Full consensus distributed ledger technology,
Secure, Fast, Decentralised, Energy efficient and Profitable.
Faster and more efficient than blockchain technology
People want privacy, without anyone spying on them, and not funded by advertisements. Just something that appears out of nothing living in your computer. Enabling you to participate on multiple levels in a shared world, that connects everyone to each other. Maybe with a few friends setting up a little stock market just for them to send things back and forth. Banks do this; but they’re the so called dark pools. It’s like a tiny little stock market, just for a few players that sort of trust each other, but not entirely.
For sure, the dark pool banking system is likely to taking advantage of some of the information involved. Maybe one bank hosts the server but they can always manipulate the timing a little bit and people should worry about this. This should be eliminated forever. A completely trustworthy stock market is needed that maybe allows you and me and a few others to trade, a very different world of stored data that keeps track of cryptocurrencies, linked together for buying and selling stocks.
Hashgraph inventor and cofounder of Hashgraph Company, Leemon Baird has, as part of his quest to understand cryptocurrency, developed a new technology that allows for the building of a full-consensus ledger, faster and more efficient than blockchain technology. To be clear; Hashgraph is not blockchain.
Distributed consensus through the Hedera Hashgraph platform
The Hedera hashgraph platform provides a new form of distribution consensus; a way for people who don’t know or trust each other to securely collaborate and transact online without the need for a trusted intermediary. The platform is lightning fast, secure and fair, and, unlike some blockchain-based platforms. It doesn’t require compute-heavy proof of work. Hedera enables and empowers developers to build an entirely new class of distributed applications never before thought possible.
It is all about trust.
The technology is based on a distributed ledger, which is the way groups of computers can come to an agreement – usually an agreement on the ordering of some transaction, maybe an agreement on what time each transaction reached the community as well. Participants want to come to an agreement, even though they don’t trust any particular computer. That’s what a ledger is. It’s all about trust.
It is not necessary to trust any one person in the community to be honest. They just want to have the confidence that the community as a whole doesn’t have too many bad apples in it.
So, they want to achieve an environment of trust, even if there are a few bad people, and even if those people are colluding and working together, and even if there are bad firewalls cutting people off from each other, while at the same time colluding with the bad people. People want to maintain a secure network that keeps running, and always provides the right, truthful answer, in order to come to an honest agreement.
That’s what a ledger is all about. It’s about building trust in the final result. Trust that the election result is fair, or that money isn’t being counterfeited, or documents aren’t being falsified, which they shouldn’t be.
First, let’s analyse the existing systems:
The Clean Voting Structure:
Voting algorithms are pretty complicated, but people send votes to each other on some yes/no question. Of course, it’s kind of hard to put things in order, while only having the answers to yes/no questions, and it’s hard to get a time stint with that info. The problem with voting algorithms is that they all send each other votes, and then they send each other receipts of their votes. And then each node in the network has to inform the other nodes how other members of the community voted. This leads to the entire system becoming bloated with information and exchanges of data.
This continues for multiple rounds and in the end, all they come to know is the answer to a single yes/no question. It’s very secure. It could even be fair in a sense, although achieving fair results doesn’t seem to come out of any of these systems, as has been proven multiple times over. The problem is that it’s slow – so slow that it isn’t even known if anyone has yet done it.
Proof of Work structure:
This is used as a chain of blocks, with each block having a bunch of transactions in it. It started in order to move money from one wallet to another, but now it has extended to exchanging a shared data layer or running smart contracts and recording the results. There are multiple uses for this system.
The idea works like a community; all agreeing that this block, this set of transactions, this list in the order of transactions is the first one. And then, after the community all agrees, the next one gets put on top, and then the next one. But how does this work effectively?
Any node in the network can raise its hand and say; here’s a block! Blocks simply apply for placement in this fashion, awaiting approval. But what if two nodes apply for placement in the chain at the same time. You would have a chain, and then at the top you’d have two blocks put on at the same time. At that point, the chain forks, turning into a tree, whereby the two new blocks which applied simultaneously, both become new nodes. But that’s not very handy.
When the ledger was a chain, everyone knew what the exact order was of each transaction in the chain, but if it changes into a tree, participants don’t know in which order things happened. So, the community will always add to the longest chain, and as long as we can talk pretty fast, eventually we’ll all agree on which one is longer, and people will decide which fork is the chain to follow and further build onto.
But wait! What if the forks are added, or arise so fast, faster than they can chop off the forks? This is why they have to slow themselves down on purpose. That’s called proof of work. Proof of work is that anybody can raise their hand and add a block, but first they have to solve a math problem, which doesn’t accomplish anything for humanity.
If the problem is super complex, the only nodes which would be able to solve the problem are miners using supercomputers, but this means they’re wasting money and electricity to build a system that is slow on purpose. The reason they developed proof of work in the first place was to slow things down, which isn’t terribly helpful to the ultimate desired outcome of having speed and efficiency.
Leader Based systems:
Leader-based ledgers solve the problem that plagues proof-of-work and voting ledgers: they’re slow. In a leader-based ledger, all transactions are sent to the designated leader of the community.
The leader arbitrarily picks the order of the transactions. Then the leader tells the community what order the transactions are in, and then the members of the community can digitally sign that they agree with that order. However, the problem with leader-based ledgers is that they are vulnerable to attacks.
There’s Distributed Denial of Service (DDOS) attacks. In this case, a hacker compromises hundreds, or even thousands of little computers all over the internet, telling them all to flood a designated computer with messages, and that computer is so overloaded with messages, that it’s unable to process other information or requests for as long as the attack continues.
Then the network stops working for as long the attack lasts. But we don’t want to be vulnerable. If it’s a small botnet, it can only shut down two or three computers at a time, but we want Denial of Service resilience. We don’t need denial of service proof, but resilience is desirable and necessary.
In a leader-based system, an attacker can flood the dictator with messages and effectively shut down the leader. In that case, the network can react and elect a new leader. But there’s still a problem. Imagine that one of the computers in the network is compromised. Because it’s in the network, it has to know who the leader is. And if it knows who the leader is, and if it’s talking to the botnet that is perpetuating the attack, the compromised computer can relay that info to the attacker.
So the botnet simply follows the leader as it changes from computer to computer, and it will shut down the entire network for as long as the attack goes on. However, leader-based systems don’t scale well. Although they’re generally faster than voting and proof-of-work systems.
Simulated Economy / Proof of Stake system:
In a simulated economy or proof-of-stake system, all the computers in the network talk to each other randomly. Each computer changes its opinion based on the opinions of the other computers in the network.
It’s like building a blockchain, but every time the chain forks, each node has to figure out which fork to go with. Each node gets to vote on which chain it believes is the correct one, but you have to gamble real monetary value in order to vote on the chain.
If it turns out you voted with the majority, you get your money back plus some extra, but if you’re in the minority, you lose your money. That’s one example of an economy based system. Economy based systems incentivise each member of the community to participate in the voting by anteing up a monetary reward.
If every member of the network is self-interested and acting independently, then Adam Smith’s invisible hand of the market should cause emergent behaviour, and they’ll all do the right thing and they will have consensus.
If they start forking too fast, members of the community will hesitate to vote because they won’t know which chain is the right one. This self-regulates the speed of the blockchain. But how secure is it?
Nobody knows. Although economy-based systems are resilient to DDOS attacks, it’s impossible to mathematically prove that the system is secure. It’s a complex system with chaotic behaviour. You can’t mathematically prove it won’t crash, but the same is true of the New York Stock Exchange, but they are not going to abandon that.
Virtual Voting system:
Virtual voting is all of the math proofs of the voting system, except that you’re doing the voting system without votes. The challenge with virtual voting is that you have to know a lot – you have to know what everyone else knows, you have to know when they knew it and in what order they learned it.
Leemon Baird’s company has accomplished just this type of ledger with Hashgraph. Hashgraph accomplishes consensus using the gossip protocol and gossip-about-gossip, then uses virtual votes to build a ledger.
There’s no leader. There’s no one to attack. There’s no wasting electricity on proof-of-work. There is proof of asynchronous Byzantine Distributed consensus proof of fairness.
Those are the five ways to build a ledger. For more info, watch Leemon Bird’s video presentation.
The Byzantine Generals’ Problem is a classic problem faced by any distributed computer system network.
The Vision for Hashgraph
The Hedera Hashgraph Council will provide governance for an open, fast and fair, decentralised public ledger, built on the hashgraph consensus algorithm. Governance will be maintained by a council of up to 39 known and reputable global organisations, committed to the support and evolution of a stable, predictable public ledger infrastructure.
Mankind stands at a crossroads, and the path that humanity chooses may have a greater impact on our freedom and prosperity than any other event in history. In 2008, this new technology was introduced that is so important that its destiny and the destiny of mankind are inextricably intertwined.
It is so powerful that if captured and controlled by the wrong hands, it could enslave all of humanity, but if allowed to remain free and flourish, it could foster unimaginable levels of peace and prosperity.
It has the power to replace all financial systems globally, to supplant 90% of Wall Street and to provide some functions of government. It has no agenda. It’s always fair and impartial. It cannot be manipulated, subverted, corrupted, or cheated, and it inverts the power structure and places control of one’s destiny in the hands of the individual.
In the future, when we look back at the 2.6 million-year timeline of human development and the major turning points that led to modern civilisation, such as:
- the development of farming
- the domestication of animals
- the invention of the wheel
- the harnessing of electricity
- the splitting of the atom
- the 60-year development of computers and the internet
This new technology will be looked upon as the single event — the turning point that changed the course of human history. It’s called full consensus distributed ledger technology, and so far, its major use has been for cryptocurrencies such as Bitcoin, but its potential goes far, far beyond that.
How do you make absolutely sure that multiple parties, which are separated by distance, are in full consensus before an action is taken? In other words, how can individual parties find a way to guarantee full consensus?
As stated, this problem has remained unsolved for thousands of years. At its core, it’s all about individual parties being able to trust each other directly—no strings attached and no one in between.
Bitcoin with its blockchain technology, claims to have solved this problem. Now imagine that the battalions of the Byzantine Empire as mentioned in the above example, are actually computers on a network and that the generals are copies of a computer program running a ledger, a ledger that—via some very complex math—records transactions and events in the exact order that they happened. The key here is that all of these ledgers are exactly the same for everyone as soon as a change is made on one copy. If it is proven to be true by the math, all other copies of the ledger are updated to match.
What we have here is a distributed ledger that is also always in consensus. This is one of the first things to understand about Bitcoin — it is the first full consensus distributed ledger mankind has ever seen.
The Hashgraph network can be expanded across the entire planet. It means that individual parties on opposite sides of the world can come to consensus on an event without requiring any third party as an intermediary for trust.