What is a Consensus Algorithm?

In order to understand Hashgraph, we need to first throw light on blockchain and will then build our case in the right manner. Just as you know that blockchain emerged in response to the disaster of multiple financial institutions back in the year 2008. The idea was actually a new monetary system where control was taken away from a single source or point of failure and relying totally over a peer to peer kind of a cash system, especially designed for serving the digital domain. It was considered as a disruptor, a revolutionary solution, only until the cryptocurrency enthusiasts and experts started to talk about another disruptive technology named Hashgraph.

What is Hashgraph?

Hashgraph in one line is the future of the distributed ledger technology. Now let’s get to the actual meat of the matter and find out that what Hashgraph really is. It is essentially known as one of the most robust system, especially in comparison to the blockchain briefly discussed above. It also has its own consensus algorithm which provides an absolutely innovative podium for employing the consensus algorithms to get things going in a much smarter way. You may recall the most commonly known attributes which you would associate with the blockchain model and those are consensus based, flexible, distributive, transparent and transactional. Hashgraph is known to have all the mentioned attributes which are also part of the blockchain. The technology majorly is a mix of the innovative consensus algorithm and the data structures which help in providing a more transparent, fast and a highly secure network, especially when compared to blockchain. In order to achieve transparency, speed and top security, Hashgraph make use of the following two highly effective techniques:

  1. Gossip about Gossip — Gossip about Gossip is such a concept which actually tells about associating a supplementary amount of new information to the ongoing gossip. The ongoing gossip is actually about the 2 x hashes to which the last 2 folks talked to. So, a Hashgraph could then be built on this principle and the same could be updated just as some more information becomes available over the node.
  2. Virtual Voting — Just as you find the Hashgraph being ready then this is the time when it is very easy to point out that what the node would actually vote. It is because, we as a user are fully aware about what is the exact information at every node and when actually they knew it all. Now this data can now be employed in order to input that in the required voting algorithm and also to skim out the fact that which of the carried transaction have reached to the consensus point in a quick amount of time.

A direct comparison of Blockchain VS Hashgraph:

The blockchain technology is rigid in the sense that it provides an incorruptible platform to perform a range of financial transactions. It also has the potential to be programmed for not just the economical transactions, but for anything of a certain value. All the information contained over the blockchain network is available in shared form and that is updated on real time basis. This kind of mechanism ensures that all the data or the records that it contains remains the same all across the network, no matter, wherever it is physically stored. Considering such a model of blockchain, nothing over the network could ever be controlled by any single person or entity. This in other words also means that the blockchain has no single point of failure.

Now let us see what Hashgraph has got to offer. The Hashgraph by nature supports a much diverse and a superior data structure which by every means is fully capable in solving a range of problems which the blockchain network always has been found to struggle with, such as its consensus algorithm mechanism. As per this time, the consensus algorithm technology is broadly categorized into anyone of the below give categories:

  1. Public Networks — Examples includes Ethereum and Blockchain etc.
  2. Private Networks — Examples are all those solutions which relies over the Consensus Algorithms (Leader based)

The public networks are inherently very expensive to run and it also have some serious performance issues which comes through the Proof of Work algorithm, where the need is to be in agreement with the transaction order to occur. This mechanism of the algorithm ensures security and consistency. The issue here is that the number of applications gets limited where there is potential to employ such technologies.

On the hand, unlike the public networks, the private type networks limits the usage of the network exclusively for the trusted parties only. The resultant of such approach is considerably low cost and it also enhances the performance of the network quite dramatically. The algorithms employed in such networks have got the potential to ensure as many as 1000 transactions in every second, which is quite speedy and phenomenal. This is especially beneficial when compared with just 7 transaction in 1 second over a Bitcoin network. However, there are numerous loopholes in such a model which paves way extremely vulnerable to DDoS attacks.

It is the Swirld Hashgraph which counters all the issues mentioned above and it is not dependent on any leader or a having some sort of a Proof of Work algorithm. On top of that, it also ensures that the transactions are completed economically, performance is not compromised and there is no case of having a single point of failure. These are the major reasons which makes Hashgraph solution worth trying over the blockchain model.

Apart from that, the Hashgraph has got a number of other considerable advantages as well where the consensus time stamping feature is worth mentioning here. In the blockchain model, a miner has got the option to preselect the transaction ordering in a block and this could also be exploited to intentionally introduce a delay in transactions with the approach of putting them into the future blockchain blocks. Moreover, they could also be completely halted to enter the system. This is resolved by the consensus time stamping mechanism introduced through Hashgraph. This model restricts anyone from altering the order of transactions through the denial approach caused due to the any kind of manipulation done in the order of the carried transactions.

Then it comes to the efficiency of the Hashgraph model which is also par excellence. This needs to be understood with reference to the blockchain technology again where all the potential transactions are placed into the blocks which then shape sup into a long chain (single). So, in such situation, if a couple of miners creates 2 distinct blockchain blocks then the community of the blockchain platform would by design pick one of the blocks and would eventually discard the other one. The issue here is considerable waste of efforts and resources. On, the other end, Hashgraph is quite smart to tackle such an issue. In its network, every container or the block is always brought into use and no block is ever discarded. Conclusively, Hashgraph as of now is a superior technology than blockchain as it addresses quite a good number of issues of varying scale.

Guney Demirci
VP Operation (VPO)
Blockchain Fintech Product
CyBit Limited | Cybit.io
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