“Creating an ecosystem of decentralized apps with distributed, user-controlled storage. Cheaper, faster and better than Blockchain”
We in Altlift explained the technical aspects of Holochain in detail in our analysis of 2019 already. This analysis is focused more on the fundamental factors and the use cases of Holochain.
To understand the project of Holochain, we need to clarify some conceptualities: Holochain is the basic framework on which Holo’s projects will run. It is an open-source framework for creating peer-to-peer applications, where each node contains its own immutable ledger with a list of transactions and actions.
Holo is a peer-to-peer distributed hosting platform for Holochain applications running on Holochain. Within this platform, the proprietary currency HoloFuel is used to pay or get paid for hosting.
The idea behind the Holochain project is to decentralize the classic Internet as we know it. Because when someone uses the internet, all the data they access has to be stored somewhere. This is usually done by big companies like Google running huge data centers for hosting services where the data is stored, managed and made available. The problem is that these companies are centralizing power, because it’s their data, they can keep it and analyze it.
Through Holo, each person can participate as an individual in the global hosting by adding his own computer to the Holochain. As this structure would lead to scaling problems when using classic structures of a blockchain as we know it from Bitcoin, like synchronizing a single consensus (FullNode), which means that each transaction must be verified by the entire blockchain, has decided that each node works on its own when processing data (P2P).
This strikes a middle ground between decentralization and centralization to realize the best of both systems and should bring back the power to the people. In addition, simplified consensus building should make it possible to significantly reduce energy consumption as opposed to the proof-of-work mechanism.
Figure 1: Shows the visualized difference between Holochain and blockchain. Source: Holochain
In this section, we will try to classify Holochain-tokens according to our methods. For the sake of simplicity, we will continue using the term HOT for Holochain-tokens.
HOT have no physical collateral because they are not backed by something like gold or silver in the physical world. They are just based on an electronical protocol which means that they have fixed rules based on code.
In this case, the code is firstly implemented on the ERC-20 standard for tokens based on the Ethereum Blockchain and secondly on the specific rules which are implemented to the HOT directly, for example a fixed total supply of tokens.
HOT has a fixed quantity of 177,619,433,541 tokens. They were issued to finance the project through crowdfunding 1 HOT = 0.0000002267 ETH (0.00015 USD). HOT will be redeemable for HoloFuel once Holo goes live. This redemption will happen at a conversion rate of 1 HOT = 1 unit of HoloFuel (HOLO).
Holders of HOT will need to redeem HOT for HOLO within 6 months of the launch of the network. You can think of it like a coupon that expires if you don’t redeem it in time. HoloFuel will work similarly to current fiat. By extending credit, the issuer adds the negative (liability) item of HoloFuell to its balance sheet and adds more value on the asset side that it acquired against fiat. The quantity will then no longer be fixed but will adapt to the current demand for computing power.
The projection of HOT is done by accessing the respective tokens through an ERC-20 compatible wallet. The tokens cannot be physically possessed, but only their access can be possessed as a value. Holo say their currency will be backed by the asset of computing power, which means if the network of computing power grows, they can issue more HoloFuel in the future.
HOT are divisible up to 16 decimals. There is currently no specific name for the decimal places of HOT. However, due to the high gas price of Ethereum, it is not recommended to send very small amounts of HOT at the moment. However, the cost of sending HoloFuel will be only 1% flat, making it ideal for small or even micro transactions.
Because HOT is an ERC-20 token, the current transmission system is the Ethereum Blockchain. In this, they send HOT and pay the miners of Ethereum in ether (Gas). However, once HOT is converted to HoloFuel, the new transaction system will be the Holochain. In this context, the fuel will initially not circulate freely between the agents but will primarily be used to pay for hosting. Gradually, however, transferability is to be extended to the level of ether (whose primary purpose is also to pay for the use of a virtual machine).
The fundamental difference from a blockchain that records changes in asset states to user addresses (or works with UTXO and tracks the history of tokens up to the point of their mining) is that balances are duplicated on Holochain. So, each transaction has an active side and a passive side (asset and liability).
The Holo ecosystem has six types of agents. An entity simply called Holo is a developer who provides the underlying infrastructure. They receive a fee for their role not exceeding 1% of the volume of each transaction. Holo also participates in the issuance and maintains a negative fuel balance.
The reserve account issues new fuel against provided collateral, which can be fiat or perhaps ether. It also carries a large negative balance.
Hosts offer computing capacity and receive an internal fuel unit as a reward. When they prove their usefulness in the network, they can become negative based on the rules in the protocol, i.e. issue new fuel.
Application providers use hosting and place their dApps on Holo. They pay hosts in the form of fuel for these services. However, the Green Book also envisions allowing payments in other currencies, including fiat currencies.
Developers write code for Holo or the application provider. Eventually, it should be possible to pay them in fuel.
Last but not least, the end-users of the apps are also part of the system. They should gradually be allowed to pay for using apps in fuel.
HOT are not linked to a security that guarantees their stability. The value is volatile and is derived exclusively from demand within the network. However, quasi-collateral (fiat, ether, etc.) is held in the reserve account. Hosts (no one else) should be allowed to exchange fuel for these assets directly with the reserve fund. However, they can only use the fuel they receive for hosting to exchange. So, no fuel sent by other agents through normal transactions once normal transactions are underway.
During the creation period, up to a total of 177,619,433,541 HOT have been created by the Ethereum Smart Contract System, all of equal value and functionality. However, as discussed, these will be exchanged for HoloFuel in the future, changing the terms as follows:
Issuance for HoloFuel will be at the discretion of the monetary authorities. It is, however, similar to fiat, double-entry. While in the case of the fiat, a corresponding debt is incurred against the issuance of money, in the case of issuance by the Reserve Fund, it is offset by a gain in collateral. It is thus similar to the issuance of national currency under the currency board regime, where the central bank must hold a foreign currency against the new money, with which it maintains a fixed exchange rate. .HoloFuel is not directly pegged to any currency and the price of the issue is determined by the Reserve Fund itself.
Issuance can also be done by hosts subject to the conditions described above. In doing so, they increase the liability side of their balance sheet and add to the asset side the value they purchase with the new fuel. In fiat, issuance in the form of a bill of exchange or purchase on invoice works similarly. Issuance can also be done by the infrastructure provider Holo, the method or limitations are not yet very clear, which can be seen as an exclamation point.
Interestingly, the creators of Holo refer to traditional cryptocurrencies as fiat, as they are created as an asset out of nothing. In contrast, HoloFuel is backed, albeit by debt (we disagree with this reasoning, but present it to demonstrate the reasoning of the Holo team). The word fiat has gradually changed meaning. Today it refers to a currency with forced circulation. The original Latin meaning translates as “Let there be” (Fiat lux = Let there be light) – that is, the creation of something out of nothing, by the divine decree. The authors refer to the system of money creation in Holo as mutual credit.
As HOT run on the Ethereum blockchain, there is no central administration that can control the money supply. Nevertheless, it must be mentioned that when the conversion from HOT to HoloFuel is completed, the termination will be different from classic cryptocurrencies such as ERC-20 and bitcoin. HoloFuel’s money supply can also shrink in this case. Active and passive accounts cancel each other out, as when the person of the borrower and the lender merge. Fuel also expires when hosts exchange fuel for collateral at the reserve fund.
What has changed since 2019
Since we in Altlift have already analyzed the Holo project in 2019, an update is now given on the most important renewals.
Figure 2: Holo’s offiical Roadmap. Source: Holochain
Since the ICO in April 2018, phase 1 of inception has been successfully completed. Phase 2 of infrastructure advanced to the extent that another 500 HoloPorts will be delivered to expand the network and perform pretests in further phases. All Holoports are sold out at the moment and you have to get on a waiting list to buy the next batch. Recently, in phase 3, they hosted Elemental Chat where users can create channels and join group discussions was brought into alpha testing where we are now on the roadmap. A further step will now be that more HoloPorts will be delivered and it will be possible to participate in testing and future hosting even without specific hardware like the HoloPort. After that, the HoloFuel registration will be carried out, where the ERC-20 HOT tokens will be exchanged for HoloFuel. Once HoloFuel works and an application for it is available, demand may increase.
Holochain community development since 2019
|Channel / Year||2019||2021||Growth|
The community around Holochain has grown a lot since 2019. The decline in Telegram can perhaps be explained by the fact that various country-specific groups have been established over time.
Price development since 2019
|Market cap in USD||239,881,430||1,119,654,092
The price of HOT has increased by 350% since our last analysis. The price of bitcoin, however, has grown almost the same during this period with +336%. We could conclude that HOT was driven by the bitcoin price during this period, which is not unusual. In order for HOT to become independent of bitcoin, it must first gain its own functionality, which could be the case with the exchange to HoloFuel and the start of Holo at all.
Demand for HOT / HoloFuel
As the price is determined by supply and demand, we will now take a look at these factors. Because we have already discussed HoloFuel’s supply under creation read there or learn more on the project’s website.
Figure 3: Internet user growth from 1990-2016. Source: Our world in data
As Holochain tries to shape a new kind of Internet, we have to ask ourselves how big the demand for Internet is. It is obvious that this demand is very high and is increasing due to globalization and technological progress. Moreover, hosting is indispensable for the Internet, because without data there is no Internet.
Figure 4: North America web hosting forecast. Source: Fortune Business Insights
As the bandwidth of the Internet and its use continues to increase, so does the demand for hosting. If Holochain really succeeds in building up a marketable hosting service, the demand for it would certainly be there. However, these data are based on an estimate only.
Figure 5: Shows the centralization in web hosting. Source: Host Advice
Holochain is trying to make hosting more decentralized through its network. As we can see, even just the geographical decentralization of hosting services is in great disarray. Because 51% of it is in the US. One could only imagine the power that the USA could exert on the entire world through this enormous influence. Since the discussion about decentralization has only been initiated in the last few years, it is quite possible that Holochain could really strike a chord with its decentralized Internet.
Use cases for Holochain
Holochain has planned to publish few official Holochain apps (hApps) in order to offer people an easy way to manage their privacy and their data on the ecosystem. At the moment they are the following:
- DPKI: Is made in order to offer to people an easy way to manage their keys across multiple devices
- HoloVault: An App for people to manage how other apps access their personal information.
- Abundance of Presence: A decentralized meeting scheduler
- HoloChat: Multi-room P2P chat like a distributed Slack
All the Holochain Apps
Since the beginning the community showed a large interest on building decentralized applications. Here you will find all the projects planned to be released using Holochain framework. (https://www.buyholo.net/en/use/)
RedGrid is building the internet of energy aimed to optimize energy assets, enable renewable integration and create a smart transaction grid.
The World Bank has defined supply chain inefficiencies as the #1 world problem to solve in order to stimulate economic growth. Morpheus.Network is here to solve this issue by providing a full-service, global, automated, supply chain platform with an integrated cryptocurrency payment system utilizing blockchain technology.
Humm is a peer-to-peer publishing platform that re-imagine how we publish and reward good content. Think of it as fully distributed WordPress made for the writers and content creators of the future.
Sacred Capital is building a reputation interchange aimed to serves as the economic backbone for the distributed world.
Junto is a new breed of social media founded in the spirit of authenticity. Their goal is to move beyond the restrictive norms of current platforms and cultivate an atmosphere that free enables expression.
Fairbnb can be summarized as a new decentralized Airbnb aimed to solve all the issues raised by the centralized version. Fairbnb is building this one in order to be smarter and fairer for the whole community.
Bridgit want to rethink the way we are making link on the internet. They call it a bridge and their intent is to add a verification layer in order to know the quality of each link.
Wirdpbc is a set of 4 different projects aimed to make the social interaction across the internet more intelligent.
Producers Token is building a platform for tokenizing and exchanging agricultural and natural resources. Producers Token works with real producers in order to evaluate tokenization opportunities. The project is currently focused on three categories of token assets: a service or a resource which is already existing, a farm under construction, an installation or an expansion that is not currently in operation. But also, the tokenization of a natural resource asset for regeneration and conservation.
Just One Organics
Just One Organics is a project who focuses on food including with revolutionary organic fruit-based products and dried flake-like vegetables. The team is studying different ways to use Holochain for their projects.
Another great project under Holochain, the ambition of Core Network is to merge into a single social network or all current social networks such as Facebook, Linkedin, Instagram, Twitter… Or also Steemit and Everipedia for blockchain fans. The advantage is that you will use a single application if you prefer, in fact the other social networks will continue to exist but you will use them directly from the interface of Core Network.
Other use cases
Application providers can use hosting on Holochain and place their dApps on Holo. Some application examples could be the following.
Today: Jim has a small guest house that he’d like to rent to visitors. However, he is looking for an alternative to airbnb. Jim likes to talk to people before he agrees to have them stay with him, and Airbnb blocks attempts to share phone numbers until after a guest has finished booking.
Coming Soon: Jim could opt to join , a Peer-to-Peer home sharing platform run by the hosts themselves. Whenever someone visits the Ourbnb website, one of the community member’s computers serves their requests and deals with the booking. In return for making Ourbnb available to anyone with a web browser, that host gets compensated in Holo for the work their machine did.
Vision: The Sharing Economy on Holo expands through building numerous interoperable cooperatives. Reputation becomes portable across communities, so rave reviews in acclaim in Ourbnb may help Jim access opportunities in other contexts as well. Sharing smaller resources (not just homes and cars) also may become more common thanks to Holo’s efficient micro-transactions.
Medical Records Management
Today: Dana has medical records on file with 8 different doctors at 3 different hospitals. Yet, when she moves to a new town, it could be a bureaucratic nightmare to assemble the records from all of the different locations.
Coming Soon: With Holo, she would be able to securely share her own copies of her records with her new doctors and hospital. She would have that team working with a full medical history without any delays. Dana feels better knowing she holds, owns and controls her personal information.
Vision: Dana’s personal AI integrates health information from her fitbit and other ongoing health records, noticing trends worth watching for a heart condition she was diagnosed with a couple of years ago. Dana is also able to opt to share the insights gleaned by her AI with a service that will help her more effectively manage not just her physical health, but her emotional state as well through a custom blend of diet, activity and relaxation. In addition to choosing to share this “between checkups” data with her doctors, Dana can choose to share subsets of her data as anonymized information for medical research.
Identity for Refugees
Today: Amena is a 15-year-old Syrian refugee living in Eleonas, a refugee camp outside of Athens. She had no ID when she arrived. Though not uncommon, this has complicated interactions with a variety of government agencies and aid organizations.
Coming Soon: With Holo, upon arrival in Eleonas, she could be given an Identity with Dignity (IDwD) smart card that she could use to begin using applications and controlling her own digital records. These could include credentials created as she moves through steps in a government immigration process, records from doctor visits, school achievements and more. For example, when Amena attends school, she can add copies of her classes and grades to her own online records. Each would be cryptographically signed by a teacher or administrator. Later, if she moves to a different camp, or is accepted into a host country, she will be able to share her school records directly with administrators, who will be able to confirm that the grades were signed by her school in Eleonas through any web browser. The hosts that support web access to refugee-controlled records may choose to donate processing power or could be compensated by the government overseeing the camp for helping support IDwD.
Vision: Our ability to control what we share and who we share it with is critical for privacy and agency. By making it not only possible, but easy for each of us to carry claims from our past into new interactions, we improve our ability to build relationships with our fellow community members without compromising our dignity – and this in turn may enable much more fluid and thriving forms of community.
Incentivized Mesh Networks
Today: A handful of telecommunication companies have a monopoly over bandwidth. This is true in countries around the world and has enabled governments in places like Turkey and Egypt to “turn off the internet” whenever they feel like it. Furthermore, some internet providers want to charge different rates for different kinds of data, making the net less neutral. Before long access to the internet could look like your cable bill: selective channels of access. Today, the only organizations that can benefit from adding bandwidth to the internet (and thus the only ones incentivized to do so) are telecom companies. They lay cable and put up towers and bill customers for internet access on a monthly basis.
Coming Soon: On the other hand, Holo’s microtransaction system could make it possible for anyone who puts up an antenna or shares a bit of their cell phone bandwidth to get rewarded for the increased internet access that they are creating. Similar to how holo leverages idle storage and processing power, it can also help us make better use of idle bandwidth — or incentivize the creation of additional bandwidth — as well. Jane could put up an antenna and choose to relay data for free for her friends or for a fee for strangers, thus extending network capacity.
Vision: With a growing ecosystem of peer-to-peer applications and an expanding peer-to-peer infrastructure, the centralized internet that has led all of us to grow accustomed to assuming we are being monitored and manipulated could soon become more of a memory than a menace. In addition, these more distributed models prove far more resilient as well – able to rebound from disruptions far more readily than is the case today. It may seem silly to require the residents of Hurricane impacted Puerto Rico to establish a connection to data centers in Silicon Valley in order to send messages to family members a few kilometers away, but for most social media and messaging applications today, that is what’s required. This centralization has resulted in brittle systems that have hampered rescue efforts too many times. In contrast, with distributed applications, just an antenna or two would re-establish the ability for residents and emergency responders to communicate, coordinate and save lives.
We in Altlift see the Holochain as an exciting project in the crypto universe that takes the approach of moving away from the classical blockchain technology. However, while many factors such as the well-positioned team and the increasing global demand for computing power and hosting are appealing, it is important that Holochain manages to implement specific use cases that create a purpose for HoloFuel. At the moment, the project is still in the development phase and it will be important to bring Holochain from the test phase to the main phase in order to create such a demand for HoloFuel.
Since the Holochain project is also strongly driven by ethical and political factors, such as the desire for a decentralized internet and a broader distribution of power, it is important that many people share this attitude and also consider it important. However, since the community is growing and all the Holoports sold out quickly, we think there is definitely interest in this project. Also, it will be important that the offer of Holochain host services will also be price-competitive with the classic host providers and that eventually more and more application examples for Holochain, Holo and ultimately HoloFuel will emerge in the near future.
All the presented projects are planned to be released using Holochain framework. Most of them, however, are only suggested by the community and not officially by the development team. We think Holochain needs to break away from Ethereum first for the projects to really start.
It is said that the stock exchange is always trading the future and we can probably say the same for cryptocurrencies, but until now, a lot has been promised for Holochain. Expectations are high, but it should be waited whether these can really be fulfilled or are at least foreseeable. Most importantly, Holochain is not a blockchain. It is a competing project. No MVP has been presented yet and it is probable that the idea will fall short against its more established competition. The developers should focus on the advantages the double-entry design of their distributed ledger offers rather than draw inspiration from existing blockchain-related ideas. However, we advise you to take a close look at the project and the market situation before making a purchase decision.