It’s quite difficult to find a person who doesn’t know about Bitcoin or Ethereum. However, they are still not considered as a reliable option for everyday transactions due to their slow processing speeds and high transaction fees. The reason behind it is blockchain, a decentralized and transparent public ledger, which recorded transactions using distributed computing. The blockchain is limited by design, thus making the whole transaction process slow. Considering the fact, Hedera, a cryptocurrency startup has decided to launch a new virtual currency platform named Hedera Hashgraph Platform in the second half of 2018.
The history of Hashgraph
Mance Harmon and Leemon Baird, the co-founders of Hedera first started working together for the U.S. Air Force in 1993 as part of a team of five members responsible for building machine learning algorithm. Then Harmon began managing a U.S. government software program for missile-defense systems. Together with Baird, he built Swirlds in 2015. The company creates private blockchains for large companies. Last fall, they started working on Hedera Hashgraph and the algorithm is invented by Leemon Baird.
The company has a great approach to corporate oversight. According to Harmon, he has already recruited 39 companies from a broad range of companies, starting from large technology companies to law farm. Each of the companies will own 2.6% of the startup, helping it make strategic decisions.
A gold standard for security?
Unlike blockchain, Hedera Hashgraph Platform uses a different mathematical approach known as DAG (directed acyclic graph). Its algorithm is a consensus mechanism, which is based on a virtual voting algorithm combined with the gossip protocol to gain consensus quickly, securely, as well as efficiently. According to Hedera, with a very low transaction fee, it can reach its destination quicker. Unlike Bitcoin’s software, Hedera Hashgraph isn’t a string of transactions. Instead, it’s a graph of transactions that can process in parallel.
“That means we can natively support micro transactions or micropayments,” says Harmon. He claims that it will be able to process hundreds of thousands of transactions per second, while Bitcoin’s process rate is 10 transactions per second and Etheruem’s is less than 25.
The best part is, Hedera has achieved “asynchronous Byzantine fault tolerance“, which means despite some of the network’s participants’ attempt to maliciously attack it, the operation will be done properly.
“We’ve achieved the gold standard for security,” Harmon claims.
Well, not everyone puts their faith on Hedera’s platform. “The correctness of the entire HashGraph protocol seems to hinge on every participant knowing and agreeing upon N, the total number of participants in the system,” Emin Gün Sirer, an associate professor at Cornell and co-director of the Initiative for Smart Contracts and Cryptocurrencies tells Forbes. “This is a difficult number to determine in an open distributed system.”
However, Baird disagrees with him saying that all of its nodes know how many nodes are there at a given time. As Hedera’s algorithm hasn’t been battle-tested in the real world yet, it’s not the right time to put a standard to its security.