Why does Holo need its own currency?

We needed to design a new kind of currency for Holo because no existing payment network met these needs:

1. Low cost in terms of fees and computing cycles.
2. Millions of transactions per second and batched accounting of service provision.
3. Value-stable, with dynamic supply, backed by valuable assets.

Distributed hosting requires microtransactions, which is the main reason we need a currency that can process payments worth fractions of a penny while still costing less (in fees and computing cycles) than the original computing and funds being counted. We designed HoloFuel to have low computational overhead; its efficiency allows us to charge 1% or less in transaction fees.

For Holo to serve the trillions of small computational interactions required for a distributed hosting ecosystem, we’ve designed its currency to support millions of transactions per second (TPS) and account for service provision in batches. HoloFuel’s TPS technically has no limit, increasing as the network scales up - thanks to Holochain’s highly efficient, agent-centric approach to data integrity.

A useful currency can’t just be a “digital gold” store of value. It has to function well as a medium of exchange, which means it needs to be stable enough for people to trust doing business with it.

HoloFuel optimizes the market value of its units in relation to the cost of hosting by 1) allowing for the currency supply to be dynamic in response to actual market behavior of its users (see Why is there no supply limit for HoloFuel? and How does HoloFuel’s dynamic supply work?), and 2) being asset-backed by the hosting resources of the network. These design features give the currency a steady and stable trajectory without being value-static or requiring a peg.