the cost of hosting an app on the network goes up? Where is the break point for people not even thinking about hosting their application on the ethereum network? By the way, are there any real applications on ethereum network as of now?

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If I am not mistaken, application developers need to pay using ether coins to have their application hosted on the ethereum network.

They have to pay gas. There's an important difference between gas and ether, explained below.

What is "gas" and transaction fee in Ethereum?

So if the price of ether keeps going up like it is now, doesn't it mean the cost of hosting an app on the network goes up?

(I'm deliberately conflating "hosting" with "using" in the below.)

Ideally, we want to cost of using a given Dapp to remain constant. We don't want transaction fees, and therefore the cost of using the Dapp, to follow the increases and decreases in value of the underlying ether currency. A volatile currency would mean different costs every time you used the Dapp.

For this reason, the total gas used when using a Dapp (or calling a transaction) is a combination of the gasUsed and the gasPrice:

total gas cost = gasUsed * gasPrice

gasUsed is a constant value. It represents the computational cost of running the Dapp.

gasPrice is not constant, and can be adjusted by the network to compensate for changes in the value of ether.

Allowing the gasPrice to adjust means that the total gas cost can be kept relatively constant.

How much does it cost to use a contract?

Where is the break point for people not even thinking about hosting their application on the ethereum network?

This problem mostly disappears given the previous part of the explanation.

Having said that... It's a market. If more people are willing to pay more to run Dapps, then prices - specifically gasPrice - will increase.

However, think back to the early days of the web, when hosting a website was a) hassle, b) expensive. Over time, market forces have reduced both those barriers to entry. (Well, depends on where you are in the world, and who you ask... ) I'd expect over time, as the environment matures, that such market forces would act to reduce Dapp costs in a similar way.

By the way, are there any real applications on ethereum network as of now?

Have a look at the "live" Dapps on the following page: http://dapps.ethercasts.com/

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If the price of ether coin goes up, does it mean less likely people are going to build application on the ethereum network?

No. Ethereum transactions will likely cost the same relative to fiat. One of the main reasons Ethereum has 18 decimal places is to handle transacting with Ethereum in very small amounts, and to handle a large price increase of Ether.

Example:

Year 1

1 Ether = 2 USD

Transaction cost

0.001 ETH = 0.02 USD

Year 2

1 ETH = 200 USD

Transaction cost

0.00001 ETH = 0.02 USD

The examples are rough, but demonstrate the principle I'm describing. As the price of Ether rises the relative Ether cost of transaction reduces. Because fees are variable, market forces will produce competition and not push out users from the network via excessive fees.

A price increase of Ether will only mean that you get less Ether for your fiat, but your fiat to transaction should stay relatively stable.

By the way, are there any real applications on ethereum network as of now?

Define "real". Bare in mind the network is still fairly young, there is a lot of development working happening on the network by a lot of very talented people. But there are a lot of existing applications on the network.

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