Holo (HOT) is the native digital asset on a distributed ledger called Holochain, which is a distributed application network that allows for payments to be sent around the world with practically no entry barriers for its users. Holo rewards people who support the network infrastructure with HOT tokens.
The world of Web3 is filled with alternative systems for distributed ledger technology (DLT). While Satoshi Nakamoto’s vision for a decentralized, peer-to-peer payment system marked the foundation of blockchain with the advent of Bitcoin (BTC), distributed ledgers have since evolved in a number of ways for a number of reasons.
One of the most unique variations of DLT is Holo’s Holochain. Holochain is a decentralized application network that aims to introduce an infinitely scalable Web3 ecosystem. To do this, Holochain uses a technology that is completely different to traditional blockchains, yet it does share many of the same underlying characteristics.
This article will dive into Holo and the network that the crypto calls home. We’ll cover Holochain technology and how it’s different to blockchain, as well as the different functions of the ecosystem and the role that HOT plays within it.
Key takeaways
- Holo (HOT) launched in 2017 and is now the 132nd most valuable cryptocurrency by market cap.
- HOT is used to incentivize nodes in the distributed application network, providing financial rewards in exchange for computational power that can host custom dApps.
- Despite sharing many of the same characteristics as traditional blockchains and being strongly aligned in terms of culture and principles, Holochain technology works very differently to other layer-1 chains.
What is Holo (HOT)?
Holo (HOT) is the native cryptocurrency for Holochain, which is a distributed ledger technology (DLT) that shares many of the same characteristics as traditional blockchains. The network supports the development of decentralized applications (dApps) and allows its users to send payments across the world at high speed and low cost. However, Holochain is not a blockchain in the purest of terms.
Like a blockchain, Holochain is open source which provides full transparency and ensures the trustworthiness of its code base. But unlike a blockchain, there are no blocks mined in the distributed ledger and each independent node keeps its own record of transactions instead. This system allows every node in the distributed ledger to verify transaction order independently, which unlocks a massive degree of scalability when compared with alternative systems.
To summarize, HOT is the native digital asset on a distributed ledger called Holochain. Holochain is essentially a distributed application network that allows for payments to be sent around the world with practically no entry barriers for its users. Holo rewards people who support the network infrastructure with HOT tokens, which gives it several key functions within the wider ecosystem.
Following the Holo ICO in 2018, the price of HOT reached a high of $ 0.031382 in April 2021 but has since struggled to approach that price level. At the time of writing, HOT is changing hands at $0.002209, down 93% from its ATH.
How does HOT work?
There are some key features that characterize both HOT and Holochain. Each characteristic will be discussed in depth below.
Holochain technology
Holochain technology differs from blockchain technology at its core, which is why Holo refers to itself as post-blockchain tech. To understand Holochain, it’s important to get familiar with how a blockchain works because Holochain and blockchains are different forms of distributed ledger — that is, a decentralized database that records information publicly, openly, and immutably.
Blockchains typically rely on the entire network of nodes reaching consensus before confirming transaction orders. This is the case for Bitcoin (BTC) and other PoW chains, as well as for Ethereum (ETH) and PoS chains. The longest chain, i.e. the one with the most successive confirmations from all nodes, is then considered to be the correct chain that future blocks of transactions are committed to.
This system is very different from Holochain. Instead, nodes in the Holochain distributed ledger can confirm transactions independently. Each node contains its own version of the ledger and uses the network protocol to decide transaction validity. Transaction validity is then verified retroactively and shared across the network. Any malpractice results in the guilty node being placed on a blacklist very quickly, thus protecting the integrity of the wider ecosystem.
Instead of using a traditional blockchain system for its distributed ledger, Holochain uses a patented technology called distributed hash table (DHT) to reach a consensus about the correct order of transactions.
Holo Hosting
Holochain supports its decentralized applications using a distributed hosting system. Holo Hosting requires that users provide computational resources to host dApps on the network. In exchange for supplying the ecosystem with computational power, users can earn HOT tokens as a reward. In effect, HOT acts as the incentive system for the distributed hosting network and enables dApps to run without relying on centralized computer servers.
HOT token
HOT is the native cryptocurrency of the Holo ecosystem. It is used to facilitate transactions within the network, pay for hosting services, and incentivize users to contribute their computing resources.
Scalability and efficiency
Holochain's architecture allows for high scalability and efficiency. As each participant maintains their own chain, the network can handle a large number of transactions without the need for all nodes to reach consensus on every transaction. This results in a more efficient and lightweight system.
In theory, Holochain is able to support limitless throughput, meaning that there is no cap on the total number of transactions per second that can be processed by the distributed ledger. In practice, total transaction throughput depends on the total number of nodes that are running on the network, as each independent node maintains its own ledger — because of this, there is no network congestion when it comes to validating transactions.
To summarize, Holochain is infinitely scalable as a decentralized application network. The more nodes that join the ecosystem and earn rewards for hosting dApps, the more transactions that can be processed simultaneously. This is a major difference between Holochain and traditional blockchains, which typically have mempools or some form of bottleneck due to the way the consensus mechanism works.
FAQs
Is Holochain a blockchain?
No, Holochain is not a blockchain, but it does share many of the same characteristics as traditional blockchains. Holochain is a decentralized application network that is fully open-source. It runs on a patented distributed ledger technology called DHT, which unlocks unlimited scalability for dApps in the ecosystem.
What makes Holo different from other networks?
Holo aims to usher in a true Web3 where web-based applications no longer rely on centralized servers and can instead be hosted by anyone, anywhere in the world. While blockchains allow for applications to be built on top of a bottlenecked consensus mechanism, Holochain allows for distributed hosting where each node maintains its own ledger. On balance, this enables unlimited scalability as more nodes join the network.
What is the utility for HOT token?
HOT tokens are used to send value across the world at high speed and low cost, and they are also used to provide financial incentives to users who maintain the network infrastructure. By providing computational resources and hosting the ecosystem’s applications, users can earn HOT token rewards passively.
The bottom line: HOT supports an ecosystem of decentralized applications by incentivizing Holo Hosting
Holo is definitely a unique cryptocurrency. It differs from other crypto assets in terms of its function and in terms of the network that it supports. In essence, HOT is integral to the security systems of Holochain, which is a distributed application network that relies on the HOT incentive system to support native dApps.
To learn more about Holochain, you might want to learn more about different consensus mechanisms for other blockchains, as this provides some useful insight into how Holochain works (and, ultimately, what makes it so different). If you’re interested, check our article Different Kinds of Cryptocurrency Explained.
