What is Hashgraph and How is it Better than Blockchain?
Blockchain has been termed as the most disruptive technology since the internet. In 2017 alone, startups raised a whopping US$ 6 billion with 879 initial coin offerings (ICOs). The distributed ledger technology (DLT) that runs behind blockchain is changing the way businesses operate. Every techie you know has an opinion or idea around blockchain.
But just like any other revolutionary technology, blockchain has its own set of challenges – speed being the most important of them. The processing capacity of blockchain is up to seven transactions per second. It brings a limit to the scalability of blockchain-based business models.
The introduction of hashgraph
On 31st May 2016, Leemon Baird published a paper titled The Swirlds Hashgraph Consensus Algorithm: Fair, Fast, Byzantine Fault Tolerance, which introduced a new form of a distributed ledger that is decentralized, consensus-based, immutable, transparent, and superior to the existing DLT systems. This method doesn’t depend on proof-of-work (PoW), proof-of-stake (PoS), or a leader node to distribute, share and synchronize data between the participating nodes.
How hashgraph works
Hashgraph is a distributed consensus protocol where the nodes use Gossip and Gossip about Gossip to communicate the latest state of their information with each other. This communication is used to build a graph of connections, and virtual voting is used to make the final decision.
Gossip about Gossip
Suppose an online transaction happens in a hashgraph network. A node creates a time-stamped and signed “event” for that transaction. The information on this event is then shared with a randomly chosen nodes in the same network. These nodes record this information exchange by creating a new event based on that and pass it forward to other randomly chosen nodes in the network. This continues until all nodes in the network are aware of the transaction that happened.
The entire process can be represented as an upward growing graph of events and is connected by cryptographic hashes. Each event in the graph is cryptographically signed by its creator and contains hashes of all events below it.
The hashgraph technology doesn’t involve actual voting; it uses local virtual voting. Every member has a copy of hashgraph. With the information from the hashgraph, a node can figure out what the other nodes have voted, and needn’t communicate separately with each node to know what they have voted. This makes it easier for them to achieve Byzantine agreement.
The virtual voting method in hashgraph saves a lot of bandwidth as it reduces the need for unnecessary communication. It also ensures that the member nodes count votes according to the rule.
Asynchronous Byzantine fault tolerance
The hashgraph system satisfies Byzantine fault tolerance protocol – a single member or a small group of members can neither prevent the network from reaching the consensus nor change the consensus once it has been reached.
Even if ⅓ of the nodes in a network is attacked, the remaining ⅔ nodes would be able to reach a consensus and continue the transaction.
Better than blockchain
Like blockchain, hashgraph is distributed, consensus-based, transparent, immutable, transactional, and flexible. But it comes with added benefits.
Faster: The speed of hashgraph is limited only by the bandwidth. Hashgraph can attain over 2,50,000 transactions per second, which means it is 35,000 times faster than blockchain.
Fairer: The consensus time stamping of hashgraph denies any kind of manipulation on the consensus order of a transaction by individual nodes. This feature is not available for blockchain; the miners of blockchain can change the order of transaction and delay the order. Thus, hashgraph offers fairer transactions.
Secure: While the relaxed security standards of blockchain make it more prone to distributed denial of service (DDoS) attacks, the asynchronous Byzantine fault tolerance makes hashgraph a more secure system.
Efficient: If two nodes create a block at the same time for the same transaction, one of these blocks are eventually discarded by the network in the blockchain. At the same time, all blocks created by the nodes in a hashgraph network are used to create the graph. No effort is wasted, making it a more efficient system.
With its speed, fairness, and security, the hashgraph technology proves to be better than blockchain. It could be the future of distributed ledger.
Learn more about hashgraph here.