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Hedera Hashgraph – The Revolutionary Solution to the Blockchain Industry Worldwide Adoption Impasse

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Introduction to Blockchain and the Concept of Consensus

Now as you read this article, I make some fundamental assumptions. You are familiar with blockchain, tokenization, cryptocurrencies and consensus – basically, you know blockchain. If you do, then skip ahead to the next section. For those of you who are not, here’s a quick intro to get you going.

The blockchain concept is quite complex for those who have never heard of it, although you would definitely have heard of Bitcoin (unless you’re a sadhu who spent the last ten years in the Himalayas), so perhaps, the best explanation quickly and as efficiently as possible could be the pictures given below. After all, a picture is worth a thousand words, right?

Take a long look at the infographics given below, peruse every corner, each word carries heavy meaning. Referring to Wikipedia to answer any doubts which arise wouldn’t be a bad idea, either.

Going Forward

So, from now on I assume that you know blockchain and cryptocurrency, and with minimum fuss, lets get on to the meat of our article – the Hedera Consensus Service (which is difficult to understand without a solid foundation in blockchain technology and blockchain concepts anyway!).

Issues with Standard Blockchain

So, from now on I assume that you know blockchain and cryptocurrency, and with minimum fuss, lets get on to the meat of our article – the Hedera Consensus Service (which is difficult to understand without a solid foundation in blockchain technology and blockchain concepts anyway!).

Now if there’s one thing cryptocurrency is more well-known for than the meteoric rise of the price of Bitcoin, it’s the multimillion-dollar frauds that have plagued the crypto industry. Also, fundamentally, as a system, blockchain suffers from undeniable security problems.

For a system billed as immutable and free from hacking, there is a surprising amount of issues with blockchain security, latency, throughput, and – of course – consensus. Standard blockchains can be hacked if a malicious agency gains access to just 51% of the total nodes in the cryptocurrency mining process. Which is a limit that several mining pools have already breached!

The standard example of Bitcoin as a blockchain-based system is a shocking example of inefficiency on a worldwide scale. Bitcoin, simply, does not scale. The time it takes to add a new block to the blockchain in Bitcoin today is ten minutes for one transaction! In comparison, Visa processes 24,000 transactions every second! For finality (the term for the transaction to become irreversible), Bitcoin takes an entire hour. Bitcoin is thus way too slow for mainstream industrial applications.

Bitcoin Cryptocurrency Mining (Proof-of-Work)

Bitcoin cryptocurrency mining is the single most pressing problem with the system. Bitcoin mining can take as much electricity as a small nation. To make it worse, 99.999% of the work is redundant. There is a race between competing nodes to compute a hash value as quickly as possible. The first one to the solution (proof-of-work) of this hashing problem is awarded the reward.

 The work of all the millions of other nodes competing in this race is thus sheer duplication and completely redundant. Environmentalists have been pressing for years for a solution to this very real issue, because Bitcoin is an environmental disaster as far as resource consumption goes.

Standard Blockchain Unsuitable for Industrial and Commercial Use

Hence, blockchain is not anywhere close to the game-changing disruptive force it was touted to be. Blockchain is a revolutionary technology but because of problems with latency, efficiency, and time taken to reach a consensus (finality), it cannot be used for commercial or industrial use. Or at least – so we thought. But there’s a new player on the block – literally. Enter Hedera Hashgraph – and the entire scenario changes. Completely.

The Solution – Hedera Consensus Service

Now, we go through the process of explaining what the hashgraph data structure is and what consensus means. The mathematical details of the science behind the technology is beyond the scope of this discussion, but as of now, we shall simply say that the hashgraph is a data structure discovered by Dr Leemon Baird, that stores a graph (an unordered tree, a set of nodes and edges) of hashed event records that maintains the following characteristics – a global ordering of events/transactions, a public immutable verifiable record of the complete transaction history. The hashgraph consensus algorithm has been around since June 2016 (courtesy Dr Baird) and has undergone complete mathematical analysis and formal verification.

The codebase of the Hedera Hashgraph Platform is also open review – completely and totally open source and can be executed and analysed by anyone. This gives it perhaps the strongest type of hacker-proofing possible today. And yes – for security, the platform achieves ABFT (Asynchronous Byzantine Fault Tolerance), the theoretically highest possible level of security a distributed decentralized system like this can offer. The platform is subject to governance and regulatory compliance by carefully vetted companies and consortiums that are involved, the latest to join being IBM and Tata. This ensures stability and prevents destabilization of the platform through hard forks, which have plagued even popular platforms like Ethereum.

The Magic Silver Bullet

The three issues we discussed with blockchain were performance, security, and efficiency. As we will shortly explain, Hedera Hashgraph provides the perfect panacea to all these problems and enables worldwide industry adoption of blockchain as a technology – with the hashgraph as its support and cornerstone.

As far as performance goes, Hedera Hashgraph is unlike any blockchain system before it. We quote from the white paper:

“For 32 computers running at 50,000 transactions per second, consensus finality is reached in 3 seconds when the network is spread across 8 regions spanning the globe. When the network stretches only 2,000 miles across the US, this drops to 1.5 seconds. In a single region, it drops to 0.75 seconds. If it is desired to keep the latency under the 7 seconds required by credit cards, while still achieving 200,000 transactions per second, it is possible to use 32 computers in eight regions, or use 64 computers in two regions, or use 128 computers in one region.”

In a very real sense, the performance of Hedera is limited only by bandwidth and by processor speed.

“With the unveiling of the Hedera hashgraph platform, the Council today also released speed test results, conducted on multiple Amazon AWS. The tests focused on achieving consensus on transaction order and timestamps for instances distributed across five continents. The Hedera network was able to handle hundreds of thousands of transactions per second, with time to finality within a few seconds. Hedera uses verification software that runs on the computer’s graphics card GPU to verify one million signatures per second.Such speed is crucial to enable use cases such as distributed gaming, stock and other markets, and micropayments.”

As far as security goes, we have already touched upon the asynchronous Byzantine Fault Tolerance security level attained. This is the gold standard of distributed systems security – you cannot have a higher security level than this. There are two networks in hedera hashgraph, the main-net and the mirror-net. This ensures true decentralization, unlike other systems which require a single node or a trusted set of nodes to arrive at the consensus for each transaction.

The main-net needs 66% of its nodes to be without malicious intent. The mirror-net is verifiably accurate and even if one single node becomes faulty or hacked, the error will be instantly noticed. The lack of a single location for reaching a consensus also means that Distributed Denial of Service (DDoS) attacks also cannot affect the hedera system. Which is a huge factor considering recent trends in cyberattacks.

Encryption standards are also heavy-duty and industry-strength, the protocols used being (we quote from the white paper again):

“All communications are encrypted with TLS 1.2, all transactions are digitally signed, and the hashgraph is constructed using cryptographic hashes. All the algorithms and key sizes were chosen to be compliant with the CNSA Suite security standard. This is the standard required for protecting US government Top Secret information. It specifies using AES-256, RSA 3072, SHA-384, and ECDSA and ECDH with p-384 and using ephemeral keys for perfect forward secrecy.”

The Hedera Hashgraph White Paper

Finally, efficiency in the hedera hashgraph is not just optimal, it is perfect, or 100% efficient. What do we mean by that? There is not much more you can ask for. To focus on value for your time, we quote the white paper again:

COST

The hashgraph is inexpensive in that it avoids energy-intensive proof-of-work. Individuals and organizations running hashgraph nodes do not need to purchase expensive custom mining rigs. Instead, they can run readily available hardware.

EFFICIENCY

Hashgraph is also efficient in its use of bandwidth. Whatever is the amount of bandwidth required merely to inform all the nodes of a given transaction (even without achieving consensus on a timestamp for that transaction), hashgraph adds only a very small overhead beyond that absolute minimum.

The hashgraph is 100% efficient, as that term is used in the blockchain community. In blockchain, work is sometimes wasted mining a block that later is considered stale and is discarded by the community. In hashgraph, the equivalent of a “block” never becomes stale.

Additionally, hashgraph’s voting algorithm does not require any additional messages be sent in order for nodes to vote (or those votes to be counted) beyond those messages by which the community learned of the transaction itself.” From the source given above.

Hedera Runs on Any Distributed Ledger Network that Requires Consensus

Every blockchain will benefit from hashgraph technology. And this means that every blockchain system in place in the world right now – Bitcoin, Ethereum, Ripple, Monero, Litecoin, Hyperledger, Hyperledger Fabric, OpenChain, MultiChain, Bankchain, Iota – you name it, it’s applicable – can and should be modified to use hashgraph technology. You might say this is too much hype, that one technology cannot revolutionize the entire industry and disrupt every system in place today.

I’m here to tell you – that’s not the case.

Hedera Hashgraph is a game-changer. The blockchain industry will never be the same again. And finally – blockchain can be adopted across industries, sectors, platforms, verticals, and even government sector industries. This is the silver bullet that transforms blockchain from an overhyped phenomenon around profit-trading and cryptocurrency value speculation to a practical, usable and viable solution for industries and enterprises everywhere.

 

This is going to change the world. Change everything. Disrupt industries. Create millionaires and conversely, force competitors who don’t adapt in time to go bankrupt.

 

Are you ready?

Issues Not Covered in the Article

We have glossed over a number of details about hashgraph and blockchain itself. For example, blockchains can be private, public, or permissioned (hashgraph is a private blockchain system). Hashgraph has a number of other topics that govern its internal mechanism, which we have not covered – the quirkily named Gossip about Gossip, voting, supermajority, how the hashing scheme works, and the mathematics behind the hashgraph algorithm. I will refer you to the list of references at the end of this article, and of course, our ever-faithful Google is ready to enlighten us upon anything we choose at any time. We live in exciting times!

Hedera Hashgraph and Hyperledger Fabric – A Match Made in Heaven

Finally, this article would not be complete without mentioning one of the most promising applications of hashgraph to the industry – its use in conjunction with Hyperledger Fabric.

For those of you who don’t know what Hyperledger Fabric is, we give you an excerpt from the Hyperledger Fabric Documentation here:

“The Linux Foundation founded the Hyperledger project in 2015 to advance cross-industry blockchain technologies.

Rather than declaring a single blockchain standard, it encourages a collaborative approach to developing blockchain technologies via a community process, with intellectual property rights that encourage open development and the adoption of key standards over time.

Hyperledger Fabric is one of the blockchain projects within Hyperledger. Like other blockchain technologies, it has a ledger, uses smart contracts, and is a system by which participants manage their transactions.

Where Hyperledger Fabric breaks from some other blockchain systems is that it is private and permissioned.

Rather than an open permissionless system that allows unknown identities to participate in the network (requiring protocols like “proof of work” to validate transactions and secure the network), the members of a Hyperledger Fabric network enroll through a trusted Membership Service Provider (MSP).

Hyperledger Fabric also offers several pluggable options. Ledger data can be stored in multiple formats, consensus mechanisms can be swapped in and out, and different MSPs are supported.”

Hedera Hashgraph is a perfect foil to a private permissioned network that can ‘swap consensus mechanisms in and out’, and with its performance, security, efficiency, stability, governance, trust, regulatory compliance, and open source features make Hyperledger Fabric combined with Hedera Hashgraph the ideal goto platform for building dApps. The two platforms complement each other. Expect a lot of activity, growth, disruptive change, and revolutionary applications to completely turn our technology world upside down.  

Hedera Hashgraph is A Revolutionary Innovation Enabling Viral Industry-Disrupting Blockchain Systems.

The Only Limit is Our Imagination

So, what are you going to build? When is your dApp coming out? And how long will you take to get familiar with this technology that will soon take over the world? Maybe you’ll create a MMORPG game that simulates characters in The Sims game. Maybe you’ll discover super-fast transactions have a significant advantage over traditional systems, and create a revolution in the IoT space. Maybe you’ll build a VR application with hashgraph that becomes the next Google. The next Facebook. The next Netflix. The next… you get the idea!

The only limit is your imagination and innovation capacities.

And, of course, your coding skills (duh).

Hold on to your hats, folks – the future is going to be an awesome ride!

The dApps revolution is just getting started! Over 200 companies already using Hedera Hashgraph!

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