April 24, 2024

Hashgraph – A New Distributed Consensus Algorithm

What is Hashgraph?

The hashgraph algorithm is a distributed consensus algorithm developed by Swirlds, Inc in 2016. It provides an alternative to blockchain technology that aims to reach consensus in a tamper-proof distributed manner without the overhead of proof-of-work such as mining.

Key Features of Hashgraph

Gossip about Gossip Protocol: Hashgraph nodes gossip (transmit information to each other) about the gossip. This spreading of information throughout the network in an organic decentralized manner allows consensus to be reached.
-Virtual Voting: The gossip protocol creates a directed acyclic graph (DAG) that represents the history and relationships between transactions. Each transaction is essentially “voted” on by previous transactions, reaching consensus through virtual voting rather than blockchain mining.
Quantized Time: Time is quantized into discrete virtual rounds to synchronize actions across the entire decentralized network and achieve consensus. This solves issues like double spends or forks.
– Mathematically Provable Finality: Hashgraph provides probabilistic finality with a low P-value of 1 in 2^128. This makes double spends or rewriting of history virtually impossible.

Consensus without Mining

Unlike blockchain networks which require energy intensive mining to validate transactions and reach consensus, Hashgraph achieves this through its innovative gossip protocol. Nodes gossip and spread information about new transactions and events without any mining overhead. This virtual voting built into the protocol ensures only truthful information spreads.

No Wasted Effort

The gossip protocol leverages information theory and cryptography to ensure that all nodes participate meaningfully in distributed consensus without wasted computation. Each node broadcasts useful information to other nodes rather than attempting to solve useless cryptographic puzzles through mining. This makes Hashgraph significantly more energy efficient.

Strongly Consistent
Through synchronized quantized time, Hashgraph reaches strong consistency throughout the network after every virtual round. This means that each transaction ordering and result is agreed upon by all nodes with mathematical certainty, avoiding blockchain forks or double spends that plague existing blockchains. The protocol is inherently non-forking.

Scalability and Performance
Testing has shown that Hashgraph scales well beyond blockchain networks, is capable of handling thousands of transactions per second even with millions of nodes and can sync new nodes much faster. This is enabled by the gossip protocol which spreads information organically across the network without block propagation delays or complex consensus algorithms like proof-of-work.

Applications of Hashgraph
The improved performance, finality, security and consensus capabilities of Hashgraph have led to it being applied in several domains:

Decentralized Finance: As a faster platform with mathematically provable finality, Hashgraph can enable real-time financial applications that blockchain currently cannot. Use cases like exchanges, stablecoins are well suited.

Supply Chain: Hashgraph is ideal for supply chain applications that require real-time synchronization and strong consistency across companies. Its parallel gossip protocol scales well with large connected networks.

Voting and Governance: Applications that require voting on proposals, decentralized governance or agreements can use Hashgraph’s virtual voting to reach consensus without delays or risk of manipulation.

Gaming and Social Media: Due to its performance and throughput capabilities, Hashgraph can power decentralized online games with simultaneous global user interactions as well as new social media models without central intermediaries.

Future of Distributed Consensus
Hashgraph represents an exciting evolution in the distributed consensus arena. By abandoning energy intensive mining, solving double spend issues and achieving strong consistency under high throughput, it improves substantially on blockchain in several ways. Over time, as the network scales further and more decentralized applications are built on top, Hashgraph has the potential to emerge as a serious alternative to blockchains for a wide range of use cases. However, further testing and adoption will ultimately determine how successful it proves in real world deployments against established blockchain networks.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it