Hashgraph is a potential Ethereum killer that’s only a few months old
Ethereum, Bitcoin & other blockchain platforms are growing at an extremely fast pace. As each gets larger so does the storing, synchronizing and scaling issues that go hand in hand with distributed computing. Ethereum alone has already surpassed 1 terabyte in size and shows no sign of stopping. Despite attempts in increasing its cap per-block, each Bitcoin transaction still requires more transaction fees. Overall systems such as these are set to buckle under their sheer size unless something is done.
Ethereum is close to 4 years old and Bitcoin has been around for a decade. In the present, many experts have voiced concerns over just how the growth and scaling on the networks will be managed and what changes to protocols will be ushered in. Failure to so would certainly see millions of outdated transaction events stored in every single full node and lead to blockchain based crash of epic proportions.
The Crux of the problem
The root issue can be found in the fact that in any given network every full node stores the history of everything.
In layman’s terms, public permission-less blockchains have computers — or nodes — on their network that hold and upkeep a shared version of the information. Securing against such problems as cyber attacks, each computer holds a full copy of the blockchain thus rendering it intact.
The other alternative sees light client protocol used rather than a full node. Light clients ensure that it needn’t be necessary to sync or download the total blockchain to access it.
While this is preferred for users that don’t have devices which have the capacity to download a full blockchain each time — for simple procedures like verifying account balances — full nodes still hold promise.
Take for example that full nodes will reject transactions that go against the grain of network rules. And as third-party servers are involved, light wallets aren’t as private as would be the case with full nodes.
Data Costs
Blockchains like Ethereum are constructed to only charge for an upload, write request and not a download, and this makes it easier for developers to build apps. They can retrieve the status of something, like smart contract or account balance, without paying the network for it. They only pay when they want to alter the state.
Problems arise when sending a transaction or executing a smart contract on a blockchain. In respect to the costs associated with the kilobytes written in such actions, fundamentally it is not economically viable to use a blockchain to store data.
This is because storage costs need to be covered upfront for the data to be stored perpetually.
Astoundingly even in the hollow victory of data retrieval being free, it costs about 0.003 ETH to call the contract, in Ethereum, and that’s before adding any data. The bottom line is that this equates to about 0.035 ETH per KB or around $76,000 USD per GB of storage.
Bigger doesn’t mean Better
So more data means bigger blocks. In light of the increasing amount of data passing through it (more commonly known as throughput), Ethereum has already crossed the barrier of processing over a half million transactions in less than 24 hours.
For the uninitiated, this would be a cause to remove information from the block. But by their very nature blockchains are practically immutable which means, in theory, existing public blocks cannot be modified. Primarily adding a new block is the only way a blockchain can be updated which adds to the initial problem.
Such growing pains stop Ethereum reaching Visa-like transactional throughput that so many enthusiasts wish it could achieve. To find a solution within its own domain is equally as difficult because at the current moment the network is not processing millions of transactions a month.
And as there is no current ‘petri dish’ to assist in finding a resolve it is foretold by many that a bottleneck will occur around the time that a necessary change is most needed.
Hashgraph holds the Solution
Enter Hedera Hashgraph, using a novel implementation of an asynchronous consensus algorithm (aBFT), which solves the above problems by having multiple fees baked into the protocol to better serve the network maintainers.
The fees associated with Hedera are set to be a mere fraction (1/1000 of a penny) of the likes of Ethereum (30 cents or so) and other public platforms — with equally as high throughputs but no proof of work used to confirm transactions.
Nodes in the Hedera ledger are paid for the provision of services and resources like computing, bandwidth and storage used in establishing consensus on the network.
In summary, the three different payment types will see clients pay nodes the fees required to process their transaction and network fees being passed onto and service fees compensated directly to Hedera. In more detail, the fees are outlined as…
Node Fee — By using a service on Hedera a node will submit transactions on the client’s behalf. The fee given for completing the task can be negotiated between client and node and is the only fee that is not set by Hedera.
Network Fee — Fees are applied for transactions plus an amount per byte used within — and entails the nodes related info, storage and the overarching consensus reached in the event.
Service Fee — Clients will also pay a fee per file plus an amount per byte per second that the file will be stored for any service updated and is calculated according to a schedule determined by Hedera.
Conclusion
Fee structures firmly in place, Hedera is more advantageous and economical than the likes of Ethereum and its peers — which continue to labor under the volume concerns and subsequent high transaction fees covered in this article.
In its extremely low transaction fees, Hedera has the capability to handle everyday payments. Ethereum is moving towards this through Casper but nothing concrete has happened, Hashgraph starts from that which makes it a strong contender. By natively supporting microtransactions and micropayments and not draining a node’s resources by inundating it with “free” queries it can become a very real payment option.
In respect of this developers still need to understand and make sure that it is not a ‘free for all’ — and there are limitations to the amount of data they can retrieve based on the amount or HBAR Hedera tokens they are willing to spend.
With the platform not allowing resource using activity to occur without payment, this will make apps more efficient and the Hedera ecosystem the best climate for developers, users and industries alike.
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