Hedera platform, introduced by Hashgraph, is, according to the whitepaper, a ‘Governing body and public hashgraph network designed to address the needs of mainstream markets’.
It aims to become a decentralised cyberspace comprising of 39 council members, including the parent company Swirlds, all with equal voting power on the direction of the network. The council members will be selected from a pool of 100 global enterprises in a structure similar to Visa’s model - where market competitors are united in equal partnership to deliver a mutually beneficial product.
The platform is designed to push distributed ledger technology towards mass market adoption, utilising Hashgraph’s unique consensus algorithm as the basis for performing digital asset transactions. This new system is stated to outperform the many problems faced by blockchain technology which prevent it from ever being used in the mass market: scalability, efficiency and the amount of transactions per second.
What is Hashgraph and how is it different from Blockchain technology?
Hashgraph is an new type of distributed ledger system that’s been developed to supercede blockchain technology, created by CEO and founder of Swirlds, Leemon Baird. Hashgraph claims to be to faster, fairer, more secure and able to handle countless more transactions per second than any existing blockchain system today through its entirely new consensus algorithm.
When reaching consensus on the blockchain, Proof of Work (PoW) or Proof of Stake (PoS) systems are by far the most commonly used protocols to create a fair and honest ledger of transactions. Coins such as Bitcoin and Litecoin (to name a few) rely on a PoW system which requires massive amounts of computational power to elect a miner to create the next new block, many of which are often discarded to form a single unanimous ledger.
PoW consensus is typically slow and susceptible to scaling issues where the blockchain has to fork in order to maintain its efficiency. In contrast to this slow system, Leemon Baird commented on Hashgraph’s supremacy for delivering faster transactions in much greater volumes:
“We can process hundreds of thousands of transactions per second on Hashgraph Hedera, compared to proof of work blockchains like Bitcoin or Ethereum’s blockchain that can do 5-7 transactions per second.”
The Hashgraph consensus algorithm works in a far lighter and more efficient manner. Firstly, it reduces the weight of each block by minimising and compressing every block to its smallest size possible without compromising the transaction information. In order to reach consensus it implements a timestamp process to each transaction which is confirmed democratically through a ‘gossip protocol’ where each node passes on information it knows with 2 further nodes across the network, and exponentially so on. By doing this, every node has a complete history of the blockchain using the bare minimum of information necessary and no blocks are ever wasted.
This system is also highly secure, with asynchronous Byzantine fault tolerance (aBFT) and resistance to DDoS attacks since no single node will possess special voting powers to create timestamps - eliminating any singular weakness in the ledger.
What does this mean for Blockchain technology?
If Hashgraph can deliver on these super fast, high volume transactions on a single decentralised ledger, it may very well become the openly adopted digital payment system and supercede Blockchain technology - which is still burdened by dated computational inefficiencies, flawed security and poor scalability.