27 Jun 2018 · 7 min read

“Blockchain Is a Centralizing Technology,” Holochain’s Director

Skipping blockchain and going straight for another type of decentralized system is not unheard of, but calling blockchain a centralizing technology takes a lot of courage. This is exactly what Matthew Schutte, Director of Communications at Holochain, told us in this interview.

Source: iStock/akinbostanci

Holochain is a ledger system and application platform similar to blockchain that claims it doesn’t suffer from the same issues like scalability and energy inefficiency. Every device on the network gets its own ledger, or Holochain, and can function independently while also interacting with all the other devices on the network for a decentralized edge computing solution.

Another name often mentioned at the same time as Holochain is Ceptr, its parent project for which Holochain makes up the infrastructure. It is a new paradigm, in some ways similar to the internet. It uses a technology similar to blockchain - the Holochain - without depending on consensus. Exactly what that means is among the things Matthew Schutte told us in this interview.

Matthew Schutte. Source: Holochain

Where does Holo fit in with Ceptr?
There are two projects at present that we're putting out into the world. One is called the Holochain and the other is called Holo, or Holo Host. Holochain is this peer to peer application's infrastructure. It's basically the baseline foundation for Ceptr.

Today, a company creates an application and you show up, not as somebody who is helping to generate or maintain or run that, just as somebody who uses it. But in Holochain, if you want to make it different, you can.

What about your consensus algorithm, or lack thereof?
We actually don't make use of consensus. It's one main difference between us and blockchain.

Blockchain came out of Bitcoin and the cypherpunk movement. The cypherpunks were interested in one real specific use case which was interacting with each other without a third party being able to get into that relationship. This got them fixated on anonymity.

The Bitcoin folks were focused on freedom from constraint by others. We, instead, were focused on the freedom to constrain ourselves.

In short, Holochain applications are each a separate social space. You build a Holochain and we might not even know it exists, let alone have some way to charge you for it. You build it yourself, and you all make the rules. It’s something like this: have you ever played cards with friends in your home?


Did you hire a referee?

No, of course not.

What happens if somebody tries to pick up the card when it's not their turn?

People tell him he’s not allowed to do that.

Exactly. In order to play the game at all, you've come to agreement on what the rules were. The point is, you don’t need a referee. At least one of the people playing see that guy pick up a card when it’s not his turn, and they stop him from doing it. If the guy refuses to listen and still wants to pick up a card, other people will move into action as well.

We call this immune system response. It’s highly efficient, but it doesn’t require consensus.

How does your project compare to EOS or Tron? What are the main differences?

The ambitions of other projects, like EOS for TRON, may be similar, at least on the surface, but the architecture is not. We’re working on a radically different architecture that doesn’t have the problems of speed, scale, cost, lack of adaptability that blockchain suffers from.

Blockchain, despite all the hype, is a centralizing technology. It enables a decentralized network to centralize perspective, to come to a single perspective. That's what global consensus means. It's a centralizing technology and as a result it has all of the shortcomings that centralization brings.

You recently announced a partnership with Promether, a developer of decentralized network powered by the blockchain. Any others that you look forward to and would like to share?

There’s nothing formal yet. But Mozilla’s [the not-for-profit behind the Firefox browser] CFO has stated that they are looking to build a browser for Holochain, because Holochain apps are composable - you can combine multiple applications into one user interface. You could create applications that are combinations of other apps, even though nobody else on the planet has that specific one.

Can you share it with others? Possibly monetize it?

It’s possible.

The way we’re funding Holochain is, in itself, a Holochain app. We’re building Holo, a peer-to-peer (P2P) web hosting app. We’re looking to enable anybody with spare storage or processing power on their computer to rent that out to developers for serving websites. Nobody has created a marketplace for that yet.

With Holochain, you don’t have to have all the content for your website on your computer. You can reach out to other members, pull back the content and assemble it. We also invented a currency system that could do the accounting for huge volumes of transactions, to be able to support that even when the transactions are a penny or less in value.

Speaking of transactions and costs, what’s Holo fuel and what are Holo credits?

Holo fuel is the currency that we use in our P2P web hosting marketplace, with which developers pay hosts. When you borrow my computer to do your work for you, you pay me an agreed upon rate.

Holo credits are almost the same - they’re temporary ERC20 tokens from our initial coin offering (ICO), redeemable for Holo fuel when we launch our system.

What are the transaction fees going to be like?

We’re working towards having 99% of the money we gain going directly to the person whose computer is doing the work. Our transaction fee is 1% or less.

What’s the next step? When can we expect the mainnet launch?

Holochain’s fourth alpha is out in the market - our original alpha was back in October 2017. Our latest version is called Scout, and we’re working on a beta version. We’re also working on an alpha version for Holo Host, to have it out by the end of the year.

When do you expect the project to become profitable?

I don’t know. There are a lot of variables, the main one being - do people build lots of Holochain apps? If enterprise gets interested in building those apps, they will probably use Holo Host. This is so they don’t have to build it themselves.

We don’t have to provide any of the hardware - everybody’s bringing their own. Our costs are limited to just our people budget. My hunch is that it will take 18 to 24 months.

You mentioned we’re in an ICO bubble. Do you expect it to pop at some point? Would that hurt your business?

I expect many of the projects that have raised funding to not deliver a product that generates profits. People will get burned and pull back, and there may be a few years when most people are not investing at all.

I don’t think it would hurt us though. We’ve already done our fundraising. We’ll be looking at other, strategically important things, like doing incubator projects, hold meetups and hackathons, etc.

Do you have any tips on spotting crooked ICOs?

The truth is, I don’t invest in cryptocurrencies, aside from ours. I bought some ETH when they first had their ICO, but that was it.

But I would say that crooked isn’t the only thing that matters. There are many projects out there launched by honest people that still fail, for one reason or another.

When you’re investing, you need to do research like your life depends on it. Gambling is not investing. I used to run an investment firm for four years - it’s not gambling, it’s completely different.

But the issue is that people trying to assess whether ICOs are credible don’t have the literacy to do that, either the technical literacy or business acumen. People often look at what kind of advisors an ICO has on board, but they’re really not advising. They’re offering celebrity status, getting them into the media. Getting big names among your advisors is a simple marketing ploy that I consider a warning sign. To me, that means this organization is more focused on manipulating perception rather than delivering value.