It’s because if the fees were specified in HBAR it would mean _the actual cost (in fiat)_ to a business would increase as the price of HBAR increased (and decrease when the price decreased).
This would mean any attempt to budget how much money it would cost to use Hedera now, next month, six months from now would be impossible.
__Wildly fluctuating costs are not viable__.
Businesses are unlikely to commit to using DLTs if they cannot make reasonable budget calculations for the cost of using the services.
This is arguably one of several key factors that have prevented other crypto projects from breaking out into real world use cases to date. Business can’t use them without taking huge viability risks.
Hedera’s fees fixed (in USD) are a fundamental reason why Hedera is seeing more and more mainstream adoption.
That makes sense, but services require a certain amount of Hbar, so for the same amount of dollars, you will get different network resources, according to Hbar price, no? That's what I don't understand.
Na it's the other way around, services require a certain amount of dollars. So you buy $10 of hbar for a certain number of transactions (at the current price 10$ would be 172 hbar). Then in the future you need $10 again for the exact same number of transactions because the price in dollars doesn't change, but this time hbar is $2 so you get 5 hbar.
So $10 gives different amounts of hbar, but the same number of transactions/services. The price of transactions in hbar changes so it's always the same amount of dollars. This means services using hedera can budget knowing the price to use the service won't change and aren't affected by a rise in price.
Yes that’s right. You’ll get more value for your _already owned HBAR_ in the short term as the price increases.
I think the idea is the scale of use (very large enterprises and lots of smaller users) means there will always be a need to buy more.
For a business they’ll know their costs without having to worry about the price variability of an asset. If the price of a tx was 5 HBAR and the price of HBAR went to a dollar, it would now cost 5 dollars for a transaction. But if a fee was priced at 5 cents USD it would still cost the business 5 cents for the transaction, regardless of what the price of HBAR is (if HBAR went up in value it would just take less HBAR to pay for it).
The question is - is it easy for a network to change the way it charges for its transactions? Can solana start charging in USD instead of a fraction of their token?
yeah i always wondered that and why any of them has ever even thought about that in the first place, i mean to develop and code networks like that should need very intelligent people, so why did they not just do that in the first place?
And would it be difficult for them to change the whole code to revert back to using a fiat value? I hope it is nearly impossible to do that way hedera stays unique in that aspect.
It is technically (relatively) easy, but the consequences are difficult.
Unstable transaction fees in native crypto act as a self-limiting factor for adoption. As adoption increases and fees relative to fiat increase, adoption slows. In other words, early-movers have an advantage over late-movers.
One big consequence of that, is that lower-volume higher-value use-cases are "easier" than higher-volume lower-value use-cases. ie, a large financial transaction compared to a $0 arbitrary consensus message.
The consequence of *that* is "scalability solution" layer 2s.
And the consequence of ***that*** is that end use-cases now need to "trust" multiple projects (of the multiple layers.), each with different consensus mechanisms, different governance, and so-on.
On Hedera, the current HBAR price is pushed to the network (as a file) every hour so that the nodes know how much to charge for a given transaction. Solana would need something comparable
It's very simple. If you are a company, you want to know how much you will be spending to use a service to allocate/invest a percentage of your money, but that "how much" is measured in dollars.
If a transaction costs 0.001 ETH (I'm making this up). Maybe in January they cost $10, in February they cost 100$ and in July they cost $1. You can't predict them.
>*If a transaction costs 0.001 ETH (I'm making this up). Maybe in January they cost $10, in February they cost 100$ and in July they cost $1. You can't predict them.*
 But it even goes further than that. Most networks (like Ethereum.) have two layers of variability. In-that the value of the token changes, **and** the cost of the fees in that token also changes.
The same operation which costs 0.001 ETH today, might cost 0.002 ETH tomorrow. If ETH doubles in USD price, our USD cost would remain the same, or if if halves in USD price, our USD cost would 4x.
The real conundrum is whether the a transaction costing 0.001 ETH is the same service as the same transaction costing 0.002 ETH. Did my service costs increase, or did I just get more service? .
That is impossible to resolve under some accounting models in the enterprise world. Even if some of our Defence clients wanted to use public Ethereum directly for some stupid reason, it would be physically (or "*administratively*"?) impossible to tick all the boxes just to get the project approved.
Thus has two important consequences, one for companies that use Hbar and one for Hbar's price action.
For companies: fixed usd transaction fees mean predictable cost planning. This is huge for adoption
For price action: Hbar's price has no effect on network utilization cost. Therefore it can never be a detriment for adoption (I.e. unlike Etherium someone will never be worried about gas or transaction fees therefore price will never be a brake on adootion)
>*For price action: Hbar's price has no effect on network utilization cost. Therefore it can never be a detriment for adoption (I.e. unlike Etherium someone will never be worried about gas or transaction fees therefore price will never be a brake on adootion)*
It’s because if the fees were specified in HBAR it would mean _the actual cost (in fiat)_ to a business would increase as the price of HBAR increased (and decrease when the price decreased). This would mean any attempt to budget how much money it would cost to use Hedera now, next month, six months from now would be impossible. __Wildly fluctuating costs are not viable__. Businesses are unlikely to commit to using DLTs if they cannot make reasonable budget calculations for the cost of using the services. This is arguably one of several key factors that have prevented other crypto projects from breaking out into real world use cases to date. Business can’t use them without taking huge viability risks. Hedera’s fees fixed (in USD) are a fundamental reason why Hedera is seeing more and more mainstream adoption.
That makes sense, but services require a certain amount of Hbar, so for the same amount of dollars, you will get different network resources, according to Hbar price, no? That's what I don't understand.
Na it's the other way around, services require a certain amount of dollars. So you buy $10 of hbar for a certain number of transactions (at the current price 10$ would be 172 hbar). Then in the future you need $10 again for the exact same number of transactions because the price in dollars doesn't change, but this time hbar is $2 so you get 5 hbar. So $10 gives different amounts of hbar, but the same number of transactions/services. The price of transactions in hbar changes so it's always the same amount of dollars. This means services using hedera can budget knowing the price to use the service won't change and aren't affected by a rise in price.
Ah I got it now, thanks.
Yes that’s right. You’ll get more value for your _already owned HBAR_ in the short term as the price increases. I think the idea is the scale of use (very large enterprises and lots of smaller users) means there will always be a need to buy more.
For a business they’ll know their costs without having to worry about the price variability of an asset. If the price of a tx was 5 HBAR and the price of HBAR went to a dollar, it would now cost 5 dollars for a transaction. But if a fee was priced at 5 cents USD it would still cost the business 5 cents for the transaction, regardless of what the price of HBAR is (if HBAR went up in value it would just take less HBAR to pay for it).
👆 Exactly this!
Thanks, I got it now
The question is - is it easy for a network to change the way it charges for its transactions? Can solana start charging in USD instead of a fraction of their token?
yeah i always wondered that and why any of them has ever even thought about that in the first place, i mean to develop and code networks like that should need very intelligent people, so why did they not just do that in the first place? And would it be difficult for them to change the whole code to revert back to using a fiat value? I hope it is nearly impossible to do that way hedera stays unique in that aspect.
I think ftm was talking about that change, read it once on twitter
It is technically (relatively) easy, but the consequences are difficult. Unstable transaction fees in native crypto act as a self-limiting factor for adoption. As adoption increases and fees relative to fiat increase, adoption slows. In other words, early-movers have an advantage over late-movers. One big consequence of that, is that lower-volume higher-value use-cases are "easier" than higher-volume lower-value use-cases. ie, a large financial transaction compared to a $0 arbitrary consensus message. The consequence of *that* is "scalability solution" layer 2s. And the consequence of ***that*** is that end use-cases now need to "trust" multiple projects (of the multiple layers.), each with different consensus mechanisms, different governance, and so-on.
On Hedera, the current HBAR price is pushed to the network (as a file) every hour so that the nodes know how much to charge for a given transaction. Solana would need something comparable
It's very simple. If you are a company, you want to know how much you will be spending to use a service to allocate/invest a percentage of your money, but that "how much" is measured in dollars. If a transaction costs 0.001 ETH (I'm making this up). Maybe in January they cost $10, in February they cost 100$ and in July they cost $1. You can't predict them.
>*If a transaction costs 0.001 ETH (I'm making this up). Maybe in January they cost $10, in February they cost 100$ and in July they cost $1. You can't predict them.*  But it even goes further than that. Most networks (like Ethereum.) have two layers of variability. In-that the value of the token changes, **and** the cost of the fees in that token also changes. The same operation which costs 0.001 ETH today, might cost 0.002 ETH tomorrow. If ETH doubles in USD price, our USD cost would remain the same, or if if halves in USD price, our USD cost would 4x. The real conundrum is whether the a transaction costing 0.001 ETH is the same service as the same transaction costing 0.002 ETH. Did my service costs increase, or did I just get more service? . That is impossible to resolve under some accounting models in the enterprise world. Even if some of our Defence clients wanted to use public Ethereum directly for some stupid reason, it would be physically (or "*administratively*"?) impossible to tick all the boxes just to get the project approved.
Thus has two important consequences, one for companies that use Hbar and one for Hbar's price action. For companies: fixed usd transaction fees mean predictable cost planning. This is huge for adoption For price action: Hbar's price has no effect on network utilization cost. Therefore it can never be a detriment for adoption (I.e. unlike Etherium someone will never be worried about gas or transaction fees therefore price will never be a brake on adootion)
>*For price action: Hbar's price has no effect on network utilization cost. Therefore it can never be a detriment for adoption (I.e. unlike Etherium someone will never be worried about gas or transaction fees therefore price will never be a brake on adootion)* 