Hashgraph is an advanced information-sharing technology that allows for secure transactions – such as digital money transfers – without a centralized computer system. The entire system is hosted by the network of computers that use it, making it “democratic,” extremely safe and speedy as hell. Think of it as blockchain (the technology behind Bitcoin) on steroids. For more detail on how it all works, see our post What is Hashgraph.
How it all began
Hashgraph was invented by Dr. Leemon Baird. Dr. Baird received his Ph.D. in Computer Science from Carnegie Mellon University. He launched Swirlds Inc. in 2016, together with his longtime friend and colleague Mance Harmon, who like him, was a former faculty member at the US Air Force Academy program for Computer Science and Cybersecurity. That same year, Swirlds published its first white paper.
The vision Baird and Harmon shared for Swirlds was to enable developers to create distributed applications with unlimited scope and scale. That is, technology that is “distributed” among its users, so that the program itself is hosted on the different computers that use it rather than on a central computer. Baird and Harmon’s solution to this was hashgraph, which was developed with a distributed consensus algorithm, meaning the computers on hashgraph’s network have to agree on a particular transaction before it is valid. Hashgraph technology is classified as Distributed Ledger Technology (DLT), which is basically a record-keeping and information-sharing system hosted across the different computers on the network.
Hashgraph means developers can now build trusted applications on a platform that is fair, offers practically 100% certainty on transactions, and achieves consensus at lightning speed, without the use of centralized servers.
What’s special about hashgraph?
Compared to tech like blockchain, why does hashgraph offer so much more?
Put simply, it uses two techniques to ensure fast, fair and secure consensus. The first protocol is “Gossip about Gossip.” This basically means that nodes don’t just communicate/gossip about a certain bit of information to each other (such as the event of a transaction that is happening between node A and B). They also communicate the information about the event – which nodes it involved, what the nodes were doing before then, at what time it occurred… That means they’re gossiping about gossip.
The second technique incorporated into hashgraph is “Virtual Voting.” According to Dr. Baird:
“I can guess how you would vote, but you don’t need to vote, so you reach a consensus for free. It’s the fastest way known for humanity to send information.”
Via virtual voting, it’s quite easy to find out which node will vote because if new information is provided, all nodes immediately know the initiator. This can be used as input to the voting algorithm to find out which transaction has reached consensus. Virtual voting makes it possible to define which transactions are valid and which are not. If a transaction has two-thirds of the node in the network as witnesses, it is valid. They have to confirm that they are connected to these nodes.
Hashgraph is the gold standard of security among DLTs. That’s because Hashgraph is Asynchronous Byzantine Fault Tolerant (aBFT), which sounds complicated but basically means that transactions are validated by consensus, with a mathematical guarantee that this will happen.
That means that the Hashgraph network will continue to operate even if a third of the network nodes are corrupted and malicious. As Dr. Baird explains “it means that when you are trying to figure out the order of transactions, there comes a time when you know that you have reached consensus.
Ultimately, aBFT means three things:
1) We are going to come to consensus,
2) We will let you know when we have come to consensus
3) It is mathematically guaranteed that everyone else is going to reach the exact same consensus.
Hashgraph vs other DLTs
Distributed Ledger Technology (DLT) has evolved rapidly during the past decade. There are two primary and competing forms of DLT. The first and original DLT technology is blockchain. The second and more recent version of DLT is based on Directed Acyclic Graph (DAG). The genesis of blockchain dates back only 10 years to the launch of Bitcoin in 2009. Because it was the first and most widely known, Bitcoin has become synonymous with blockchain.
In the years following Bitcoin’s launch, other forms of blockchain were introduced, such as Litecoin in 2011. Ripple in 2013 and Ethereum in 2015. Blockchains, as the name suggests, are ledgers composed of a chain of blocks, reaching right back to the first (genesis) block. Each block is made up of several transactions. New transactions are sent to “miner” nodes or computers, which then produce blocks of multiple transactions at intervals. These blocks are attached to a chain of the other older blocks, and the new chain is broadcast to the network.
Blockchain technologies such as Bitcoin are slow by design, and while they provide high probability they can’t offer 100% certainty.
Directed Acyclic Graph (DAG) is the second and more advanced form of DLT, and it began to emerge in 2016. DAG refers to a linear process that cannot circle back on itself. Hashgraph is the most advanced and widely-known distributed solution based on directed acyclic graph technology.
In contrast to blockchains, DAGs can handle multiple events happening at the same time, without each event being slowed down by a group of miners sucking up massive amounts of energy as they process transactions. The DAG network as a whole determines the order. Various DAG algorithms make different choices regarding how to reach this distributed consensus, how fast, how efficiently, and how deterministically that happens. They also make varying choices of the information about the events recorded into the DAG. Some broadcast events to the whole network, others are more point-to-point or use a group of trusted witnesses to validate the growing DAG. DLT solutions based upon DAG are more scalable and fairer while offering much higher throughput, lower latency, and higher certainty and security than blockchain-based DLTs.
In 2018, PwC conducted an analysis comparing eight applications based on the DLTs Blockchain and DAG: Hashgraph, Bitcoin, Ethereum, NEM, EOS, IOTA, Byteball and Nano. PwC assessed performance, fairness, security, programmability and governance. Hashgraph received the highest comparative rating in all five evaluation categories.
Coro Global Inc. is proud to have been among the first companies to complete a license agreement with Swirlds for the Hashgraph technology. Coro has since developed its own private permissioned DLT network, powered by hashgraph.
In Q2 of 2020, Coro will launch a global payment application that uses gold as money, supported on its private hashgraph network.