Hedera Hashgraph: A DLT Alternative to Blockchain for Global Business


Hedera’s unique architecture and legacy-sanctioned business model could help construct a bridge between tradition and blockchain.

Summary

Hedera Hashgraph is a public Distributed Ledger Technology (DLT) that uses a Directed Acyclic Graph (DAG) instead of a blockchain for its architecture.

A council of global business leaders, including Boeing, Deutsche Telekom, and Google, oversees the project. Hedera Hashgraph is a distributed ledger technology (DLT) service provider with built-in centralized control and client optimization features.

It has piqued the interest of businesses looking to take advantage of some of the benefits of blockchain technology without fully committing to decentralization.

Some blockchain idealists have criticized Hedera Hashgraph’s proprietary, for-profit gossip protocol, closed developer loop model, and restricted decentralization for a lack of transparency and equitability.

Contents

HBAR and Hedera Hashgraph’s DAG Architecture 

The way hashgraphs and blockchains add transactions to their respective distributed ledgers are one of the key differences between them. Blocks with transaction records are added to the data chain one after the other to construct a history of the network’s data on a blockchain.

If two miners construct blocks at the same time in the race to hash out a new block, the blockchain will split and the network’s nodes will choose to add to the longer chain, discarding the shorter chain. For the network to work, the sequential sequence must be preserved.

Hashgraphs likewise package transactions into blocks, however, unlike blockchains, all hashgraph blocks are added to the distributed ledger in the same sequence, regardless of their order or circumstances.

Hashgraphs are all utilized to produce a more full image of the network’s transactional data, rather than a winner-takes-all race to confirm the blockchain data. A Directed Acyclic Graph (DAG) is the name given to the resulting structure.

One of the main advantages of DAGs over blockchains is that they can minimize the size of data per transaction, cutting costs, increasing speed, and attaining higher levels of scalability.

The Hedera public network’s native cryptocurrency is the HBAR token, which is designed to facilitate transactions on decentralized applications (dApps) and peer-to-peer payments, as well as to safeguard the network from malicious actors using a staking process similar to Proof of Stake (PoS).

Hedera Hashgraph promises to be able to handle 10,000 transactions per second with an average transaction price of $0.0001 using its DAG model and HBAR currencies.

The Hedera public network’s native cryptocurrency is the HBAR token, which is designed to facilitate transactions on decentralized applications (dApps) and peer-to-peer payments, as well as to safeguard the network from malicious actors using a staking process similar to Proof of Stake (PoS).

Hedera Hashgraph promises to be able to handle 10,000 transactions per second with an average transaction price of $0.0001 using its DAG model and HBAR currencies.

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Hedera Hashgraph’s Gossip Protocol

To obtain consensus on network data, Hedera Hashgraph employs a gossip protocol. A gossip protocol provides transaction data to network nodes, which then reach an agreement on the transactions.

Nodes send all of the transaction information they have to other nodes at random intervals, allowing transaction information to spread quickly throughout the network. When two nodes sync — known as a “gossip sync” — each node creates an “event” to signal the end of the sync.

An event is a data structure that contains a timestamp, transactions, two hashes of the last of each node’s events, and a cryptographic signature and is stored in the network’s memory.

The history of events and their hashes is known as “gossip about gossip,” and it takes the form of a hashgraph, which is a type of DAG. Within seconds, nodes can identify where a transaction should be placed in the ledger’s history by gossiping about gossip.

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Benefits of Directed Acyclic Graphs

Unlike blockchain consensus algorithms, the hashgraph consensus algorithm is asynchronous Byzantine Fault Tolerant (aBFT), which means that no one node or group of nodes can disrupt or change the network’s consensus once it has been reached.

Hedera Hashgraph supporters further believe that it is fairer because no single node or miner is ever given priority in calculating a transaction’s timestamp.

Hedera Hashgraph, on the other hand, calculates timestamps through automatic voting, allowing all nodes to reach an agreement. The resulting order of transactions is presumably fair because timestamps are determined fairly.

Projects That Utilize Hedera Hashgraph

A coupon tracking system developed by The Coupon Bureau, a coupon industry non-profit organization; a platform that tracks and verifies advertising events and engagement developed by AdsDax, a media advertising platform; and a distributed ledger for tracking the drug supply chain developed by Acoer, a healthcare-focused software development firm are all examples of projects built on Hedera Hashgraph.

Tata Communications, an Indian telecoms firm, is also looking into using Hedera Hashgraph for secure user authentication and transaction logs, among other things.

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Criticisms of Hedera Hashgraph

Hedera Hashgraph’s ability to validate the whole of transactions completed on its network has been called into question, possibly due to its unique approach.

Some opponents claim that bad actors could encourage nodes to transmit fake data due to the lack of cryptographic block confirmation methods and that Hedera Hashgraph has a limited ability to detect and prevent such actions.

Furthermore, Hedera Hashgraph’s technology currently lacks an active node reward scheme, implying that nodes have no immediate incentive, to be honest. This misalignment of incentives introduces a risk factor that isn’t present in Ethereum or Bitcoin.

The concept of decentralizing businesses to promote access and equitability has been central to the blockchain space. The Hashgraph protocol is patented and cannot be used or developed by the general public. Swirlds, the corporation that owns Hedera Hashgraph, has the authority to change the protocol and functionality of the entire network at any time.

As a result, app developers and currency holders have limited influence over how the network functions.

Furthermore, it is common for decentralized ledger nodes to be run by volunteers, who are rewarded for participating in the confirmation of new blocks to the ledger. In decentralized setups, this is a fundamental incentive mechanism.

While Hashgraph’s protocol also necessitates nodes, they can only be operated by a few numbers of companies, the majority of which are giant multinationals such as LG, Google, IBM, and Boeing. These businesses are among a large list of top-tier corporations that have pledged to collaborate with Hedera on the platform’s development.

While the private sector’s strong support could help Hedera become a mainstream crypto platform, this method could be troublesome for idealistic cryptocurrency users who want to break free from old economic systems and ideologies.

Hedera Hashgraph is more than a cutting-edge technological alternative to blockchain architecture.

From hardline decentralized supercomputers to enterprise service providers, the team’s business strategy and track experience demonstrate that there will be multiple sub-sectors of the developing blockchain industry that fulfill radically varied needs.

DAGs, gossip, and hashgraphs constitute a distinct and potentially viable position in the vast range of blockchain technology, according to Hedera Hashgraph’s unique design and legacy-approved business model.

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