Why after so many bungled ICO launches, sharp price drops, issues of scalability, DAO inspired forks, massive block chain sizes, and lack of confidence from the developers on the future of the project do people still attribute so much monetary value to a Ethereum? How does it bounce back so rapidly from falling so far? Why will it be the dominant cryptocurrency in a few years?
Ethereum was meant to function as an asset that pays for the gas on smart contract transactions, it can never be a stable long term currency because it is abundant and inflationary, and not a good store of value. But bad money drives out good. As long as ether is being treated as money to buy into ICOs, it will win in the battle against the much more stable currency of bitcoin.
Gresham's Law states that any circulating currency consisting of both "good" and "bad" money (both forms required to be accepted at equal value under legal tender law both are traded in major currencies) quickly becomes dominated by the "bad" money. Abundant and inflationary money is the same as shaving down / alloying coins to debase their actual value when both good money and bad money are traded in the same exchange currency.
https://en.wikipedia.org/wiki/Gresham%27s_law
Long term, as more people view ETH as a currency used to buy into ICOs that quickly recovers after even the slightest hiccup that SHOULD cause the value to drop, it will be hard to reverse this trend without some catastrophic event that brings the ETH blockchain to a halt.
One has to wonder if all of these ICOs are simply trying to gather up as much ETH as possible before the PoS switch....
