Back
Most cryptocurrency is money you bet on. People need money they can use.
Consider
Would you run your household or your business on cryptocurrency?
Or, maybe more precisely, could you run your household or business on cryptocurrency?
In April of 2016, Steam - a digitally native, technically sophisticated business - announced that consumers could use Bitcoin for game and in-app purchases on their platform. That experiment came to a halt less than two years later, with parent company Valve announcing that “As of today, Steam will no longer support Bitcoin as a payment method on our platform due to high fees and volatility in the value of Bitcoin.” Valve further explained that volatility created an impossible situation: if a transaction failed to complete before the Bitcoin price guarantee window expired, customers faced paying an outstanding balance (plus a second layer of transaction fees). About four years later, Steam co-founder Gabe Newell revealed that approximately 50% of all on-platform Bitcoin transactions were fraudulent.
Steam was not alone in concluding that it is impossible to operate a business using Bitcoin as a means of exchange. Some of the largest and most sophisticated companies in the world have offered and subsequently retreated from using crypto as a basis for transactions, with the two most prominent being Tesla and Dell.
A common thread is the underlying volatility of Bitcoin itself. This makes intuitive sense: if you’re trying to operate a business, you need some reasonable basis for planning and setting your prices, and thus you certainly need to know what you’re actually getting paid for your product or service. There’s a reason you can’t pay for a coffee with lottery tickets – while you might argue the store owner could be getting paid a million dollars for a single cup of coffee (a hell of a business), the owner also knows he might be getting paid nothing (a pretty bad business model).
Volatility is the enemy of commerce for this very reason, and so excessive volatility is fatal for currencies. If neither party involved in a transaction can have some basic level of confidence in the value of the transaction as agreed, instead of a fair exchange of value, transactions become trades, with the same zero-sum implication every trade offers: someone will win (e.g. get more value than expected), and someone will lose (get less).
And look, sometimes you want to bet that the price of a thing will rise or fall. But if you’re running a business, or operating an economy within a community, sometimes you simply want to be able to sell a cup of coffee knowing that you received fair value for it.
The bigger issue? Bitcoin’s observably high volatility (roughly 10x higher than the US Dollar) is a structural flaw. It’s built into how this kind of currency is “made”, and it’s worth understanding how. Most importantly, for anyone who actually wants a functional digital alternative to fiat currencies for any number of very good reasons (chief among them avoiding total reliance on governments and central banks to protect your interests as a currency holder, vs. theirs), the question is whether there’s a remedy for this flaw.
We think there is, and in fact, we’ve built it.
What Bitcoin got right
Bitcoin cracked something hard - how to move value between two people who don't know or necessarily trust each other, without a bank or a clearing house in between. The fixed supply and the distributed ledger were genuine achievements. And the fixed supply was aimed at a real disease: a government or central bank that can print currency can quietly devalue your savings, and Bitcoin took that lever away. Removing the issuer was what hard-money advocates had argued for over a century.
The deeper win is simpler than any of that. Bitcoin proved that people will go to extraordinary lengths for a better kind of money. Nothing that follows forgets that.
Where it stalled
Fixing the supply solved one half of the equation, but left the other half wide open. Price is based on supply and demand. Crypto pinned the supply and let the demand float on a single expectation – that someone will want the token for the same price or higher than they do today. That is a fine basis for a bet. It’s no basis for money.
A price that floats on sentiment can't do the things money has to do. You can't quote a service in it, write a contract in it, or build a budget on it.
El Salvador put it to the test. In 2021 it made Bitcoin legal tender alongside the dollar, compelled businesses to accept it, and let people pay their taxes in it. By early 2025 it had reversed course - widespread acceptance never came, and there was no measurable gain in financial inclusion. A sovereign government with every power to compel could not make a volatile token behave like money.
What volatility costs a business
Money has three jobs: hold, measure, and move value. Volatility breaks all three at once.
If you sell anything - your time, a product, a service - you can't price it in something that might move twenty percent before the invoice clears. You can't run a supply chain on it. You can't sign a contract denominated in it. These aren’t philosophical arguments - they’re the daily reality of anyone trying to operate.
A speculative asset and a functional currency are not the same thing, and they don't want the same things. Volatility is exactly what makes a trade profitable, and exactly what makes everything else - pricing, planning, paying people - range from difficult to impossible. The architecture of most publicly traded tokens picks speculation every time.
Money that begins with a transaction
Mutual credit, however, is a different type of currency, and it begins with a transaction. A unit is created in a shared ledger at the moment two parties make a real exchange — every positive balance is somebody else's negative one — and it nets to zero. Say James buys a coffee from Jill's café: Jill's balance goes up by the price of a coffee, and James's goes down by the same amount. Neither of them had to hold any currency first — the purchase itself brings the credit and the debit into being. They're just numbers in an account, a record of an exchange of value.
Mutual credit is not new. People were settling accounts this way in Babylon five thousand years ago and today mutual credit is used for transactions valued in the millions and billions by associations and business networks like IRTA and Sardex. HoloFuel — the mutual credit currency, powered by tools from Holo, Unyt, and Holochain — is designed to run peer-to-peer and scale.
And unlike the dollar, and unlike almost every cryptocurrency, mutual credit is not fiat. Fiat means declared into existence, whether by a treasury or by an algorithm. Mutual credit isn't declared at all. The money doesn't come first and wait for belief to give it value. It appears as the economy moves, and it tracks the work it accounts for.
That also answers the demand question crypto never did. Fiat manufactures demand through tax – you’re compelled to need it. Mutual credit manufactures it through ordinary business: we all run up obligations, and we all have to settle them. A positive balance is a claim on productive capacity; a negative balance is a debt you have to work off. Nobody has to believe in the unit for it to be worth something. It is worth something because it’s owed.
As we said, HoloFuel is a mutual credit currency, and its value is grounded in something concrete - currently that’s the cost of computing: CPU, bandwidth, and storage on commodity hardware. If HoloFuel trades above the cost of compute, more hosts join, supply rises, and the price settles back down. If it trades below, hosts leave, supply tightens, and the price settles back up. The market is a floor and a ceiling that sentiment can't override for long. That isn't a promise the price never moves. It's a currency tied to real work rather than to the mood of the people trading it.
Unyt: the rails that make it real
Of course, a currency still needs plumbing in order to flow. That's Unyt – the accounting and payments layer that Holo commissioned to build the underlying infrastructure that makes HoloFuel possible. Without it, HoloFuel can’t move.
Unyt isn't confined to us. It's built to work as a peer-to-peer payments rail across crypto and non-crypto alike, and the same infrastructure that settles HoloFuel can settle a far wider economy. Money that's earned rather than declared doesn't have to stop at Holo's edges, and the rail that carries it doesn't either.
A different kind of currency
Our aim was never to win at the volatility game. That game is zero-sum: for everyone who comes out ahead, someone else has lost. Our aim has always been to make the game irrelevant to the people doing the actual work, and to give them a currency where the whole economy can come out ahead at once. Speculative assets still have their place. This is simply a different thing, for a different job.
HOT was sold in 2018 as a pre-purchase of future utility. That utility now exists – which means anyone holding HOT is the holder of a pre-purchase on the network's real productive capacity.
We've run the swap as a public HOT-HF Technical Migration Test, and it worked. The engineering is understood, scoped, and underway. We're not waiting on a breakthrough; we're working on final details.
We’ll name the date of the real HOT-HF Technical Migration on a livestream, July 30th.
Join our Holo Telegram community to stay updated and join the wider the conversations. In order to support those conversations we just updated our Telegram channel to multiple topics including: Holo Hosting, Unyt, Holochain, Moss, and General. Looking forward to seeing you in a topic there soon! https://t.me/channelholo