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Holochain: The New Blockchain? A Look Beyond the Hype

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Introduced in Satoshi Nakamoto’s 2008 whitepaper, Bitcoin was truly groundbreaking and has obtained great success and popularity for the last ten years.

Consensus or coming to agreement on the state of transactions is established in a decentralized manner with multiple parties through a method called proof of work.

Many miners process sets of transactions called blocks and the miner who finds the right nonce (string of random numbers) necessary to add a new block to the one before it is rewarded with some Bitcoin. Blocks form a chain of blocks known as the blockchain, which is a series of blocks (which are series of transactions themselves) that collectively represent all Bitcoin transactions since Bitcoin’s initial block, known as the genesis block.

All nodes (computers, servers, etc. that may or may not participate in mining) host copies of the same blockchain, which ensures that blockchain integrity is maintained and that there is no single point of failure when it comes to potentially losing the record of Bitcoin transactions. Changing the blockchain is impossible without gaining control over a majority of the network’s hashing or computing power, a feat that is considered implausible due to exorbitant computing costs.

Bitcoin’s approach allowed the creation of the first digital currency that overcame the double-spending problem (sending one transaction then another after it to negate the first), as no one can send such fake transactions without all other nodes knowing due to everyone having the same copy of the blockchain.

However, in recent years, the proof of work method has proven to be unable of processing large amounts of transactions efficiently, which is worrisome if Bitcoin is ever to gain more widespread adoption.

Different approaches to this problem have proposed.

Projects like Ethereum and EOS have proposed their own respective solutions to solving the problem of “scalability” (improving blockchain protocols so that they can handle a large scale of transactions without issue), yet no project has actually been proven on a commercial scale.

Holochain: Solving Blockchain Issues without a Blockchain

Holochain is yet another contender in the fray. While it aims to provide a solution to the scalability question, it takes quite a different approach as it technically isn’t even using a blockchain.

As stated on Page 1 of the Holochain whitepaper, Bitcoin’s approach to the problem is a data-centric one that focuses on creating a single, shared data reality (in this case the Bitcoin blockchain) that is hosted by all participants.

While this approach has proven to be great over the past decade or so of Bitcoin’s existence, it has come at the cost of scalability as mentioned, as coming to consensus via the computationally-intensive proof of work method is complex (takes time) and currently not suitable for large amounts of transactions.

Holochain’s approach is an agent-centric one, enabling the sharing of independently evolving data realities amongst participants as long as some ground rules are established and adhered to by participating agents or users. Git is the most well-known project with this approach, creating forks when differences of certain degrees are made in the code, allowing two projects to exist on the same fundamental layer. Just as different species come from the same origin, different applications can emerge from the same layer.

However, this may cause one to wonder how it’s possible to have a consensus between non-identical realities. As Holochain has no one, global shared state, there is neither consensus nor a single ledger. This is an extremely important point that one can miss easily: Holochain is not your everyday blockchain or even a blockchain.

Holochain’s and Distributed Hash Tables (DHT)

What makes Holochain different from traditional blockchain is distributed hash tables (DHT), a decentralized storage system most known for its use in torrents. In a DHT, while downloading a file, for example, you don’t download data from one single source. Instead, you download different parts of that file from different hosts.

In the same manner, Holochain nodes don’t have to share a single, global state, (e.g. a ledger of all transactions from beginning to end as seen in “traditional” blockchain systems) as long as some nodes can “piece together” parts of a whole (DHT).

Increased Flexibility (and Responsibility) for Developers

Bitcoin has no room for varying validation rules out of the box, thus giving the network participants no flexibility (unless soft forks, or software changes, are implemented, or hard forks, which can even create a different Bitcoin, such as Bitcoin Cash, Bitcoin Gold, and so on, take place).

On the other hand, thanks to its feature called DNA, which are the pre-established “ground rules” set by participants in a decentralized application’s (Dapp’s) system, Holochain allows Dapp developers to have increased flexibility to choose and implement their own rules as long as they do not contradict DNA. It’s important to note that DNA is inherent to each Dapp. In other words, each Dapp has its own DNA or rules for “consensus”.

Something to note, though, is that DNA places more responsibility on developers, who have to set quality DNA before building out a Dapp ecosystem to ensure that the Dapp runs smoothly. Giving more flexibility to developers (which also means more responsibility) could prove dangerous, as seen in the case of Ethereum.

Ethereum uses a fairly open-ended programming language called Solidity. While developers have more free reign in designing their Ethereum-based Dapps and smart contracts, this has led to numerous issues, such as The DAO hack, Parity wallet hacks, and other mishaps, as developers have been unable to develop their solutions properly.

DNA and Immune System as Holochain Security

DNA also acts a security measure. For instance, imagine a Holochain Dapp called “Ourbnb” (Holochain-decentralized version of Airbnb) with DNA that stated that an Ourbnb host couldn’t rent an apartment to two parties at the same time. If user(s) try to initiate a transaction that goes against this DNA and rent out an apartment to more than one party, the transaction would automatically be rejected by the other nodes in the Ourbnb network.

Another security feature that Holochain has is the immune system. Nodes look at their DHT and the various Dapps and their respective DNA that they have. When certain actors are determined to be breaking DNA rules, nodes communicate this information to each other, and the bad actors are shut out of the Holochain network.

Token Economics

Holochain has a token called Holo Token (HOT), which is rewarded to nodes for running Holochain software and hosting Dapps.

Therefore, while “traditional” software providers, such as Airbnb, are responsible for not only building out applications but also providing the hosting and security, on Holochain, Dapp developers build out Dapps while nodes host them and uphold security by enforcing DNA rules and using the immune system to cross-check for bad actors.

75% of HOT tokens were distributed via the Holo Token ICO and 25% are held by the team and organization.

Token Sale Metrics

The Holochain ICO raised 30,202 ETH. The soft-cap was determined to be €1 million, but the team successfully collected more than €20 million. The price per token was approximately €0.0001.

According to the Allocation of ICO Funding by Amount Raised table on the Holo Token ICO page, 15% of the collected funds were allocated to Holo development, 10% to Holochain development, 40% to currency reserves, 10% to infrastructure, 10% to operations, 5% to support of developers, hosts, and app providers, 5% to marketing and communication, and 5% to events and programs.

Team

Chief Architect Arthur Brock: Brock was the CTO at Targeted Currencies Network and is the founder of Metacurrency Project. As both jobs were focused on creating alternative digital currencies, Brock has been working on digital currencies since 2001, or before Bitcoin was even conceived.

Verdict

Below is a breakdown of the risks and growth potential of Holochain.

Risks

  • As Holochain is quite different from traditional blockchains, it is hard to make any guess on its future and its adoption, which is a crucial step for long-term success. (-2)

Growth Potential

  • A unique approach to the consensus problem that could solve blockchain’s current limitations. (+1)
  • Not a “whitepaper project” – developers can get started building on Holochain. (+2)
  • ICO went smoothly and was structured to prevent centralization in terms of token distribution amongst ICO contributors. (+1)
  • In addition to the above, no crazy private or presale deals (large bonuses, no lockups/vesting for large bonuses, etc.), which prevents token dumps by large, early-stage investors. (+1)
  • The project lead Arthur Brock has been working on alternative digital currencies and peer-to-peer technology since 2001. (+1)
  • Low $20m ICO hard cap (as of writing, $175m market capitalization) vs. other projects, such as EOS and Dfinity, which have raised billions of dollars. A lower market capitalization could leaving more room for HOT price appreciation. (+1)
  • Marketing for the project seems to have taken an organic approach, with the community being Holochain’s biggest evangelists, as evidenced by social media support and activity (comments, likes, etc.) on platforms like Reddit and Twitter. (+1)
  • Support from Mozilla CFO and Netflix Co-Founder Jim Cook. (+1)

Disposition

Holochain is a platform based on a quite different agreement mechanism than traditional blockchains. Due to its data-centric nature, Bitcoin meets with many problems such as inefficient mining. While Bitcoin forces one shared reality (the Bitcoin blockchain) on the entire network, Holochain allows people to have free will and their own realities as long as some ground rules are accepted by participants. While it’s too early to tell if Holochain can achieve its goals, the project’s novel approach, working product, fair ICO structure, team’s background in digital currencies and peer-to-peer technology, lower market capitalization relative to other big projects, and community support on social platforms as well as from tech industry heavyweights like Jim Cook could prove favorable in terms of the project’s investment potential. Holochain receives a 7/10.

For More Information

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Bitcoin Cash Price Analysis: BCH/USD May Have to Return to $400, Before Big Bull Buying

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  • BCH/USD price action did form a potential double top formation, subject to a move back towards the neckline.
  • The RSI indicates price is oversold via the 4-hour chart view, after bouncing in early hours of Monday.

The Bitcoin Cash price remains firmly on the back foot. As a result, of a top area being produced within a heavy touted supply zone. This can be seen within the $650 price region, which as a result has caused BCH/USD bulls to falter in their tracks north. Back in the very early part of September and most recently on 7th November has seen the sellers pile in at this area.

BCH/USD daily chart

Given the current price behavior it would suggest technically, the bears are looking to force a retreat, Eyes would be towards the neckline of the set up. This would see BCH/USD returning to $410, as demonstrated during the selling pressure back in early September. A likely area to attract buyers back in, a failure however to see this area of support hold, could be very punishing indeed.

Possible Neckline Breach

BCH/USD Neckline

Should a breakout to the downside from the $410 area support occur, heavy selling pressure may be seen. Eyes would then be on for a potential steep fall, down towards $285, the next major level of support. BCH/USD last traded down here on 13th October 2017, after seeing a chunky breach through the above-mentioned neckline.

4-hour Chart View

BCH/USD 4-hour chart

Looking via the 4-hour chart view, BCH/USD price action is moving within a descending channel formation. This is very much subject to a potential breakout to the upside; however, as described above, the price may need to retreat towards $410. Near-term resistance can be immediately seen at $530, which is the upper part of the channel.

The resistance above trend line of the detailed technical set up should this continue to hold; it raises the case to the top formation play out. A breakout to the upside now could send BCH/USD flying back for a retest of the $650 region supply. To the downside, support should be noted around the psychological $500 level.

As detailed above with the descending channel, this could also be perceived as a text book bull flag pattern. Such a move coming into play after a decent run higher, to then cool, ahead of another burst to the north. Looking via the RSI, it did hit a bottom, running into oversold territory. This occured in early hours of today – Monday 12th November.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 45 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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BCH Price Resumes Downward Consolidation as BitPay Backs Bitcoin ABC in Upcoming Hard Fork

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After an explosive rally, bitcoin cash has entered a period of consolidation ahead of a highly anticipated hard fork in just four days. On Saturday, crypto payment processor BitPay announced it will back the primary upgrade of Bitcoin Cash, joining a growing list of entities that are sticking with the so-called “Satoshi Vision” chain.

BCH/USD Update

After a positive start to the weekend, bitcoin cash reversed course on Sunday, falling 5.1% to $530. With the decline, the digital currency is down nearly $120 from last week’s swing high.

Trade volumes have declined sharply since Wednesday, when daily turnover reached $1.2 billion on virtual exchanges. As of Sunday, BCH trade volumes had fallen to $678 million, according to CoinMarketCap. BitForex, OKEx and DigiFinex are the largest markets for BCH trades, based on daily turnover.

The 4-hour chart shows a large drop in momentum for the BCH/USD trade, with the relative strength index (RSI) approaching oversold territory. The MACD is equally bearish.

BCH also traded firmly lower against bitcoin. At last check, bitcoin cash was worth 0.08286396 BTC, down 4% compared with Saturday.

At current values, bitcoin cash has a total market capitalization of $9.2 billion, placing it fourth among active cryptocurrencies. At the height of the most recent value, bitcoin cash’ market capitalization rose above $11 billion.

BitPay Will Not Implement Bitcoin SV

BitPay, one of the world’s leading crypto processing companies, announced Saturday it will support the Bitcoin ABC implementation of the upcoming bitcoin cash hard fork. In doing so, the payment processor said it has no plans to implement Bitcoin SV, the hard fork protocol promoted by Craig Steven Wright, CoinGeek and Calvin Ayre, a well-known casino mogul.

“BitPay has not made any plans to migrate from the Bitcoin ABC implementation of Bitcoin Cash to a different implementation,” the company said in a blog post. “BitPay will closely monitor network conditions and the chains resulting from a chain split. We will send you another notification when we determine that payment risks have passed.”

The payment processor has recommended that users avoid sending transactions leading up to the hard fork, which is scheduled to take place Nov. 15.

As Hacked recently reported, the Bitcoin SV implementation promoted by Wright and others is being rejected by the BCH community. Bitmain founder Jihan Wu has also confirmed that BCH developers are “working together” to remove Wright from the community.

In addition to BitPay, market heavyweights Coinbase and Binance have also announced support for Bitcoin ABC. Individual miners are likely to follow suit should outright support for one version of the hard fork continue to build.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 661 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Coinbase Anticipation Keeps Stellar (XLM) and Cardano (ADA) Afloat Amid Market Dip

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On a quiet Sunday for the cryptocurrency market the only two major altcoins to record clear growth also happen to be two of the coins up for consideration by Coinbase. Both Cardano (ADA) and Stellar (XLM) recorded between 3-5% gains moving into the afternoon.

The other coin up for a possible Coinbase listing, Zcash (ZEC), was down close to 5% over the same period, as the community speculates that a privacy-coin would be the least likely to be next, owing to technical complexities.

Stellar Price Update

Stellar seems to be the popular favourite to be next on Coinbase, judging by social media chatter. And if we take market performance as a sign of intent, then it appears as though traders are singing from the same hymn sheet.

Stellar (XLM) climbed 5.4% in value over the previous twenty-four hour period, climbing from a coin price of $0.256443 up to $0.270373. The ascent was fairly steady across the day, with trade volumes rising 60% in the process.

Anyone looking for short-medium term gains already knows about the Coinbase announcement from back in July, when five cryptocurrencies were singled out for Coinbase’s attention. Following the listings of Ox (ZRX) and Basic Attention Token (BAT), it appeared to be a toss-up regarding which coin would be next.

While this may look like a clear investment signal, especially given the effect Coinbase had on Ox and BAT, it’s probably wise to keep a clear head. Social media searches for ‘coinbase’ are throwing up a lot of Stellar chatter, but such chatter isn’t always authentic.

Technical signals, and the buzz created around a $125 million airdrop compound the growing sense of anticipation around Stellar, although some see the airdrop as a cynical marketing attempt to float a coin that won’t move by itself.

Cardano Price Update

Cardano’s gains were less pronounced on Sunday, climbing 3.5% before levelling off later in the afternoon. The value of ADA jumped from $0.074438 up to $0.077107, then pulled back to the $0.75 range.

Trade volumes remained relatively low for ADA, rising from $13-18 million, with Binance’s ADA/BTC pair accounting for over 20% of the action alone.

The Coinbase Saga

As of November 11th, Stellar is up 10% for the week, while Cardano is up around 1.5% for the same period. Zcash actually appears more likely as an outside bet when looking at its weekly gains of 10% – marking it out as one of the best weekly performers in the market cap top one-hundred.

Anyone looking to ride the Coinbase wave on one of these three coins should take Basic Attention Token’s recent fall as an example, after it lost over a quarter of its value after finally making it onto the exchange.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 88 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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