If Ada is a commodity, like oil, will an inflated price reduce the efficiency of dApps on the Cardano platform?


#1

My current understanding of Ada is that, like Ether, its primary function is not intended to be a currency or a store of value, but as a resource to run dApps for the Cardano application platform. In that way, it is a commodity, like oil. It is also being used a store of value, but this is secondary.

Imagine if people started hoarding oil to be used as a store of value, and the price of oil skyrocketed. How would this impact your ability to drive your car? How would it impact the price of milk (from rising transportation costs)?

In the same way, I’m wondering, will an inflated Ada price due to hoarding and speculation impact the efficient functioning of dApps on the Cardano platform? Why or why not?

Most likely I am just not understanding something basic about how this works, so please enlighten me!


#2

I don’t think so, because you can divide an ADA into 1000000 lovelace, and we could split it again if we needed to for liquidity.

Unlike oil, there is not a specific physical quantity needed to operate a smart contract.

By the same token… heh… the value per ADA is variable.


#3

Does that mean that the amount of Ada or Lovelace needed to run an app or smart contract will fall as the $ value of the currency increases?


#4

Yes, but, cause and effect would normally be reversed. The amount of Ada needed to run an app will be bid down by processors, and as a result the $ value of ADA will increase.

But that is based on my assumptions about how Cardano might work.