(c) Blockchain på Berget. This is Norway. Hashgraph is a new distributed ledger technology (DLT) capable of reaching fair consensus effectively and blazingly fast. What is it, how does it compare to blockchains and what are the consequences? I'm writing this post to try to wrap my head around this exciting new technology...





Background

Hashgraph was developed by Prof. Leemon Baird, a computer scientist from Carnegie Mellon. He has earlier published research in distributed consensus, machine learning, computer security and more. Swirlds (www.swirlds.com), license the technology to private companies today, but I expect a public version of the Hashgraph to be announced soon.





Blockchains and its limitations

Distributed ledger technology (DLT) is a group of algorithms designed for reaching consensus in a computer network. In Bitcoin, Proof of Work is used to allow miners to add new blocks to the ledger every 10 minutes. Other DLTs include Proof of Stake, voting-systems and leader-based systems.





Fairness is important. As a user, you want to have the same chance to have your transaction written to the ledger as everyone else. In the blockchain today, miners determine if a transaction is added to a block, and even the position of each transaction within the block.





Scalability is necessary for any DLT technology to be successful. Taking the Bitcoin as an example, about 7 transactions can be added per second, not nearly fast enough to be capable for a high-volume transaction services. Other blockchains with higher throughput rates have emerged, Litecoin (LTC) and Ripple (XRP) being just two of many examples.





Bitcoin is a pretty robust blockchain technology. New blocks have been added to the chain every 10 minutes for nine years without a glitch. However, there are concerns that interrupts to internet – in theory - could influence the protocol. What if China closed The Great Firewall for bitcoin overnight? Could six verifications be reached on the isolated network in China in parallel to six verifications on the remaining network on the outside? And what if an evil mining syndicate could reach 51% of the mining power?





Additionally, 100% certainty of not having a transaction added to the chain in bitcoin just never happens. It is just extremely unlikely that after six verifications the transaction could be rejected.





New blocks are added to the bitcoin blockchain every 10 minutes. If two blocks compete on being added as the next block, the network selects the chain with highest combined difficulty as the winner. Having a 10-minute interval between blocks makes it possible to figure out which block to select and which to discard. The time and energy spent by the loser is effectively waste.





Fairness, scalability and effectiveness are key factors when evaluating distributed legder technologies. Bitcoin have issues with all 3.





Hashgraph

The ideal DLT is immutable and robust, consensus is reached immediately, have capacity for millions of transactions per second and guaranteed fairness in adding transaction. Hashgraph promises robustness, max 3 seconds to reach consensus, up to 250.000 transactions per second as well as fairness. That is impressive, and a huge step forward compared to blockchains.





How Hashgraph works.

I’m no mathematician, but I will try a shot at explaining Hashgraph. Mostly to try to understand it myself.





Hashgraph uses “gossip on gossip” as the primary means of reaching consensus. Gossip is a well-known method of sending a message across a large network. A node with a new transaction randomly selects a node on the network and starts gossiping, meaning that both party shares everything it knows. The selected node creates a new event, stamped with the time it received the message, as well as the hash of the last messages. Then the process repeats itself. And so on. The message spreads exponentially quick over the network!





By adding a tiny pieces of information to the message – namely



a) the hash of the last message the node sent, and

b) the hash of the last message the node received,



...the whole network gets a complete history of all transactions. Hence gossip on gossip. This is the Hashgraph.





“Virtual voting” is the concept of NOT having to vote to determine which transactions to add to the Hashgraph, because you already know what the node is going to vote. In blockchain, from time to time competing blocks are rejected. This isn’t a problem in Hashgraph.





Hashgraph guarantees consensus through asynchronous Byzantine Fault Tolerance, basically meaning :

1. Consensus will be reached

2. You’ll know when consensus is reached

3. You’ll never be wrong.



Please don’t ask me for the math proof. But it means is that the security in the Hashgraph is mathematically proven – and it is more robust than in blockchains.





The results

1. Consensus can be reached almost immediately, less than 3 seconds

2. Consensus can be reached without costly proof-of-work, reducing expensive investments and electricity costs

3. Consensus can be reached fairly. Each transaction has same chance of being written to the ledger.





Consequences of Hashgraph

The consequences are amazing. Close to zero seconds to reach consensus, no supercomputers or mining rigs needed – even a mobile phone will do – and full fairness adding transactions to the ledger?





Wow. Just wow. Millions of devices all over the planet having access to near real-time data, no central infrastructure. Vibrant and live. Impossible to DDoS, hack or manipulate. Completely fair. Add “Realtime”, “Distributed”, “Bullet-proof” and “Fair” to your tasting to the following bullets:

Trading systems

Auctions

Games

Cryptocurrencies, micro payments

Airspace control

Navigation and tracking systems

Real-time voting

Health monitoring

Any type of monitoring for that matter

Physical access control

Electronic access control.

Anywhere a fair, robust and scalable ledger is needed.



When is the blockchain superior to the Hashgraph? After a few days of research, I’ve not found an answer yet.



Hashgraph is a patented technology, but a statement regarding a public version is expected soon.





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