Hashgraph: replacing blockchain technology?
Blockchain technology is one of the most exciting new technologies of the last years. Bitcoin has reached mainstream news; you can read about it on a near daily basis in any given newspaper. Soon many other developers saw the possibilities that blockchain technology had to offer. People started creating other, more versatile, cryptocurrencies. A huge altcoin hype resulted from that. But also in other businesses, blockchain technology seemed to open new opportunities. It is now used to trace food, offer cheap, environmentally friendly electricity, and blockchain technology helps governments digitize their systems. It seems blockchains are here to stay, or aren’t they?
There are some downsides to blockchains. The proof-of-work consensus system is slow, for example. The mining process is energy consuming, which has a negative impact on the environment. Dr. Leemon Baird, Co-Founder, CTO, and Chief Scientist of Hedera found this reason enough to look for another solution. And he has found it: hashgraph.
What is hashgraph?
Hashgraph is, just like blockchains, a distributed ledger technology. Baird invented the technology to solve the consensus problem that blockchain technology faces. With hashgraph, Baird introduces a new consensus mechanism, based on gossip about gossip and virtual voting. Gossip means that all nodes connected to the network share the knowledge they have with other nodes. This sharing is an event. Gossip about gossip is the history of how the events are related to each other through their parent hashes.
Virtual voting offers the same guarantees as normal voting but is much faster and efficient as no votes are sent over the internet. Node A does not send its vote to node B. In fact, node B adds what node A would’ve voted based on B’s knowledge of what A knows. B knows what A has learned by checking the history in the hashgraph. This limited communication saves a lot of time when looking to reach consensus. This makes hashgraphs fast, real fast. It is estimated that the technology can process more than 250,000 transactions per second.
All the communication in hashgraph is being saved, albeit gossip. No blocks will ever be discarded so there is zero waste of resources. Proof-of-work blockchains do have discarded blocks when two miners create contesting blocks. This leads to a consumption of resources that is wasted.
The speed of hashgraph is dependent on its slowest member. Since the distributed ledger is updated simultaneously, the member with the slowest internet connection decides the pace of the processing of transactions.
Hedera: the implementation of hashgraph
When Baird created hashgraph, he also made the Hedera hashgraph platform. It advertises itself as lightning fast, and providing the best level of security possible in a distributed consensus algorithm. Just like blockchain, Hedera is decentralized. The Governing Members of the Hedera Hashgraph Council have equal voting rights and are appointed their position for a period of 3 years. They are limited to two consecutive terms. Ultimately, the network will contain millions of nodes, all with voting on the order of transactions. These Governing Members of the Council are the organisation that provide distributed governance. There will be up to 39 Governing Members, all from a wide variety of industries and geographical diversity. No single member of this council will be in control, nor will small groups be able to influence other members. They are weighted only by stake; the member with the most tokens will have the stronger weight in consensus voting. These tokens can be earned by contributing towards consensus.
Not everyone is entirely positive about hashgraph. Even though the network will be decentralized, the technology is patented. This goes beyond the ideology of many blockchain enthusiasts. Hedera wants to avoid forking by not making the technology open source. Forking though, is how to democratize the system. Hashgraphs will also only work for ‘permissioned networks’. Again, this goes against the open, decentralized character of cryptocurrencies in general.
Another criticism is that hashgraph can only be fast, fair, and secure within its own zoned off setting. As soon as it will go public, it will inevitably face the same issues that public blockchains are struggling with.
So hashgraph seems to be really fast and secure. But will it remain this way when the whole network reaches its desired scale of 5 million nodes? There are benefits to the technology behind hashgraphs, but it remains to be seen if it can outmarket blockchain technology altogether. It might eventually lead to a whole new network in which both technologies are merged, using the benefits of both, leaving behind any cons.