Technology often has a habit of being quickly superseded by sophisticated derivatives. Moore’s law, an observation which essentially states that processing power will double every two years, almost dictates this.
Technical obsolescence can also be applied to the cryptocurrency industry; a space in which innovation thrives, but competition is saturated. Scores of projects venture to outdo the other, with newer and more efficient ideas on transparency, decentralization, and consensus methods. In turn, this has helped breed a myriad of developments, which with enough momentum, could seek to threaten existing frontrunners.
The Ultimate Ledger?
Blockchain, the underlying technology behind many cryptocurrencies, is, at its core, an evolved ledger; used for storing a plethora of digital information within an immutable, trusted and distributed network. In essence, blockchain offers a solution to the many inefficiencies of society’s business infrastructure, from streamlining supply chain management to the disruption, and renovation of the financial industry; but is this the only answer?
As beautiful an idea as blockchain is, it’s not without its flaws. Scalability stands as one of blockchain’s biggest hurdles. Cryptocurrencies such as bitcoin (BTC) and ether (ETH) are confined to a current average of 3.8 transactions per second (TPS), and 15 TPS respectively. This is scarily inadequate when compared to traditional counterparts such as Visa which is capable of up to 52,000 TPS.
Moreover, blockchain is relatively inefficient, with a new estimate from researchers at the University of Cambridge revealing that bitcoin alone consumes the equivalent energy of Switzerland.
Blockchain’s consensus algorithm, Proof of work (POW), is the main reason for these inefficiencies (although POW does, of course, come with unique advantages). POW involves an excessive amount of processing power to solve equations to verify transactions. This is a slow process by nature, created as such to avoid bad actors and ensure security.
New Kid on the Block
However, as noted, there is always an innovation solution seeking to exploit the weaknesses of the pioneer. Dubbed as one of the few “Blockchain killers,” Hashgraph presents itself as a genuine rival to blockchain; citing a high throughput of up to 250,000+ TPS, as well as boasting tremendous efficiency, all thanks to its bespoke consensus mechanism.
To achieve such its impressive throughput, Hashgraph uses a protocol called gossip. Nodes within a network share information about transactions, dubbed gossip. When they’re finished gossiping about transactions, the nodes gossip about gossip; recording each event and creating a hashgraph of information.
In order to reach Byzantine fault tolerance and thus ensure consensus, secure the network, and verify transactions, Hashgraph uses virtual voting. While voting mechanisms are typically inefficient, due to the actual voting element, hashgraph avoids this by forgoing the vote altogether. Instead, nodes refer to the hashgraph to ascertain a network accord.
The very fact that blockchain obsolescence is a point of discussion alludes to the reality that protocols running on this tech may themselves become overridden by a superior. Currently, Ethereum and bitcoin remain the two most popular blockchain-based cryptocurrency networks.
The creator of Ethereum, Vitalik Buterin, coined a term that perfectly encapsulates ETH’s main issues, the trilemma.
The trilemma states that neither the speed, scale, nor security of Ethereum can be improved upon without the degradation of the others; which, of course, presents an unfortunate inevitability.
By comparison, a project running on hashgraph technology could reasonably trump Ethereum and other blockchain-based protocols, especially in terms of efficiency and security.
While Ethereum has several optimizations in the works, such as sharding — the partitioning of data — and a proposed switch to proof of stake, which will see it scale to some degree, these will likely come at a compromise to security, as per the trilemma.
Hedera Hashgraph, the only public iteration of hashgraph, boasts several advantages over ETH. Chief among them is its stability which is supervised by a 39-member governing council. Each member of the council holds a limited 3-year term (with a total of two terms) and is entitled to a vote weighing 2.56% per member; ensuring equitability among the primary nodes. The council is primarily responsible for authorizing software updates on the network; as well as functioning as a means to prevent splitting or forking.
By comparison, Ethereum’s stability rests upon its melting pot of influencers; ranging from its developers who continue to tinker with its code, to the miners, who keep the network alive. However, this lack of governance poses a few issues. First, ETH is at peril of centralization due to the domineering influence of some core developers. Moreover, the de facto way in which ETH is governed isn’t conducive to progression; as displayed by recent instances of discord within the community, which threaten to slow progress further.
Inside its technical features, Hedera allows for the controlled mutability of the network state. One advantage of this comes in the form of an opt-in feature that enables users to connect additional data such as identification to transactions. This satisfies both know-your-customer (KYC) and anti-money laundering (AML) requirements; furthering Hedera’s capacity for legal compliance and legitimacy. Meanwhile, due to the aforementioned de facto nature of governance, Ethereum’s regulatory stance remains relatively unclear.
Hedera is set to launch its public mainnet bata on September 16. The beta will be open to any developer looking to build decentralized apps (Dapps) upon the network. Once fully optimized Hedera could be a game-changer, providing a formidable challenge to POW based enterprise platforms such as Ethereum.
OKEx Will List HBAR
OKEx is delighted to announce that we will be one of the first exchanges to list Hedera Hashgraph (HBAR)! The go-live schedule is as follows:
- Deposits: 04:00 Sep 16, 2019 (CEST, UTC+2)
- Trading pairs HBAR/BTC, HBAR/USDT, and HBAR/USDK: 04:00 Sep 17, 2019 (CEST, UTC+2) (time may change if the stability of the network is not assured)
- Withdrawal: 04:00 Sep 24, 2019 (CEST, UTC+2)
Experience the power of Hedera Hashgraph on OKEx!
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