Blockchain and Hashgraph- what is the future of Distributed Ledger Technology?

Cryptocurrencies and blockchain technology are presaged to be the future of technological advancement since the internet itself. But what if a distributed ledger technology (DLT) claims to deliver the most essential benefits of the Blockchain without its biggest limitations. This is the claim made by Hashgraph — a consensus algorithm which offers a new platform for distributed consensus. It heralded as more secure, faster, decentralized, cost-effective and more importantly fairer than blockchain. Both blockchain and Hashgraph are types of Distributed Ledger technology (DLT) but distinguished.

What is Hashgraph?

Hashgraph is a new approach that is vastly different than the other interpretations of the distributed consensus. It offers an upgradation to the current systems of DLT. Even though it is similar to blockchain in many respects like being transparent, flexible, distributed, transactional, Hashgraph is a consensus algorithm and data structure that is fairer, speedier and more secure.

To accomplish this fast, fair and secure consensus Hashgraph particularly uses two special techniques — Gossip about Gossip and Virtual Voting

· Gossip is computer science term for a calling a random node and telling it a piece of information previously unknown (to it). In DLTs the minimum bandwidth needed is that the transactions go to every node, only with gossip this information transfer is attained faster. Gossip about Gossip means attaching a small amount of data in addition to this Gossip, which are two hashes containing the last two people talked to. Utilizing this data, a Hashgraph can be created and constantly updated as more and more information is gossiped on each node.

· After Hashgraph is ready, it is simple to ascertain what a node would vote, since we are aware of the information that each node has and when they knew it. Therefore, this information can be used as an input to the voting algorithm and to find which transactions have reached the consensus already.

How is blockchain different from other DLTs?

What is really fascinating about blockchain, is how its more than just a simple data structure. It is possible to use a blockchain to identify transaction rules or even for generating a smart contract. Furthermore, blockchains are a chain of blocks. But, DLTs (distributed ledgers) do not require such sequence.

Mainly, DLTs do not need proof-of-work (agreement to the order in which transactions will occur) and provide (at least theoretically) improved scaling options.

How does Hashgraph compare to bitcoin and blockchain?

One thing to remember, before diving into comparisons in between the two, is that Hashgraph is not an open-source project.

This means that the claims made about it have not been proven yet, but its abilities are being reviewed now. Even so, the Hashgraph team are quite confident in the outcome. For comparison sakes, we assume that its claims are valid, as there is no reason to disbelieve them yet.

Speed

The blockchain is limited to only 7 transactions per second, while on other hand Hashgraph boasts of 50,000 times faster transactions. Unlike blockchain, the transacting speed of Hashgraph is only limited by the bandwidth of all nodes.

Fairness

In blockchain, miners can choose the order of which the transactions will occur in a block — therefore, giving them the power of delaying orders by placing them in the future blocks or even entirely stopping them from entering the system.

While on the other hand, Hashgraph offers a unique solution to this in the form of consensus time stamping. This system prevents an individual from affecting the consensus order of transactions by preventing any sort of manipulation of the transactions.

Sybil Attacks

The main reason why Hashgraph is able to achieve its positive outcomes is that it does not use “Proof-of work” — thus making it more cost-efficient to process transactions compared to mining on the blockchain. However, this may happen at the cost of security.

To explain this more extensively- you may know one of the attacks faced by peer-to-peer networks as ‘Sybil attacks’. They are described as situations when an adversary regulates multiple nodes on a network by generating false identities, opening the possibility for an individual to gain control of the major part of the network.

How are blockchain based cryptocurrencies more Sybil resistant?

Bitcoin is very much Sybil resistant- this is because all the miners in Bitcoin are trying to mine the next block and earn the bitcoin reward- therefore they have more motivation to use their full-computational powers. Concludingly, the attacker is not able to create more blocks on the blockchain by producing false identities and running more nodes — because of their computation power limitations.

So, what happens when you don’t have reward- motivated node operators to use all their computing power? The result is each node using minimum computing power needed to keep the network running. This then leaves a possibility for an adversary to generate multiple identities and run several nodes and therefore, control a large part of the network than the honest nodes. Hashgraph has not reached the same level of Sybil resistance as bitcoin and other blockchain based cryptocurrencies.

Even so, Hashgraph has addressed the issue of Sybil attack — in form of proof-of-stake, where it allows only members to vote as per their ownership stake.

Byzantine fault tolerant

Unlike other systems, Hashgraph is a fully asynchronous Byzantine. In simpler terms, it makes no suppositions regarding the speed of the messages that are passed on the net. This ability makes it resilient to DDoS attacks, firewalls and botnets.

Meanwhile, in Bitcoin, there is never a chance of knowing that you have a consensus.

Hashgraph is only deployed on private, permissioned-based networks

Hashgraph has not announced any plans for an ICO. Furthermore, whether it can be adapted to a truly decentralized public ledger remain to be seen. It requires a means of registering/unregistering of members in the network, while public blockchains permit nodes to sign in and out of the network without any notice. It is sometimes even called as ‘permissioned blockchain’ as there are no Hashgraph cryptocurrencies or public ledger and is currently only deployed on permissioned networks.

Concluding thoughts

It is apparent that in some respects, Hashgraph does offer some improvements over blockchain. Will it be the answer for a speedy, secure decentralized payments? Maybe, maybe not -given that it is more vulnerable to Sybil attacks than bitcoin and other blockchain-based currencies. Plus, part of blockchain’s value is that it is easy to grasp, which may have a hand in its larger adoption rates. Hashgraph is still in its initial stages and is quite complex-needing more time to understand.

Being said that, it definitely has centralized applications that have a wide range. Plus given its superior efficiency compared to any Proof of Work, it would benefit private institutions to adopt Hashgraph. It is definitely an idea which needs to be improved upon to avoid the same pitfalls as any other Proof-of-Stake consensus. Nevertheless- the question remains — whether it will completely overthrow blockchain? only time will tell.

- Link1: https://www.intelegain.com/smart-contracts-automation-power-on-the-blockchain-infographic/

- Link2: https://www.intelegain.com/blogs/