Holo (CCC:HOT-USD), the native token of Holochain, has had a great run so far this year. HOT is a smart pick as a ticker — many investors want to make quick and easy gains from the latest and hottest cryptos. But a cooling price and valuation beg the question: Does Holo actually live up to its ticker name?
Today’s crypto market feels like the well-known quote, “It’s a bird! It’s a plane! It’s Superman!” Some see value and growth, some see pure speculation and others see the future of digital money. It all depends on the your angle of analysis and optimism towards cryptocurrencies.
No matter your approach, though, Holo has several positive aspects and a couple major drawbacks. Hype and speculation pushed the price higher and kept a FOMO (fear of missing out) effect rolling as long as possible. Holo has some definitive benefits, but they may be outweighed by the negatives.
The Positive Factors and Value Case
What is Holo? According to CoinMarketCap.com, “Holo is a peer-to-peer distributed platform for hosting decentralized applications built using Holochain, a framework for developing DApps that does not require the use of blockchain technology.”
The token is meant to make Holochain apps more accessible by bridging the gap between them and traditional internet. It also wants to give users control over their data by providing enhanced privacy and security.
Additionally, you may remember the recent buzz about green energy and environmental issues in the crypto space. Tesla (NASDAQ:TSLA) CEO Elon Musk sent the cryptocurrency market into a spiral when he expressed concerns about crypto’s environmental impact.
Fortunately for Holo, its platform “is millions of times more efficient — you won’t have to waste 0.5% of the planet’s electricity to achieve a mere handful of transactions per second.”
In addition to its energy efficiency, Holochain has some notable advantages in scalability, security and transaction fees.
Unlike blockchain networks, transactions on Holochain are logged on individual user nodes rather than a public ledger. The platform is decentralized, and its users do not need to receive confirmation from other network participants.
How Does Holo Work?
As a platform with no servers or blockchain, you may be wondering how Holochain’s security works.
Holo users access the platform via an app, which stores their data on their device. They share their public data with a random group of peers, who then validate and store that data. The network unleashes a widespread security response if it detects invalid data.
If you’re as lost as I am, it may be easier to view it this way: Holo acts as a distributed peer-to-peer platform for Holochain apps (hApps). It allows you to download these apps from traditional internet browsers. Holo incentivizes users to host apps and maintain its decentralized nature by rewarding them with its tokens.
This may seem like a money-making opportunity for users, but to me, it raises a big red flag. What if a hacker uses the platform to gain access to other computers? Personal data and valuable files may become compromised. I am skeptical about this.
The Major Downside
Holochain calls itself an upgrade to the centralized systems that dominate the Internet. Its users can make their own choices about their data on a trusted platform. They call this “digital agency,” and feel that it can contribute to social change.
I am skeptical about this, too. The world needs many things, but an upgrade to what, exactly? I consider myself a tech-savvy person, but no one I know has ever said to me, “look at this awesome Holo app!” What is the progress on these ambitious hApps? Are they ready to use or will they launch soon?
The Holo whitepaper describes the larger value proposition of their network. They’re confident that it can solve “many of the most pressing problems in the crypto space including decentralized storage, scalable decentralized applications, and secure decentralized identity.”
This crypto project is visionary. But for now, there is a huge difference between having a vision and successfully implementing it. I am not 100% convinced by the results Holo has achieved so far.
Despite its upsides, Holo lacks tangible successes. This shows that its wild price is driven by speculators, not its fundamentals.
Another Wild Run and an Intense Selloff in Holo
As of June 29, a Holo token has a price of .6 cents. In early April, the price reached a high of about 3 cents. This vertical surge was, as you may have guessed, unsustainable. Huge gains led to huge losses. Doesn’t this sound like many other tokens today?
Still, when I note that Holo has a market capitalization of $1,006,501,702 it makes me wonder. What is their market cap based on? I am very concerned about how tokens easily get over-inflated valuations. Holo is a prime example of this. Based on that, its developments and traction, HOT-USD doesn’t seem so hot to me.
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On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com/. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.