Faster, fairer, and more secure
Hedera Hashgraph is providing the benefits of blockchain as a distributed ledger technology without the limitations
This article is published by DNA, the world’s premiere crypto venture fund. Stay in touch with us on Telegram or subscribe to our newsletter.
“In order to truly have distributed ledger technology that is scalable and enterprise-ready, you need it to be fast, fair, and secure.”
That belief is the foundation of the Hedera Hashgraph public ledger platform (a DNA portfolio company). It provides a new form of distributed consensus allowing people to securely collaborate and transact online without the need for a trusted intermediary.
Hedera Hashgraph aims to provide the benefits of blockchain as a distributed ledger technology without the limitations. “It is not a blockchain, but instead is a simple, elegant algorithm, mathematically proven to achieve consensus, and implemented in software,” says Mance Harmon, the CEO of Hedera, the company behind the hashgraph public ledger.
So what does “faster, fairer, and more secure” mean in this context?
Faster means performing hundreds of thousands of transactions per second compared to proof of work blockchains like Bitcoin or Ethereum’s that can only do 10–20 transactions per second.
Fairer means delivering mathematical proofs of fairness of ordering, access, and timestamps. This is critical for applications where it is important for the sequence of transactions recorded in the ledger to match the actual order in which the transactions were received by the network, like auctions and stock exchanges.
For security, guaranteed asynchronous Byzantine fault tolerance is key. This allows a system to guarantee consensus will be achieved, that everyone will know it when it happens, and all will reach the same consensus, and do so even under realistic assumptions about malicious nodes and network errors.
The Hedera Hashgraph Council
In addition to these technology factors, the governance of Hedera Hashgraph is also a key differentiator for the platform. One source of inspiration: Visa’s strategy for bringing competing banks together to create a governance model that benefits all, without letting any single member unfairly influence the whole.
To that end, the Hedera Hashgraph Council will consist of up to 39 leading organizations, with membership designed to reflect a group diversified by geography, sector, and time. The council will include up to 18 industries and feature members from a wide range of locations. Council membership is time limited, preventing entrenched interests and ensuring a continued flow of new council members. The governance terms ensure no single member will have control and no small group of members will have undue influence.
Industry research shows that the existing public platforms are not actually that decentralized. Business decisions are made by a small group of people within a single foundation or a single company, and most of the mining is done by a handful of miners. In theory these platforms were supposed to be decentralized, but market forces have caused them to become more centralized over time.
The governance model aims to ensure ongoing decentralization by design. Business decisions will reflect the interests of all markets represented by the council members. And the crypto-economics minimize economies of scale and encourage the addition of new nodes to the network. There are no Master Nodes, Coordinators, Block Producers, or special nodes of any kind. At scale, the Hedera network will contain tens of thousands of nodes, each participating on par with their peers in a fully-decentralized, fully-open global network.
The governance model aims to ensure ongoing decentralization by design.
Not Open Source
One intriguing aspect of Hashgraph’s approach: The project is proudly not open source. Mance Harmon, CEO of Hedera, explains, “First, the source code will be open for public review. Anyone wishing to view the source code will be able to do so. This is not a black box. We will provide full transparency. Also, there is no license required to use the Hedera network. Developers simply use the platform token to purchase API calls in a manner similar to other public platforms. However, we believe there are application developers and enterprise business managers that have no interest in forking the platform or making changes directly to the platform software. Many in this group simply want stability in the platform, and a governing body in whom they can trust to run a world-class organization, cryptocurrency, and network. The uncertainties associated with today’s open-source public networks represent risk, which in our opinion impedes broad-scale adoption of public ledgers. Hedera aims to remove that risk.”
Many simply want stability in the platform, and a governing body in whom they can trust to run a world-class organization, cryptocurrency, and network.
The result is a new option for developers. Harmon says, “We recognize that some developers will always want the ability to fork the public platform and make changes directly to the platform itself. Those developers have dozens of open-source platforms from which to choose. Hedera is introducing a new option that hasn’t previously been available to the developer community — the choice of both transparency and stability.”
Developer outreach
The company’s biggest area of focus right now: getting developers to build on the Hedera Hashgraph platform.
To accomplish this, Hedera has assembled a team of developer advocates in the United States, Europe, and Asia. “These are people who are specifically focused on asking, ‘What do developers needs to be successful on Hedera? How do we help them? How do we encourage them?’” says Harmon.
These advocates are tasked with providing a highly professional response to developers who are interested in the platform and have hard technical questions. “Our goal is to make sure that we have credible people who can respond to developers in a timely manner with the right information,” Harmon notes.
Our goal is to make sure that we have credible people who can respond to developers in a timely manner with the right information.
The founders
Hashgraph is the brainchild of Dr. Leemon Baird and Mance Harmon, founders of Dallas-based software company Swirlds, Inc. Swirlds has been selling private, permissioned versions of the hashgraph distributed ledger for a couple of years now, and has provided an irrevocable license to Hedera Hashgraph for the public ledger. This is the third company that Baird and Harmon have created together.
“Unlike many in the blockchain space, they’ve created innovative technology and built successful companies before,” says Tom Trowbridge, President of Hedera Hashgraph. “They have a track record of collaborating successfully and conceiving, building and deploying technology. Building companies also requires recruiting and scaling teams and taking products to market, which they have done several times. The team at Hedera has done this all before.”
“Unlike many in the blockchain space, they’ve created innovative technology and built successful companies before.”
The origin story: About six years ago, Leemon began thinking about some of the problems facing cyberspace — invasions of user privacy and the lack of control people have over their own data. He began considering ways to help users carve out their own piece of cyberspace, in which users are no longer forced to entrust their data and privacy to a central organization. In 2015, Leemon discovered the power of Gossip-About-Gossip, and that quickly led to Virtual Voting and the algorithm that today is called Hashgraph.
The executive team’s prior experience in building scalable, sustainable businesses, including taking a startup from launch to IPO, and building robust developer communities has been a key selling point to investors and developers. “We joke that we are the only ones with grey hair in this industry. But we think that best practices for growing scalable software businesses can and should be applied to this industry as well,” says Trowbridge.
The launch event
Hedera Hashgraph held a big launch event in March of 2018 in New York City. They decided that given the advanced state of the technology and complexity of the story, the typical 30 minute announcement at a conference wasn’t good enough. The company wanted to make sure it had enough time to explain all the different parts of the story: the technology, the governance model, use cases, partners, and everything else developers needed to know.
The result was a smashing success. Over 1,000 people attend the event live and 80,000 streamed it, according to Hedera. There was extensive media coverage on the event too, including coverage in Forbes, Venturebeat, TechCrunch and Coin Desk. Attendees included journalists from the New York Times and Wall Street Journal too.
How did Hashgraph get so much attention out of the gate? “Long before we started telling our story, we started from first principles to derive a vision of how the world should work,” explains Harmon. “This vision solves fundamental problems that span technology, governance, and market constraints. At our launch event in March, we publicly described this vision for the first time, and we did so in terms of the problems it solves. We are radically different because that is what’s required to realize mainstream adoption of public distributed ledger technology, and many people now recognize and appreciate both the art and the science behind the decisions we’ve made.”
It’s also about emphasizing the team behind it. “Our team is very credible so that’s always a part of the story. And an enormous amount of work has gone into it. Leemon has been working on this since 2012 — I like to call it a six year overnight success. This is what we believe the future looks like,” added Trowbridge.
Advice for other blockchain startups
Hedera Hashgraph’s advice for others looking to follow in its footsteps:
Make sure that you’re focused on the fundamentals.
“We made sure to spend a lot of time working on both the algorithm and business solutions to market constraints before we ever thought about talking about it publicly. We spent years, not weeks or months, thinking about this.”
Find a real problem that needs to be solved.
“Our goal is to solve fundamental problems that unlock potential value for the community as a whole. By doing that, we believe we can build a company that will last for generations and change society for the betterment of all.”
Focus on blocking and tackling.
“For business leaders, there is always a tension between quickly delivering a product or delivering product that is well done. Some people choose to deliver product as quickly as possible, no matter how immature and buggy the product might be. We are not those people. When making that trade-off, we want to make sure that we are doing things the right way. We are sober and deliberate in the decisions we make: hiring the right people, making the right choices for developer support, ensuring a comprehensive security audit and test plan, working diligently to comply with regulatory concerns, ensuring the council members are the right ones, and many, many more decisions on a daily basis. This is not rocket science, but these represent the fundamentals that every company must do correctly to succeed in the long term. When there is a choice, we will focus first on building the best product, and then delivering both quickly and efficiently.”
Some people choose to deliver product as quickly as possible, no matter how immature and buggy the product might be. We are not those people.
