• Is Hashgraph Just the Next Evolutionary Step in Distributed Trust?
  • Started by Hash Fox
« Last Edit: May 14, 2018, 06:50:29 AM by Hash Fox »

Original Article: https://www.linkedin.com/pulse/hashgraph-just-next-evolutionary-step-distributed-trust-s-sly/

Introducing the fourth generation of distributed trust, from Cryptocurrencies to ledgers to smart contracts to markets. Hashgraph completes all third generation requirements, while having scale-ability to fourth generation market demands.

But what is Hashgraph? Hashgraph is a DAG (Directed Acyclic Graph) based data structure, think multiple blockchains working together, a DAG accepts all initially created events (equivalent to blocks in a blockchain) whereas a blockchain doesn’t.

In a Blockchain, using the PoW (Proof of Work) consensus algorithm, the block ‘mined’ first is accepted, all other partially ‘mined’ blocks are not used, leading to inefficiency – think of a single branch (Blockchain) that has notches (disused partial blocks) running all the way along it. Whereas Hashgraph is like an intertwined set of branches running in the same direction without any inefficiencies (notches).

The main benefit Hashgraph has over Blockchain consensus mechanisms is fairness in transaction order. Use cases include high-frequency trading (HFT) on a stock exchange, where the millisecond transaction ordering, Hashgraph offers, creates a ‘fair’ market. This fairness is achieved through a combination of mathematical proof and accurate timestamping.

What about transaction speeds? A common factor of debate amongst BitcoinCore developers as seen with the hard fork* of BitcoinCash – increasing block size within the blockchain to increase transactions per second. Whereas, events in Hashgraph can be any size.

When creating a new event, any new transaction/s, plus a few bytes for overhead, make up the entirety of the event size. Events can be anywhere from a few bytes (no transactions) to whatever size is required.

Combine this with virtual voting & Hashgraph’s consensus algorithm, ‘PoG’ (Proof of Gossip) where events within the graph, gossip to each other about all events previously taken place, gossip about gossip. Transaction speeds can now be 250,000 per second pre ‘lightning network’ equivalent and pre ‘Sharding’.

Moreover, Hashgraph is completely secure with aBFT (Asynchronous Byzantine Fault Tolerance), in theory the most secure version of BFT. Bitcoin is not. Whilst Bitcoin transaction verifications decrease the probability of a ‘bad’ transaction (unsecure) to 1 in 150 billion after 6 verifications - due to elliptic curve digital signing algorithms, it is still not aBFT.

Now consider Bitcoin, ‘mining’ bitcoins presently costs 65.4 TWh to ‘mine’, more than the total yearly energy consumption of 160 countries, similar with Ethereum - a reason they are moving to a PoS (Proof of Stake) consensus. Even in comparison to VISA the electrical output doesn’t currently seem logical, long-term, hopefully, lightning and/or segwit integration will reduce energy consumption. Hashgraph doesn’t have this problem.

This all sounds great, but what are some of the potential downsides? In comparison to the completely open source Bitcoin, Hashgraph has a patent owned by ‘Swirlds’ the company that Hashgraph is based on. One of ‘Swirlds’ vision’s for the patent is to help stabilise the platform by never allowing Hashgraph to fork, a prevalent issue with some ledger platforms that artificially inflate supply. Does this mean the code is closed source? No, the code will be open for review, aiming to provide trust and transparency.

Adding to this the Hedera Hashgraph council will act as the governing body, providing distributed governance. Consisting of 39 governing bodies from a diverse range of leading organisations. A decentralized market solution, both in terms of organizational decision making and in consensus of transaction ordering.

Terms dictate that no single member or small group of members will have undue influence over the membership body. When it comes to consensus, the network will expand to millions of nodes, all of which will vote on consensus.

Finally, there are some significant pros to Hashgraph over traditional distributed trust technologies but, it has yet to prove itself in the real world. Unforeseen scale-ability issues could arise, or other unthought of problems might show themselves. Only time will tell.