The term blockchain has become synonymous with decentralization. While a proven method for noting and securing data, blockchain is not the only decentralized technology. It is just one of many that come under the decentralized ledger technology (DLT) banner.

Hashgraph is another DLT, and while technically different, for the uninitiated, it doesn’t seem much different: a network of validators who maintain the record, using encrypted maths to prove transactions and note them on the ledger. Hedera, the only publicly running hashgraph DLT, even has its own native token, the HBAR.

But you do not call every four-wheeled vehicle a car, do you? A quad bike has 4 wheels, and so does a farm tractor.

What is Hashgraph and what makes it unique

The biggest difference between a traditional blockchain and Hashgraph DLT is how the nodes talk to each other. While fundamentally, both create a permanent record that is secure and not alterable, how they do it is completely different.

A blockchain forms a single line

Before understanding how Hashgraph handles records, it is pertinent to know how blockchain does it.

In a blockchain network, the validators (or miners), the computers that maintain data, run a single line of files. Each file, called a block, contains a set of transactions. When a new block is created, it is mathematically connected to the previous one. This forms a long chain of blocks, hence the name, blockchain.

Now, in a normal blockchain, there is only one line. If somehow (by chance, a disagreement between the validators, etc.) two blocks are created at the same time, one of them will need to be discarded. All the effort, computing power, and energy of the discarded block are a waste, and the transactions conducted are reverted.

Hashgraph is all about gossiping

Hashgraph uses what is known as a “gossip about gossip” protocol. Instead of a validator creating a block and shouting out to the world, “Hey, I created this block!” and waiting for other validators to agree, validators in hashgraph gossip around.

Think of this as children in a playground. Bobby buys candy from Susan, who then tells Johnny. Johnny, in turn, tells Alex that Bobby bought candy from Susan. In just a few minutes (but much, much faster in a Hashgraph), the news spreads across the whole playground, and everyone knows about Bobby selling candies.

Unlike a blockchain, where one tells the next, who tells the next in a straight line, Hashgraph’s gossip protocol spreads the news in all directions, ensuring that all people get to know it, even if from multiple sources.

If two people transact on a hashgraph, a validator not only checks if the transaction is correct, but also decides to randomly tell another validator. The next one then does the same, and so on.

Eventually, the transaction spreads to every node and validator like a gossip. Each gossip not only contains the transaction, but also essential data like who they heard it from, who first said it, and when they heard it.

Voting on Hashgraph is easy

With the information spreading around like gossip, everyone now has a whole tree of the conversation. A blockchain system would require validators or miners to vote on whether they agree with a block. This takes up precious time that could have been used for the next batch of transactions and a new block.

In Hashgraph, there is no traditional voting as such. The gossip tree already contains that information. Since each validator has already recorded what they “heard” and when they heard it, this is taken as their vote of agreement.

Timestamps also exist in Hashgraph

Any transaction, whether in a traditional ledger, a blockchain, or even a hashgraph, always carries a date and time of the transaction. A centralized ledger, such as by a bank, will note it in its spreadsheet. In a blockchain, the validator or miner who creates the block gets to timestamp it and cryptographically add it to the chain.

But what about hashgraph, where multiple gossip can be going around at once? Which one comes first in the record?

In Hashgraph, there is no first validator who calls out the time. Instead, the network looks at the median time that all validators received the information.

Why all the effort when blockchains exist?

Blockchain has become a gold standard of data immutability and security. While not perfect and some networks do face issues from time to time, networks like Bitcoin and Ethereum have shown that they are extremely reliable.

But to understand why Hashgraph exists, it needs to be compared with traditional blockchains.

Gossiping speeds up transaction per second (TPS)

Transactions on some of the biggest blockchains like Bitcoin and Ethereum are comparatively slow (around 7 and 20, respectively). Hashgraph DLT can touch as high as 10,000 TPS, though newer blockchains and layer-2 networks are starting to come near this.

Pro: Hashgraph has faster operations with ultra-low transaction fees (a fraction of a cent).

Con: The gossip protocol creates a web of massive data, which pushes up the cost of storage.

Less influence on transaction orders

In traditional blockchains that use a validator or miner, the one who solves a block first gets attached to the chain, with tardy blocks (and their data) rejected. All transactions of that late block are sent back to the mempool and await addition in future blocks.

In a hashgraph DLT, it is the median time receiving the gossip that becomes the timestamp. This means while the order of transaction confirmation can be different, ultimately the timestamps ensure everything is in logical order.

Pro: It is difficult to influence the order of transactions, even if there are genuine delays.

Con: Hashgraph validators need to be more synchronized to achieve this level, potentially becoming a limit as specific internet reliability and speed requirements rise.

Advanced data integrity system

Hashgraph uses a directed acyclic graph, which is an alternative to blockchain. Its specially curated asynchronous Byzantine fault tolerance (aBFT) is a more advanced consensus system than traditional blockchains. 

Instead of forming a single line of validators posting a block one by one, Hashgraph is a playground where everyone is talking to each other at once, connecting data points like a web. This allows the network to still operate even if some messages in the gossip protocol are delayed or not sent.

Pro: Hashgraph is more resilient to certain malicious attacks like distributed denial of service (DDoS), where multiple attackers overwhelm the system with false requests.

Con: Hashgraph consensus requires substantial bandwidth and storage of data, potentially creating a barrier to entry for aspiring validators.

Hashgraph prefers speed over openness

Most blockchains are permissionless, meaning they are open to anyone wanting to become a miner or a validator, barring things like the high cost of entry. However, Hashgraph’s only public running network, Hedera, is a closed-door governance system, with its council approving validators.

Pro: With only 39 corporations, such as IBM, Google, and others, on the council, the consensus validators have the bandwidth, storage, and other resources to ensure Hedera keeps running efficiently.

Con: Hedera and its hashgraph DLT is centralized, as only approved and limited validators can run the show. Also, the small number means that roughly 11 validators need to start registering false information for the consensus to fail and halt operations.

Is Hashgraph better than Blockchain?

This question does not have a direct yes or no. Each technology has its own advantages over the other.

While some blockchains are slower, they tend to be more censorship-resistant due to their open nature. Hashgraph is cheaper and faster.

Hashgraph may also be more appealing to enterprises, as reputable businesses sit on its council. On the other hand, it’s a more centralized approach that many decentralized fans may not be comfortable with.

In the end, the question is not which is better, but which one suits a user’s exact needs.

Hashgraph FAQs

What is Hashgraph in simple terms?

Hashgraph is a type of distributed ledger that records transactions using a fast “gossip” communication method instead of blocks, allowing quicker and cheaper processing.

How is Hashgraph different from blockchain?

Blockchain stores data in a single chain of blocks, while Hashgraph spreads information across a network using gossip, forming a web-like structure that confirms transactions faster.

Is Hashgraph more secure than blockchain?

Hashgraph uses advanced security called asynchronous Byzantine fault tolerance (aBFT), making it very resistant to certain attacks, but security also depends on how decentralized the network is.

Is Hashgraph decentralized like Bitcoin or Ethereum?

Not fully. The main public Hashgraph network, Hedera, uses approved validators governed by a council, making it more centralized than most public blockchains.