The worldwide arrival of Blockchain was marked by the introduction of digital currency in form of a cryptocurrency named Bitcoin. Cryptocurrencies like Bitcoin, which emerged as a new monetary network, use decentralized control as compared to general centralized control in traditional banking systems. Being relied solely on the peer-to-peer network, the Distributed Ledger Technology (DLT) presents a better model to businesses to harness computing power like never before.
Till now the transition to DLT is limited due to various reasons as scalability, efficiency, and interoperability, but Hedera Hashgraph comes as an alternative to it.
Below we shall be discussing the various features and differences between two Decentralized Distributed Ledger technologies – Blockchain vs. Hashgraph.
A Distributed Ledger Database or Distributed Ledger Technology can be described as a ledger of any transactions or shared contracts that are synchronized and maintained in decentralized form across different locations and people. A Distributed Ledger Database stores the information in it securely using immutable using cryptographic techniques and DLs are much difficult to attack as all the nodes will have to be attacked and manipulated simultaneously.
To maintain Distributed Ledger Database both Blockchain and Hedera Hashgraph use different types of data structures and consensus mechanisms.
Blockchain technology is the earliest generation of Distributed Ledger Technology (DLT) that works upon a sequential data structure that forms a chain of blocks.
Blockchain banks upon a number of mechanisms like –
To bring a consensus in the network and secure the block, this mechanism requires solving a puzzle by computation. This mechanism is also known as mining, while the network’s nodes are known as miners. Here to validate transactions and add new blocks and win rewards, the members/nodes of the network have to solve these puzzles.
This mechanism works on a basis, where a creator/validator is chosen to verify and add blocks to the Blockchain and they are chosen on the basis of their contributions to the network.
This mechanism follows a fair lottery system to prevent the network from high energy consumption and resource utilization. In this consensus algorithm, network participants have to identify themselves before joining the network, in this algorithm system there are fair winning chances and it is generally used over permissioned networks.
As the name suggests, here in this mechanism, members in the network send transactions to the leader computer, who in turn sends out the transactions in order to be added to the chain.
In this mechanism, all nodes must be familiar and flexible. Here in such networks, all nodes have to verify blocks together and manage the ledger.
This mechanism works upon the idea of economic rationality to manage consensus, as a real-world economy functions without dealing with chaos.
Here in this mechanism, you have to vote to add blocks and you might have to pay a fine in case you vote for a block which no one else voted. On a similar note, you may even earn a profit if you vote for such a block for whom everyone voted.
A Blockchain-based Smart Contract is an agreement, which is a self-executing sort of contract between buyer and seller being directly written into lines of computer code. Such code and agreements which control the execution and transactions are trackable but immutable in nature. In case there is a need to modify it, a new contract can be used, which is similar to modifying a smart contract.
An intermediary Smart Contracts have the ability to hold the current active smart contract’s address with a function “delegatecall,” which will conveniently redirect all the transactions and calls to the active version. However, another alternative solution is to extract the previous contract information, then add it to a new one, and update the address you want your users to see.
Like Distributed Ledger Technology based Blockchain technology, Hedera Hashgraph is based on DLT technology that works on Graph like structures where all the nodes communicate their information to each other and their communication is reported by building a graph of connections. All the information or data is stored in form of events.
Hashgraph is a Decentralized Distributed Ledger Technology that functions over the Asynchronous Byzantine Fault Tolerance consensus algorithm, which is capable of securing the platform against attacks. Security, fair conditions, and a high level of performance are some of the main features offered by Hashgraph that make it stands out as unique in terms.
The main mechanism of Hashgraph technology relies over ‘Gossip about Gossip’ and ‘Virtual voting’ to bring consensus to the network.
Here the term Gossip means to transfer or sync information from one node to another random node. This mechanism is used to make sure that all data has been circulated to all the members of the network.
Virtual voting is possible since the Gossip about Gossip mechanism is being used, where each node is already aware of what the other node knows. Therefore, each node can predict what the other node would vote and this results in electronic voting or virtual voting.
This mechanism does not allow voting messages to be sent across the network, but each member has information regarding what another member would have voted, even without voting.
This service feature is available over Hedera Mainnet and it allows developers to do the following functions –
Hedera Hashgraph has released an open-source SDK for developers in Java, to build Hashgraph applications. This SDK supports three services on the platform that includes File Storage, Smart Contracts, and Cryptocurrency.
All the necessary tools for creating public/private key pairs and signing transactions are offered by this SDK.
Mainnet Testing Platform is a programme that allows users and developers to test various network capabilities before the actual mainnet gets opened for the access. As recently Hedera Hashgraph announced the second phase of the Community Testing Program.
Under phase II of testing, Hedera plans to make Android and iOS versions of the Hedera wallet, Hedera Browser Extension, and open source WordPress plug-in. These applications would be used to create use cases for the Hedera network services test and P2P micropayments by the developers under community testing phase.
In Hedera Hashgraph, when a client makes a transaction, they may seek acknowledgment about, whether that transaction was added to a consensus state. So, to address it Hashgraph offers the following mechanism to know about confirmation –
In this scenario, the client submits a transaction to a specific node with a request added, that the transaction should be submitted to the network. Before being submitted, the node will quickly check the transaction and respond with the client’s result. This check is mandatory since it determines whether a transaction is structured or not. If it is structured and found “OK”, then the node will add the transaction to the network, while the client can pay fees associated with it.
Subsequently, the honest node adds the transaction to the network, while the response is sent to the client with it. This confirmation makes the client confident that the transaction will change the consensus state.
A receipt displays the following information –
HBARs are the utility tokens used in Hedera Hashgraph, which are used to grant access to token holders into Hashgraph-based distributed applications.
Being fast, allowing micropayments, and offering low network fees are some of the lucrative features of HBAR. Additionally, Hedera even rewards users with HBARs for contributing to the launch of the node on the network. There are wide range of use cases of HBAR cryptocurrency like Digital Content Monetization and Influencer Activity Monetization.
Contrary to Smart Contracts those once deployed over Blockchain cannot be modified whether one has to fix a bug or add new functionality and deploying a new contract to replace the old one is only the option.
Here in Hashgraph, an option is present to enable “binding arbitration” for smart contracts. But that doesn’t compromise with the immutability feature of it, rather it allows change only if several parties designed by the smart contract developer agree. Developers have a choice to choose the contract’s subsequent mutability while deploying a smart contract on Hedera Hashgraph.
Now, let’s see how Hashgraph vs Blockchain fare against each other in terms of various categories –
|Consensus Mechanism||Proof of Work, Practical Byzantine Fault Tolerance, Proof of Work, Proof of Elapsed Time||Virtual Voting|
|Security Mechanism||Cryptographic Hashing||Asynchronous Byzantine Fault Tolerance|
|Applications||Bitcoin, Hyperledger Blockchain Projects, Ethereum, EOS, Tezos||Swirlds|
|Speed of transactions||Depends upon the protocol implementation (Eg: 100 – 1000 transactions per second in Ethereum, Hyperledger)||Up to 500000 transactions per second|
|Asynchronous Byzantine Fault Tolerance||Some implementations in Hyperledger are Byzantine Fault Tolerance ready||100% compliance|
It’s an open secret that Blockchain is an open-source technology to run over the DLT platform and it can be contributed by many people to build utilities like cryptocurrencies and other utility tokens. Moreover, Blockchains have created their niche around some business houses due to their decentralized nature after defining their quality.
Whereas Hashgraph is a patented technology owned by Swirlds, so as a new user you have to pass through Swirlds.
In Blockchain technology, the speed depends upon the implementation of protocols such as Hyperledger, or solutions such as cryptocurrency, Blockchain platforms such as Ethereum, Corda, and more.
Compared to Blockchain technology, to provide high transaction speed Hedera Hashgraph uses the gossip about gossip protocol as it requires less information to propagate with more events taking place.
No doubt, Blockchain is way much slower than Hashgraph which can process up to 500,000 transactions per second.
Efficiency at Blockchain comes to question since it uses a block approach which makes it difficult for more than a number of miners to work on it, as at the same time only block can be mined. While the other blocks which are being mined get discarded, and the efforts are wasted.
Compared to this, Hedera Hashgraph is much more efficient, as no resources are wasted or discarded. Here all events that are gossiped about to the network are reserved, which makes it 100% efficient.
The consensus mechanism in Blockchain relies upon cryptography and currencies. The most widely used consensus algorithm used in Blockchain technology are Proof-of-Stake, Proof-of-Work, Proof-of-Elapsed Time, Practical Byzantine Fault Tolerance, etc.
To achieve the same network consensus Hedera Hashgraph platform uses virtual voting. Now in this mechanism, there is no need for other algorithms as they can provide low transaction cost and high performance without failure. Apart from that, even operating costs can be minimized as there’s no need for high computation power and electrical supply.
Currently, Hedera Hashgraph as a Distributed Ledger Technology stands as a promising technology, but nevertheless to mention it also faces limitations in some areas. As of now, Hashgraph awaits to be tested in a public network, as till now it has only been used in private and permission-based networks.
Hedera Hashgraph’s faster transactions throughput and flawless security might look impressive, but to replace Blockchain solutions, the real potential and effectiveness of Hedera Hashgraph must have to be proven. Which only can be known once it gets released to the public and non-permission based networks and the same gets tried over the Blockchain sector over the course of time.
Here’s everything you should be aware of the HBAR cryptocurrency. … The company utilizes blockchain to run the crypto-network it runs. The company also uses hashgraph for security and allows for rapid transfer speeds
The Purpose Company