Not everyone is comfortable with the centralized nature of the internet. There have been deep yearnings for a kind of internet that is run by mere individuals who determine how their data is stored.
Thanks to the introduction of blockchain technology, more blockchain-based products that allow users to dictate how their data is stored and accessed have emerged.
One of the remarkable inventions is Holochain. Holochain was specially designed to create a distributed internet built with user independence in mind.
In this article, you will learn about how Holochain is transforming how we use the internet and the various use cases of its tokens, HOT token, and HoloFuel.
What is Holochain?
Holo is a peer-to-peer platform that allows decentralized applications to host their dApps on its network rather than using centralized servers. It offers a P2P market of Dapps where users of the network can host data by using their computers and getting paid in return.
The goal of Holo is to offer a more productive and cheaper system for developers who are working with decentralized applications. It also aims to create an internet where interactions and relationships between users aren’t ruled and monitored by centralized entities.
Although applications that run on Holochain are decentralized apps, they are called hApps rather than dApps.
Rather than using the existing blockchain technology to verify transactions and generate new blocks while securing the network, the Holo and Holochain ecosystem uses a special hashing function and it’s built on the Holo Distributed Hash Table (DHT).
The DHT system doesn’t rely on selected nodes but on a single node that can individually verify transactions. Once verified by an individual node, the data is delivered to other nodes in the system which double-check the verified data for transparency and legitimacy.
Use Case: Reward users for hosting apps and data
HoloFuel is given as a reward to users, who share their computer storage space and power, to host apps and data on Holochain. Users host this on a part of Holochain known as HoloPort and such users who share their computing power on the network are known as Holo Hosts.
Rather than storing and validating data through mining, the Holo Hosts get paid for providing hosting space to mainstream users and applications through their computer storage. Holo Hosts don’t earn HoloFuel directly, it’s gotten as credits as first. Later on, the credits will be redeemed as HoloFuel from the network’s reserve account.
Holochain takes the hosting of sophisticated social applications out of centralized data centers to decentralized data centers on our simple devices. With this, it enables hosts to turn a mini-computer into a source of income, where they get paid for hosting distributed applications.
The Hosts enjoy a great level of autonomy which lets them choose what apps they intend to offer their storage services to and they set their own hosting prices and priorities.
HoloFuel is efficiently designed to be used in carrying out a high volume of micro-transactions and its value stays stabilized because they’re backed by a valuable modern asset: computing power. As more hosts join the network and share computing power, the network becomes more valuable, giving HoloFuel more purchasing power.
Use case: Transaction Fees for Hosting Services
HOT coins are used as the main payment method on the Holochain network, The Holo organization not only provides the necessary infrastructure to offer peer-to-peer data hosting but also maintains that infrastructure through the funds raised from transaction fees. These fees are charged in the form of HoloFuel.
The funds for maintaining the network’s infrastructure are gathered from the tiny transaction fees on the thousands of transactions that occur on Holochain. Since it has been difficult to receive funding from major venture capitalists, this is one strategy Holochain has used to resolve the issue.
The fees are not only for current maintenance and services but to fund future features and infrastructure expansion. Holchain plans to create tools in place that will enable network participants to determine the allocation of a significant portion of these funds,
During Holochain’s mainnet launch, the percentages of these funds will be established so that the structure of its allocation can be coded into the governance of Holochain.
Use case: Liquidity in Reserve Accounts
HOT is used as a currency to provide liquidity to Reserve Accounts. Reserve Accounts are a special type of HoloFuel account run by the Holochain team. The funds in the reserve accounts are purchased by publishers or App developers to pay for hosting services in the network.
The supply of HoloFuel in the reserve account increases when the reserve account sells hosting credits in exchange for an external crypto asset. The funds in the reserve are then held for network hosts who provide hosting services to access as rewards.
Only network hosts are allowed to redeem the HoloFuel in the reserve, which is confirmed by auditing hosts’ Proof-of-Service entries and transaction histories.
While Reserve Accounts may temporarily expand the supply of HoloFuel token, they only do so in response to increased demand. As hosts redeem their hosting rewards, the supply decreases again.
To perform its role adequately, the Reserve Account is designed to be transparent to all network participants and reveal the ongoing deposit and withdrawal of funds from the account.
The Future of Holochain
Holochain is a revolutionary project that considers its technology superior to the typical blockchain. Instead of the existing decentralized model, it uses a distributed blockchain model to create a cheaper and more efficient network.
If it’s able to deliver on its promises successfully, it could become a high-level crypto project that enjoys great adoption, in a few months. However, we’re just some months away from finding out how credible this will be.
Part of the things that could enhance the success of Holochain is that it has a strong development team and community that are dedicated to the project and are committed to creating high value for the ecosystem.
More so, Holochain apps will run more effectively than other blockchains because it removes the tokenization and consensus processes associated with blockchains, and only focuses on running smart contracts.
As it continues to eliminate blockchain congestion via faster transaction validation, Holochain is on the right track to becoming a major competitor in web 3 technology.