Is Holochain (HOT) A Good Investment? In-depth Analysis and Near to Longer-Term Expectations
Is Holochain (HOT) A Good Investment? In-depth Analysis and Near to Longer-Term Expectations

By CryptoBoomer | Investments | 15 Jan 2020


The blockchain is only one of many Distributed Ledger Technologies (DLTs). Some other types you might have heard of are IOTA’s Tangle, a Directed Acyclic Graph that gets faster as more users join the network. 

Developers have been looking for blockchain alternatives and there has been some success in this regard. Frankly, people are looking for alternatives and improvements in almost every area of DLT-development, as the field is so new (The early 2020s is looking to be the time when we move from research and into full on development.)

There is such a rush for building the optimal platform, whether that’s for decentralized application (DApps) development or for decentralized cloud computing. The project I’m going to be talking about today is Holochain, a somewhat well known project in the space.

Holochain has a few things going for it, not the least of which is the fact that it is not a blockchain-based project. The project is highly focused on creating a strong infrastructure and ecosystem for DApps, as we shall see.

I’m going to give you a quick rundown of what Holochain (HOT) is, the architecture and design of the network, the enterprise strategy that the team is taking, what developers themselves are saying, as well as the HOT token’s price history and investment potential.

What is Holochain (HOT)?

A brief explanation of what Holochain is.

The idea for Holochain (HOT) was conceived in 2017 by Arthur Brock and Eric Harris-Braun. The project, which goes with the taglines “think outside the block” and “a more human internet”, has a vision to build a decentralized economy. To build this more human internet, the team hopes that Holochain “enables a distributed web with user autonomy built directly into its architecture and protocols.” 

Identity, data privacy and storage, and processing are considered by the team to be important areas that could be improved with the introduction of DLTs. This new kind of internet (which is more or less the idea of Web 3.0 or a decentralized web), through Holochain, will help people have true ownership of their identities by having them own and control their data, transact without centralized systems, and use cheaper and more efficient applications that are customized for their needs.

In other words, the Holochain team wants to build decentralization to several aspects of human interaction, not just financial transactions. In its actual practical manifestation, this will include DApps related to governance and collaboration; social media, social networks and vendor links; sharing economy and platform co-op apps; and supply chain and social communities.

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Holochain for developers. Source.

Holochain can be thought of as “a framework for distributed apps.”  Holochain’s developers, and the branding in general, explicitly state that Holochain is NOT blockchain. Core developer Nicolas Luck described it as “Ruby on Rails, without all of the centralization” For those of you unfamiliar with Rails, a web application framework that provides the default structures for databases and web pages online.

So that’s a very quick explanation of what Holochain is and what it does. Let’s move onto what’s interesting about the technical design of the project.

The Technical Architecture

An overview of how Holochain works.

The project is quite clear with its non-blockchain style: “think outside the blocks”, after all. If not the blockchain, then how does Holochain operate? The team has actually described it in multiple ways. One interesting description that might click, at least for the more tech-minded, is as follows: “Holochain is BitTorrent + Git + Cryptographic Signatures + Peer Validation + Gossip.”

On the Holochain network, every user has their own hash chain, which keeps a record of all their transactions and data. If necessary, this data can be uploaded to a shared space where others can use the data. This is one process where decentralization comes in - usually this data would be handled by centralized entities in a centralized system. Currencies are optional on the Holochain network, intended only for the cases where it actually serves a purpose. Every node is a full node, and the barrier of entry is low as you do not need full blockchain data - every node has a little bit of the data, making the process distributed (and in the grand scheme of things, decentralized.)

This is an excellent guide that explains the technical aspects of Holochain in a very intuitive manner.

The other important thing to know about Holochain, from a technical standpoint, is its Proof-of-Service consensus protocol. It works as follows: if a user completes a service for another user, he or she is rewarded in cryptocurrency for the effort. This reward comes in the form of HOLO, which is different from HOT. HoloFuel can be compared to Ethereum’s gas. The HOT tokens are like receipts which be redeemed for HoloFuel. The Holo currency whitepaper explains this in detail.

The Holo Fuel that keeps the system running.

Basically, the Proof-of-Service system keeps track of the contributions of users on the network, which can be data storage or transfer, and other processes when more DApps are developed.

That’s about it for the technical side of Holochain. How is the team planning to expand their network and grow the ecosystem?

Business Strategy, DApp Development and Partnerships

There are two things that are noticeable from how Holochain has carried development and expansion: an enterprise focused strategy and a strong focus on DApp development. These two go hand in hand, as the team is really facilitating the development of applications by making things as easy as possible for developers. 

The team has provided extensive documentation and guides to ease developers into working in this emerging tech trend of decentralization. Developers can build in JavaScript and Lisp, and the system provides core services like: 

  • A customizable UI
  • The Holochain DPKI app that manages keys and identities across holochain applications
  • The Holo platform for serving crypto apps to normal web browsers
  • API bridges between crypto apps
  • The capacity to migrate data when updating distributed apps

It makes sense that Holochain would target enterprises, who would want a quick and reliable way to access decentralized and distributed solutions. They can quickly migrate their ideas to these new systems with Holochain’s tech.


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Holochain and the Next Block Group are working on enterprise solutions. Source.

In fact, Holochain partnered with the Next Block Group for this purpose. The latter connected base layer protocols with enterprise entities. The partnership will see the two parties together to develop enterprise solutions.

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Projects built on Holochain will be listed on Orion’s DEX. Source.

Holochain has also partnered with Orion in August 2019, a protocol which “connects centralized and decentralized exchanges, enabling an ecosystem of dApps to solve liquidity issues and price parity.” This means that projects built on Holo will be listed on the Orion Protocol DEX, with discounted IEO fund-raising packages and additional trading services.

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Morpheus Network will use Holochain’s framework. Source.

Lastly, Holochain has partnered with Morpheus Network, a project attempting to disrupt the global trade industry. Morpheus Network will use Holochain’s framework to build its supply chain solutions.

What have Others Said about Holochain?

Holochain has also received some praise from established figures in the tech industry. The most prominent of these is Jim Cook, one of the co-founders of Netflix. Cook said that “Holochain is talking Mozilla’s language.” Cook was formerly the CFO of Mozilla. He had a lot to say about decentralization in general.

Price History

HoloChain launched in May 2018 and it’s seen a topsy turvy ride in the market since then. ICO investors are seeing a slight loss on their investment at 6.11%, but that’s not enough for people to worry. The HOT token is currently ranked 44 on CoinMarketCap with a market cap of roughly $111 million.

The token’s all time high occurred in May 2019 with the token’s price being $0.0025. The all time low occurred in June 2018, with price being $0.00034. 52 week highs and lows tell a similar story, at $0.0025 and $0.0005 respectively. 

HOT price chart

HOT’s price chart. Source. 

Even if the price chart might make it seem like that Holo has been having a wild ride, it’s way too early in the market for anyone to be forming conclusions about the project. This is something you’ll notice in a lot of altcoins that have potential use and good development, but are nowhere nearly as well known as some of the more major networks. 

That being the case, we should still look at the qualities and efforts of Holochain that might make it a worthwhile investment. 

Investment Potential

Even from an initial glance, you can tell that the team is genuinely attempting to develop something that is of practical use to developers. There is also a strong work ethic in them, another key factor that should be in your mind when making an investment.

However, even with a useful purpose and a strong work ethic, projects are not guaranteed to succeed. There are several solutions to the DApp, scalability and data ownership problem. Competing projects include Ethereum (ETH), EOS (EOS), TRON (TRX), Civic (CVC) - even Microsoft is coming up with a digital identity solution. A lot of these projects are tackling some of the related problems. 

Yet, it is hard not to feel a little optimistic about Holochain. It’s hard to say whether their project has better performance, design decisions and business strategy, has any better of a chance than a lot of altcoins. Only time will be able to tell us that. 

I highly recommend keeping an eye on this project and seeing how things develop.

Conclusion

Perhaps it is too early to make any conclusions about Holochain. You’ve got to ask yourself that question that keeps repeating itself when you look at a new altcoin: does this project have enough development and use case potential for it to be worth the risk. And make no mistake, every altcoin is worth a risk, given that anything can happen with 

Holochain’s focus on enterprise development sure is a positive sign, at least to me, because for the moment, I think that enterprise adoption is more important than commercial adoption. The more developers build on blockchain networks, the more quickly will the whole market grow. 

Commercial adoption will trickle down from enterprise players, who just want to use the best technology possible to gain and retain their customers. I think increased commercial adoption will naturally follow from enterprise adoption, so I’m happy to see DLT solutions focus on the enterprise market.

All that said, what does the HOT token mean for you? Should you invest in it? I’d recommend investing in it only if you are on the riskier side and/or like to value invest in projects. There’s no guarantee that Holochain will become a mainstay in the market, but that’s true of so many projects. If you like to play it safe, don’t invest, and stick to Bitcoin, Ethereum and a few of the other major assets.


CryptoBoomer
CryptoBoomer

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