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What Is Holochain?

Holochain is a distributed computing network that may perform faster than blockchain technology. It is claimed to have infinite scaling capacity through peer-to-peer (P2P) networking, so that as distributed applications are added, there is no degradation in the performance of the network. The HOT token is the current unit of cryptocurrency.

For a deeper analysis of Holochain, please visit our HOT Digital Asset Report & Evaluation (DARE).

Introduction To Holo

Many blockchain projects are built to be decentralized, but Holochain went a different route by building a distributed network. It’s a minor difference that relates to sharding and relieving congestion. We’ll get a bit more into the weeds on it below if you’re already salivating.

Cofounders Arthur Brock and Eric Harris-Braun, along with the development team, believe they developed an enterprise-grade platform that’s so next-gen, it isn’t even recognizable as a blockchain anymore. Instead, they dubbed it Holochain. It has no limits in its ability to scale and host dApps, and it’s built with today’s distributed, cloud-based IT infrastructure in mind.

Of course, many on Reddit and other crypto forums wonder (quite aggressively, if you can believe it) whether the mainnet launch and HOT’s ERC-20 conversion to Holofuel will be worthwhile. There’s a lot of vaporware, and crypto is a “show and prove” market these days.

As of April 26, 2019, the mainnet is still in a closed Alpha state of development.

Hodlers and ICO investors shouldn’t worry too much. There’s a lot of active development on the project, and Brock already cofounded Holo.host, Holochain’s flagship testnet app that will make it further development on the platform.

This doesn’t guarantee success though, so let’s review the entire project, starting with HOT, the Holochain token that was sold during the ICO.

Breakdown of HOT

Holochain has a total supply of 177,619,433,541 HOT. Its peak price so far was $0.002 on May 5, 2018.

The Holochain ICO occurred from March 29 through April 28, 2018, at which time 25,000,000,000 HOT were released as ERC-20 tokens. The supply was steadily increased until 133,214,575,156 HOT were minted and 30,202 ETH was raised. Of the tokens released, 75 percent were distributed through the crowdsale, and 25 percent were held by the founding team to fund future expenses.

Because it’s an ERC-20 token, HOT is supported by most ERC20-compatible wallets.

HOT is supported by a wide variety of popular exchanges, including Binance, Latoken, Hotbit, and Fatbtc. Its trading pairs are typically ETH and BTC, although it can also be exchanged for USDT on Liqui, should you need it.

Once the Holochain mainnet goes live, Holochain Tokens will convert to Holofuel (HOLO) at a 1:1 ratio. It’s unclear yet which wallets and exchanges will retain compatibility during this transition, although it is expected that Binance will do so. The organization appears to be planning another ICO for HOLO once the mainnet beta launches though.

The Move to Distributed Over Decentralized

As I said at the start, Holochain’s big focus is on distributed computing over decentralized, and there’s a good reason for this. Over 96 percent of enterprises currently use cloud computing, and they’re not all exclusively cloud-based. Instead, most modern corporations use a cloud hybrid IT model, whether using on-site employees or virtual teams.

Cloud computing is a $130 billion industry, and major players like IBM are also deeply entrenched in blockchain technology too. Startups like Dropbox managed to squeeze $1.1 billion annual market share in this space because it was ahead of the curve.

Like Dropbox, Holochain is ahead of the curve in many ways. It’s at the forefront of blockchain – in fact, it claims to be “beyond blockchain” – which is one of the most important technologies developing over the next decade. But it’s not all roses for the Holochain project – there are plenty of obstacles ahead.

For one thing, offering a cloud-based storage solution isn’t the reason we know what Dropbox is. It’s not just technology that matters, and Dropbox aggressively pushed a referral marketing campaign that’s still paying off dividends to this day.

But the Holochain team isn’t going in completely empty-handed. It partnered with Next Block Group in early 2019 to spur more commercial and enterprise applications to the platform.

Holochain doesn’t have the explosive growth of Dropbox yet, but it does have a thriving community that’s continuing to grow. Community support and belief in the project could catapult Holochain into the limelight, but it’ll need a functional mainnet before we start popping the champagne.

Is Holo’s Promise a Hollow Promise?

The major difference between distributed over decentralized computing is in how the blockchain is processed. With a decentralized network like Ethereum, every node has to process the entire chain, which is present in its entirety on each node. Distribution removes the need for this redundant information, and data integrity is maintained among unlimited peers without a consensus mechanism needed.

It’s the same concept used by sidechain or mother/child chain networks like EOS with the addition of removed consensus. This means no PoS or PoW, and no mining. By removing these processes from the traditional blockchain mix, Holochain believes it created a more efficient blockchain, and it may be right.

Apps created on Holochain would run smoother than other blockchains, and while that may not sound like a big enough deal to matter, speed is everything in technology. Look at video cards, where a crypto mining or VR-capable graphics card fetches a high price because every millisecond matters. If a professional gamer is facing opposition with better equipment, they’ll have faster response times, and she’ll likely lose.

To showcase the utility of the platform, Holochain already has several distributed apps developed on its mainnet alpha, including Ethereum’s DAO, a KYC/Whitelist dApp, and Junto, a new social media platform. It also developed Holo, which acts as a bridge between the blockchain and the rest of the world.

Blockchain startup RedGrid is also using Holochain as the hosting platform for its Internet of Energy.

Instead of mining, node computers will lend processing power to hosted dApps like these, and they’ll be compensated in Holofuel. Instead of everyone tracking everyone’s token transactions, the host nodes track their own transactions. This compensation model is much closer to the traditional employee compensation model used in pretty much every legitimate business around the world.

This one-to-one transaction is also how retail works, even though crypto doesn’t. Have you ever noticed you don’t need to show the McDonald’s cashier 7 years of tax records, bank statements, credit scores, and receipts just to buy a Big Mac?

The ledger is only used to verify the current transaction. Do you have enough money to give me or not – I don’t need to know the serial number of every bill you give me. It’s just not that important for most daily transactions.

But we don’t know yet how well it’s going to work, because it’s still in the alpha development phase. The betanet is scheduled for a Q4 2018 release, and it’s so far pretty well received by the community. You may not have heard of Holochain in 2018, but you may live to regret that come 2019.

Holochain Summary

Holochain is so ambitious, it considers itself above and beyond the typical blockchain. Instead of a decentralized model, it uses a distributed blockchain model to create a leaner, more efficient network. If it succeeds, it can become a sleeper hit in crypto, and we’re mere months away from finding out. Here are Holochain’s key strengths and weaknesses.

Holochain has a strong development team and community that seems dedicated to the project and willing to write solid code. (Our code reviewer, Andre Cronje, almost fell over himself in his praise.)

Holochain apps will run more efficiently than other blockchains because it removes the tokenization and consensus processes to focus purely on smart contracts.

Individual nodes process their own ledgers to build a truly p2p trust ecosystem that could prove to be a better way to blockchain in the wild.

With its focus on relieving blockchain congestion, Holochain is on the right track. So long as the mainnet holds up to the team’s promises, it’ll be a major contender in tech.

We’ll wait to see how well the dApp ecosystem develops over the next year.