Hashgraph Vs. Blockchain. Who will win this battle?
Hashgraph Vs. Blockchain: An Introduction
Here at Zfort Group, we often find ourselves working on hashgraph and blockchain development projects. An important part of the service we provide is the education that we offer along the way.
When it comes to hashgraph and blockchain, we typically have to start by covering the similarities and the differences between the two, providing a rundown of what each of the two does along with the pros and cons and why you might pick one of them over the other.
And that's what we're going to take a closer look at today, and so if you're ready to learn more about Hashgraph and blockchain, you've come to the right place. So let's go ahead and get started.
What is Blockchain Technology?
Let's get started by taking a look at blockchain, which is a type of distributed database that's shared via the internet between a large number of different machines. It works similarly to the way that bit torrents revolutionized peer-to-peer file sharing, ensuring that no single entity has total control over the blockchain.
Blockchains are mostly associated with financial technology, and with cryptocurrencies in particular, due to the fact that it's the technology that powers them. Using blockchain, cryptocurrency transactions can take place in total anonymity while hackers and other bad actors have no way to compromise the records and change the information that's stored there.
Blockchain technology can also be used across a variety of other different industries. For example, it could be used in healthcare to provide medical records that can be accessed by any healthcare provider and which are owned by the patients themselves rather than any particular facility.
Blockchain could also be used in the real estate industry to power independent property records that show the history of any given property. For example, sale prices, dates, and repair work could all be stored on a blockchain to increase transparency between buyers and sellers.
Basically, then, blockchain is like a database on steroids, providing increased transparency and better security while simultaneously decentralizing ownership of the data and taking it away from the large-scale institutions that have previously monopolized it.
What is a Distributed Ledger Database?
A distributed ledger database is a kind of database that relies on peer-to-peer communication to validate data, store records, and arrive at a consensus. In contrast to more traditional databases, which are typically owned and operated by a single individual or organization, distributed ledger databases are designed so that every node has a full copy of the ledger and no changes can be made to historical transactions.
There are a number of distributed ledger database solutions out there on the market, with blockchain and hashgraph only being two of the most popular and most promising. Both of these solutions are founded on the principles that make distributed ledger databases so powerful - they're decentralized. They have high security and transparency, and they work quickly and relatively cheaply.
But what is it about blockchain and Hedera Hashgraph that makes them the two leaders of the marketplace? Let's take a closer look.
What is Hedera Hashgraph?
Hedera is an open source, publically distributed ledger that's similar to the blockchain and which uses hashgraph to provide consensus, something that we'll talk about later on in this article when we compare Hedera with blockchain.
Some of Hedera's main selling points are that it supports smart contracts and native tokenization and that, like blockchain, it can be used to create fully decentralized applications. However, unlike blockchain, which has a reputation for gobbling up huge amounts of electricity (and thus, fossil fuels), Hedera is carbon negative.
Hedera is also super-fast and secure, providing a large amount of efficiency when it comes to bandwidth and processing. In fact, it can process tens of thousands of transactions per second, making it perfect for large-scale, decentralized development projects.
The technology itself is overseen by the Hedera Governing Council, which includes experts from a range of leading technology companies. But the council is fully decentralized, with one vote per member, and none of the council members has a vested financial interest in Hedera.
Hashgraph Vs. Blockchain Pros and Cons
Transaction Speed: Hedera hashgraph can process tens of thousands of transactions per second.
Predictable Fees: When you're developing software using the Hedera hashgraph, you can make much more accurate predictions about how much processing is going to cost. That's because every transaction costs a set fee of $0.0001 USD.
Carbon Negative: Hedera hashgraph is carbon negative, which means that it offsets more harmful emissions than it creates.
Relatively Unproven: Because Hedera hashgraph is still a new technology, it's relatively unproven, and we're yet to see all of its applications as well as a true test of its versatility and performance.
Proven history in the finance industry: Blockchain is already known and respected as being the method of choice for powering cryptocurrencies like Bitcoin and Ethereum.
High-quality record keeping: When new information is added to the blockchain, it's automatically given a precise timestamp and set in stone. So that the transaction can never be amended or deleted.
Blockchains can fork: As mentioned earlier, if two nodes on a blockchain process the same transaction at the same time, it can lead to the blockchain being forked, and the network needs to choose one of the two variants to proceed with.
High power consumption: Blockchain uses considerably more power to process its transactions than Hedera hashgraph, and this has an impact on its sustainability. Unlike carbon-negative Hedera hashgraph, most blockchains are harmful to the environment.
Comparison of Hedera Hashgraph and Blockchain
It can be hard to judge between blockchain and Hedera hashgraph when it comes to approach. Because the two are very similar thanks to their reliance on the distributed ledger database model.
With that said, Hedera can be said to have the edge because only one node processes each transaction with other nodes and then verifies it. This is in contrast to the blockchain, where multiple nodes can process the same transaction, ultimately leading to redundancy and a split in the chain.
Both blockchain and Hedera hashgraph are known for being relatively secure, in part because of the model that they use. In addition, because they're fully decentralized, there's no single organization that has full control over the database, and thus no way for either that organization or a group of hackers to manipulate the information that's stored there.
Still, while blockchain itself is already pretty secure, Hedera hashgraph takes things a step further. It's said that hashgraph is ABFT, which means that it's mathematically proven to have the highest possible amount of security for a distributed system. It doesn't get any more secure than the Hedera hashgraph.
Consensus algorithms are what both blockchain and Hedera use to verify the values of any data that's stored upon them. The whole point of these algorithms is to ensure the utmost in reliability and that no incorrect data is ever stored. Something that becomes particularly important in distributed computing applications like those that blockchain and Hedera are able to power.
Traditional blockchain applications work by selecting a miner on the network to choose the next block, with the consensus algorithm ensuring that all blocks are added to a single, continuous chain that's agreed upon by all of the different nodes in the community.
Hedera works a little differently, with the entire community of nodes working together to agree on which transactions are added to the ledger.
It's a slightly more democratic approach, but it also solves another of the problems that's inherent to the blockchain.
With blockchain, there's a risk that two blocks will be created at the same time. When that happens, the network is split in two in a phenomenon that's known as a fork. The nodes that make up the network will then choose which of the two variants to proceed with and then discard the other one.
Processing speed is interesting because this can depend upon the blockchain in question. Some blockchains are faster than others, while Hedera hashgraph processes at a pretty steady 10,000 transactions per second or so.
The general message to take away from this is that both blockchain and Hedera hashgraph will probably process transactions quickly enough for your use case.
Hedera is more consistent and predictable. But if you're chasing after a high transfer volume, it's better to look for a blockchain specializing in speed.
Both blockchain and Hedera hashgraph have fairness built into them by default, and so there's not much to go on here. Both of them are perfect for democratizing access to data and ensuring that no single entity has full control over the data that's being stored.
It's also worth noting that Hedera's governing body is largely democratic, bringing in people from a variety of different institutions to oversee the direction that its development heads in.
These people receive no monetary compensation and have no vested interest in the technology, so they're able to guide its development based purely on what's best for Hedera and its users.
Hedera has the edge here, but for a particular reason. As we've already discussed, in some circumstances, two different nodes can process the same transaction on a blockchain, and this can lead to it forking. This causes problems and can make it difficult for the network to determine which of the two forks to keep.
This doesn't happen with Hedera, which means that it's automatically more efficient due to the lack of forking. It's also more energy efficient, or at least it's carbon negative, meaning that even if it did end up using more energy than a blockchain, it would still offset that additional energy use.
Adoption and Development Stage
Blockchain arguably has the edge here because we're technically heading into our third decade of technology. Even though we're yet to see the full impact that it's set to have on our society, we've already seen a number of impressive use cases, and we're sure to see plenty more over the next five years or so.
Hedera is earlier on in its development stage and is yet to see as much adoption as blockchain, but that doesn't mean that it will never happen. On top of that, while there may be fewer existing use cases for Hedera right now, those we see show a lot of potentials. It's definitely one of those technologies that are "one to watch."
Open Source vs. Patented
Both Hedera hashgraph and blockchain technology are open-source. However, patents are increasingly encroaching into the blockchain space as people try to create their own patented blockchains.
It's a case where the core technology is open-source, but people then try to make modifications and patent their final product. It's like someone using WordPress as open-source software to build a website and then trying to patent that particular website.
This means that even though both blockchain and Hedera hashgraph are open-source, Hedera has a better track record and is, so far, the least affected by patents and legal mumbo jumbo.
Will Hashgraph Replace Blockchain?
It's too early to tell whether hashgraph will eventually replace blockchain, but as you've probably figured out from reading this article, there are a number of ways in which it has the edge.
The real question is whether we're already so reliant on blockchain that it has the market cornered.
To us, that seems unlikely because blockchain is yet to reach full mainstream adoption. Instead, the question of whether hashgraph will replace blockchain is a little like asking whether cloud-based software will replace traditional software.
Hashgraph has enough advantages over a blockchain that it will almost certainly eventually supersede it, but how long that will take is anyone's guess. And don't think that this is the final nail in blockchain's coffin either because it still has plenty of advantages of its own. Hashgraph and blockchain can - and probably will - co-exist.
Now that you know the basics of hashgraph and blockchain, you're in the perfect place to continue learning and put the technologies to use for you. The good news is that if you're in the market for a blockchain development agency, we've got you covered.
Here at Zfort Group, we've got plenty of experience working with hashgraph and blockchain and all the expertise you need to bring your development project to fruition. And so if you'd ready to find out more, don't hesitate to get in touch. We're looking forward to chatting with you!