Hashgraph is a comparatively new addition to the world of Distributed Ledger Technologies. Hashgraph is not related to blockchain except the fact that both are types of DLTs. While discussing and studying blockchain in more details, it is thus important to understand what hashgraphs are and how they can affect blockchains.
The Ailments of Current Blockchain System
There are several shortcomings of the current blockchain system today.
Byzantine General Problem
Blockchain solves this issue to a large extent, but not completely. Two different blocks can still be mined simultaneously creating a temporary fork or split. The network then determines the correct chain of blocks.
Block confirmation times are still long making the network slow in processing transactions.
Proof of Work is still the most widely used consensus protocol and for block confirmation this requires huge amount of electricity, large infrastructure which makes it expensive to maintain
What is Hashgraph
Hashgraph is a distributed ledger technology that implements cryptography to realize the distributed networks for cryptocurrencies and smart contracts.
The consensus mechanism is based on a combination of virtual voting algorithm and gossip protocol. This helps in achieving consensus in a secure, quick and in an efficient manner.
According to Swirlds, the company building Hashgraph, it is …
…a software platform designed to build fully-distributed applications that harness the power of the cloud without servers. Now you can develop applications with fairness in decision making, speed, trust and reliability, at a fraction of the cost of traditional server-based platforms. It is as “blockchain on steroids”.
Many feel that Hashgraphs can replace blockchains in the near future.
Consensus Mechanism in Hashgraphs
There are two algorithms that define the consensus mechanism followed in Hashgraphs –
Gossip Over Gossip Protocol
An event that happens in the network can be told by one node to another (second) node. This is called a gossip. The second node can further gossip this to a third node. This is called gossip over gossip.
In this way, every node discusses everything happening on the network to other nodes that the other nodes have no knowledge of. This gossip can contain very detailed information that includes timestamp, source where a new information generated, etc.
Classic Voting Protocol
This is a cryptographic algorithm that can automatically calculates how every node in the network votes. In case of Hashgraphs, individual node vote is not required and consensus is reached free of cost. In a sense virtual voting happens by calculating which node gossiped with which node and getting a sense on how a node would vote.
These two algorithms ensure lightning fast gossip and voting.
Founder of Hashgraph aims to implement Hashgraphs for three services –
- Cryptocurrency as a service to support micropayments
- Micro-storage for distributed file service to be used by apps
- Smart contracts
Hashgraph aims to provide the powerful features of blockchain minus the limitations. Hashgraphs are 50,000 times faster when compared to bitcoin. It would take some time to implement Hashgraphs and mainstream it. Hashgraph implementation with IoT might happen before it can reach a state where it can replace bitcoins.