Golem is a consumer blockchain solution that aims to let users buy and sell latent computing power. To incentive participation and encourage people to commit resources to their network, Golem has created a cryptocurrency – GNT.
Say, for example, you use a portable work laptop. You like being able to work on the go, and this setup is fine for 90% of tasks you perform on a day-to-day basis. But, every once in a while, you need to render a 3D model, animate a sequence or run a demanding program. You would be the perfect customer for the Peer to Peer network Golem is building.
Companies pay tens of thousands of dollars for powerful computers which depreciate in value every year. What if they could instead connect a laptop or phone/tablet to a computer with the same resources without stocking up on expensive hardware?
Golem’s Use Case
The Golem Network Token (GNT) is exchanged directly for computational resources. Opposed to Bitcoin and other blockchains, which rewards miners in tokens for completing tasks and doing work, the value of each token is more clear-cut. There is a clear exchange of token for goods and services.
In addition to becoming the world’s first decentralised supercomputer, “Golem aims to build flexible tools to aid developers in securely distributing and monetizing their software, Golem altogether changes the way compute tasks are organised and executed. By powering decentralised microservices and asynchronous task execution, Golem is set to become a key building block for future Internet service providers and software development. And, by substantially lowering the price of computations, complex applications such as CGI rendering, scientific calculation, and machine learning becomes more accessible to everyone.” – Whitepaper Draft
From this chart, you can see that Golem is also trying to become an ecosystem that developers can build software on. They will be paid in GNT for their contributions to the Golem Application Registry and computing resources that their application uses when the user runs it.
Third-party developers will be able to make extensions for industry standard plugins. for example, a developer could create an extension that uses the Golem network, and then get paid a percent of every transaction that happens on it.
Golem claims in their whitepaper that big companies are dominating the software market and charging hefty premiums because of a lack of competition. Golem’s Application Registry could lead to a more transparent market with lower barriers of entry. The success of the Golem Application Registry entirely depends on the team’s ability to promote their platform and get people building applications and using and buying GNT tokens.
Golem has a long-term goal. They want to become a part of the platform that builds web 3.0. They aren’t the only blockchain with these aspirations. Maidsafe and Substratum both have similar use cases to Golem and are both aiming to replace existing centralised infrastructure.
If you are planning to buy Golem and invest in this cryptocurrency, you need to understand that the Ethereum network which handles payments for Golem isn’t able to process microtransactions yet. Scalability solutions like Casper, Sharding, Plasma, and Raiden are all close, but like the ERC20 token Golem almost is, its success is tied to Ethereum’s.
Reasons to Invest in Golem
The cloud computing market is massive. Statica estimated the market is worth $140 billion in 2018. Investing in Golem when it is so early in its development would be nice to reflect on if only a tiny portion of this massive amount of money found its way into a blockchain decentralised computer.
Brass Golem is supposed to be released in Q2 of 2018. The planned progress of the GNT blockchain, is mapped out in the Golem blockchain roadmap. Admittedly, it is going to be a while before the Golem network does what it says it is going to. They already have a working prototype which has been tested rendering, and it works just fine. You can even test it yourself.
Golem estimates that they will have a finished product in 36 – 48 months.
Obstacles Golem Needs to Overcome
The GNT blockchain is ambitious. They are competing with multi-billion dollar companies like Amazon, who offer AWS (Amazon Web Service) a very popular cloud computing service. There are others. Golem needs to convince businesses that they should move of these tried and tested services to a decentralised solution.
Even the rapid advancement in computer tech is competing against Golem. £1000 Laptops come with i7 processors and 16gbs of ram out the box. If this price keeps dropping or if Chinese chip manufacturers push down the cost of their American, Japanese, and Korean counterparts, Golem might be seen as a frivolous service in 5 – 10 years.
Another big one are the legislative hang-ups they face. In the United States companies need to know who they are sending money to. KYC compliance refers to the due diligence that companies and financial institutions need to confirm who they are sending money to. These laws are starting to affect a number of exchanges. The UK equivalent are the Money Laundering Regulations 2007. This legislation could affect how people can sell computational resources on Golem.
Investing in Golem’s team, who are they?
My take on Golem’s organisation is it is structured more like a business than other cryptocurrencies. Compared to foundation run Ethereum, open source NEM and deep internet Monero, it is a suit and tie company. If you are thinking of buying Golem as an investment, this is probably a good thing. Fast moving corporate solution blockchains like Ripple, IOTA and Cardano, are all catching up to the more developer focused currencies. Mainstream money will invest in Golem because the structure makes sense to it.
What is Golem’s GNT Token?
GNT isn’t an ERC20 token. It is often mistaken for one. It uses the Ethereum network as a transaction layer, but they have chosen not to include a few protocols, because they believe it will make the network faster.
More accurately, the reason the devs gave for not adopting the ERC20 tokens on GNT, was that it required more data. 3xs the amount of state data is a number thrown around on forums, but I can’t find where this figure came from.
The token standard required them to keep functionality they didn’t need for the machine to machine transactions they had planned.
All the GNT tokens that will ever exist were created during the crowdfunding. 1000000000 GNT tokens were distributed to 820000000 participants. The team kept 6% and 12% were allocated to the Golem Factory GmbH. This is a very fair token distribution compared to cryptocurrencies like Ripple. Chris Larson co-founder of Ripple owns more Ripple tokens (% of total supply) individually than the entire Golem team.
Can Malicious Software Run on the Golem Network?
In theory, viruses and malicious code can be added as software to the Golem Network. It would, however, be very hard to do any damage to them. Golem runs task in isolated environments, and these containers only have access to specific paths on the host machine.
There could be all kinds of vulnerabilities on the network that the devs aren’t aware of yet. Golem has approached this problem with a reputation system. Application Registry users are split into three categories: authors, validators, and providers.
Authors publish applications, validators review and certify applications as safe and trustworthy. They create whitelists and blacklists of tested programs. The provider can keep their own list of trusted validators and authors. They have a say in what software is run on their computer.
Computers farms looking to maximise profit might choose to run all programs except ones that have already been blacklisted. This is a high risk, high reward approach, but the choice is theirs to make.
Is The Data Sent on The Golem Network Anonymous?
Since Golem is built around the Ethereum token standard, it could easily implement ZkSNARKs and make blockchain transactions private, but Golem investors need to understand that Golem has no real interest in doing that. The Golem FAQ page on Reddit explains that Zero-knowledge computing is expensive and time-consuming. They argue that a lot of use case value (business or scientific) is generated by processing non-sensitive or public data.
Golem might be using a trustless blockchain method of consensus to send information and payments, but there is nothing stopping Golem from regulating their own network and making providers sign agreements that explicitly state what they can and can’t do with the information on their network. It will be interesting to see how this one plays out, but if you are going to buy Golem, remember that they need an actual working network before privacy becomes a priority.
How to Store Golem in a Wallet?
GNT’s can be stored in any wallet that supports ERC tokens. MyEtherWallet is an option worth exploring. You can also hold them on Metamask, and in both Trezor and Ledger hardware wallets. Other options include Exodus and Jaxx Wallet. If you are going to buy Golem and hold it long term, it is best to get a cold wallet, paper wallet or a hardware wallet. These Golem wallets aren’t connected to the internet, which will protect the investment in your Golem wallet.