The rise of technologies has always been responsible for the progress of mankind. Distributed Ledger Technology could be one of the potential technologies to have the ability to deliver a new kind of trust to a wide range of services.
Distributed Ledger Technology is a network of nodes that manages and records a transaction independently. It is defined as a ledger of any contracts or transactions maintained in decentralized form across different locations to eliminate the need for a central authority.
Every ledger has its advantages as well as disadvantages. The different types of DLTs can be compared based on the attributes like speed, security, fairness, consent, and scalability.
Distributed Ledger Technologies like Blockchain, Hashgraph, and Lightning network are based on different algorithms.
So, let’s understand how three DLTs, i.e., Blockchain, Lightning Networks, and Hashgraph are distinguished from each other.
What is Blockchain, Lightning Network, and Hashgraph?
BlockChain:Blockchain is a distributed ledger technology that maintains the tamper-proof and permanent record of transactional data. Every computer in the distributed network keeps a copy of the ledger for getting rid of a single point of failure while updating and validating copies simultaneously.
Lightning Network:Lightning Network is a decentralized network with a centralized hub which has been designed as a solution to Blockchain scalability problem and is a “second layer” payment protocol. It enables fast payments over a network of participants.
HashGraph:Hashgraph uses consensus algorithm to run decentralized applications fast, securely, and in a fair way. It needs not compute proof-of-work like blockchain-based platforms.
- Bitcoin: Bitcoin is a peer-to-peer technology based on the blockchain.
- Ethereum: Ethereum is an open source platform built on blockchain technology that allows developers to create and deploy decentralized applications.
- Tools used by Ethereum Ecosystem for building applications:
- Ethereum Virtual Machine(EVM) serves as a run-time environment for Ethereum-based smart contracts.
- Web3.js is a collection of libraries used for interacting with remote or local Ethereum node via IPC or HTTP connection.
- NEO: NEO is a “non-profit community-based Blockchain project” which makes use of digital identity and blockchain technology to automate the digital asset management using smart contracts.
- Tools used by NEO: Neo Virtual Machine (NEO VM) is a lightweight virtual machine that reads and runs instructions in sequence in the contract and performs a function based on the instruction operations and logic operations.
- Hyperledger Sawtooth: Hyperledger Sawtooth is an enterprise blockchain platform, designed for building distributed ledger networks and applications. It simplifies the blockchain development process by allowing the developers to specify the business rules for the application while using the language of their choice.
- Language: Hyperledger Sawtooth contracts can be written in any programming language of the developer’s choice.
- Tools for building applications on Hyperledger Sawtooth platform:
- Hyperledger Composer is an open-source development framework and toolset used for developing blockchain applications. It is possible to model the business network and convert the existing system and data with the blockchain network.
- Sawtooth Explorer enables the data visibility into the Sawtooth Blockchain for Node Operators.
- Hyperledger Cello is a blockchain module toolkit designed to bring “as-a-service” deployment model to the blockchain ecosystem for reducing the efforts to manage, create and terminate blockchain.
- Hyperledger Fabric: Hyperledger Fabric is an open-source, permissioned and enterprise-grade blockchain platform based on a highly configurable and modular architecture. From banking to finance, human resources, healthcare, agriculture and supply chain, Fabric offers a broad range of industry use cases. Smart contracts containing business logic and rules are called as chain codes in Hyperledger Fabric platform.
- Language: Fabric’s smart contracts can be written in general-purpose programming languages including Java, Node.js and Go instead of constrained domain-specific languages.
- Tools used by Hyperledger Fabric for building blockchain-based applications:
- Network-setup tool for setting up the network for applications.
- Node-chaincode-utils and chaincode-dev-setup for developing the chaincode.
Lightning Networks is under development phase, and no application has released yet.
- Swirlds Hedera: Built on the top of permissioned Hashgraph consensus platform, Swirlds Hedera is used to build decentralized applications. The platform mainly provides three services, i.e., cryptocurrency for micro-transactions, distributed file-storage system, and solidity smart contracts supported by EVM.
- Tools: Framework:
- Exo framework allows developers to build applications on Swirlds Hashgraph platform.
- Exo Angular framework allows developers to plug in Angular-based web applications into a Hashgraph platform.
2. CULedger: CULedger is a proof-of-concept project based on the distributed, permissioned, and shared ledger platform that does not involve any central administrator for stored data.
Pros and Cons
- Bitcoin: Bitcoin can make seven transactions per second.
- Ethereum: Due to a hard-coded limit on computation per block, Ethereum can currently make 15-20 transactions per second.
- NEO: NEO can make 10,000 transactions in a second.
- Hyperledger Sawtooth: Hyperledger Sawtooth is aimed at enhancing the the performance of blockchain by making thousands of transactions in a second.
- Hyperledger Fabric: Hyperledger Fabric comes with the ability to making more than 3,500 transactions per second.
Transactions take place instantly between the sender and the receiver.
Hashgraph council have conducted a transaction performance testing on Amazon AWS across five continents covering eight regions and were able to make more than 50,000 transactions in a second.
Miners can change the order of transaction; hence there are chances of fraud.
It is a network designed on the Blockchain that scales the speed of transaction to offer the fairness matched by the underlying Blockchain.
Hashgraph is a fair system as all transactions are marked with a timestamp and manipulation is not possible.
Blockchain consists of the digital blocks that are tamper-proof. Since each block is linked to all the blocks, a hacker cannot manipulate the records stored in the blocks. Blockchain also uses cryptography to keep the records secure. All participants in a network have their private keys which work as a digital signature. If someone tries to alter the record, the signature becomes invalid, and all nodes in a network come to know that something wrong has happened.
As it is a “second layer” payment protocol which operates on the top of the Blockchain, it implements the security measures like that of the underlying blockchain. A Bitcoin network depends on the hash rate, but the lightning network does not have any hash rate at all. Therefore, it is not that secure.
Hashgraph is an Asynchronous Byzantine Fault Tolerant System which means no member can stop the community from reaching consensus and no one can make changes once the consensus is reached.
Miners who mine the block are known as the temporary dictators of that block. One needs to pay them a toll fee to let any transaction pass through. The increased number of transactions leads to the higher fees. So, sharing can be one of the best solutions to the scalability issues.
Lightning Networks can be used for scalable micro-payments because of faster transaction time and lower fees than blockchain.
Hashgraph is highly scalable as it can make hundreds of thousand transactions in a single network using sharding.
Blockchain 1.0, i.e., Bitcoin has 829 K twitter followers, Ethereum has 386 K Twitter followers, Neo has 306 K followers on Twitter and Hyperledger has 51K Twitter followers.
The Lightning Lab has 60.3 K twitter followers and 1,044 members on Telegram.
Hedera Hashgraph has 21.1 K Twitter followers and 27,344 members on Telegram.
- Bitcoin: Bitcoin generates a hash based on the designated pattern to secure the block. An iteration is run continuously to bring out the designated pattern of the hash. Each time a value is incremented, it is added to the data known as Nonce. Bitcoin implements Proof of Work which is the amount of time taken to produce the required hash. Therefore, it is a proof that work was done to keep the block secure and nonce is the number of times the iteration runs to get the hash.
- Ethereum: Ethereum uses Proof-of-Stake where the creator of every new block is selected based on the wealth factor. Proof-of-Stake is used to achieve a cheaper and efficient distributed consensus.
- NEO: NEO works on Delegated Byzantine Fault Tolerance as a consensus mechanism to improve the processes based on mechanisms like PoS and PoF. Delegated Byzantine Fault Tolerance uses a delegated voting process to acknowledge the entities forming the ecosystem. So, it brings security to the entire ecosystem by reaching consensus even when 66% of the nodes agree with the information.
- Hyperledger Sawtooth: Sawtooth supports the following types of consensus implementations-
- Proof of Elapsed Time(PoET) is a consensus algorithm, designed to be a production-grade protocol which can support large network populations. Depending on the secure instruction execution to achieve scaling benefits, without the power consumption drawbacks of PoW algorithm.
- Dev mode is a random-ledger algorithm which is used for testing and development.
- PoET simulator can provide PoET-style consensus on any hardware type, also including virtualized cloud environment.
- Hyperledger Fabric: Consensus in Hyperledger Fabric is divided into three phases, including Endorsement, Ordering and Validation.
- Endorsement takes place when participants endorse any transaction.
- In Ordering phase, the endorsed transactions are accepted and agreed to the order to be committed to the ledger.
- In Validation phase, the block of ordered transactions gets validated for the correctness of results, involving double spending and checking endorsement policy.
Lightning Network uses local two-party consensus, also known as Payment Channel to achieve consensus. Two parties have to transfer an initial amount of Bitcoin into a multi-signature transaction using a local consensus on the current balance distributed among the two participants. Distribution of the current balance can only be updated with the cooperation of both parties.
Hashgraph platform uses two techniques, i.e., Gossip about Gossip and Virtual Voting. Information is sent to all of the nodes using Gossip about Gossip Protocol, and Virtual Voting is used for finding out whether the transaction is valid or not. So, Hashgraph can quickly reach fair consensus with the help of these techniques.
- Bitcoin: Bitcoin came into existence in January 2009.
- Ethereum: Ethereum went live for the first time on 30th July 2015.
- NEO: NEO blockchain project was founded in February 2014.
- Hyperledger: Linux Foundation started the Hyperledger project in 2015 to support the development of blockchain-enabled distributed ledgers.
Bitcoin’s Scalability Project, i.e., Lightning Networking has been tested successfully and is now working on its beta implementation.
Hedera Hashgraph Council has released speed test results on multiple Amazon Web Services instances. There is a fun game “Kitten Catch” that has been built on the Swirlds Hashgraph platform. Other applications that are deployed on Swirlds Hashgraph platform are Satori Platform and StreamBots.
- Bitcoin: Bitcoin was introduced by unknown Person/Team using the alias Satoshi Nakamoto. Bitcoin is managed by Bitcoin Foundation.
Link for its whitepaper: https://bitcoin.org/bitcoin.pdf.
Link to GitHub Repository: https://github.com/bitcoin/
2. Ethereum: A young programmer from Toronto, Vitalik Buterin brought the idea of Ethereum. In addition to Vitalik, Ethereum was co-founded by many other members such as Mihai Alisie, Anthony Di Iorio, and Charles Hoskinson.
Link for its White-Paper: https://github.com/ethereum/wiki/wiki/White-Paper
Link to GitHub Repository: https://github.com/ethereum
3. Neo: Neo Blockchain was developed by the founders of R& D company, “On Chain” based in Shangai. The founders of On Chain are Da Hongfei and Erik Zhang.
Link for its Whitepaper: http://docs.neo.org/en-us/
Link to GitHub Repository: https://github.com/neo-project
Alex Bosworth, a software developer, has made the first lightning bitcoin mainnet at Bitrefill for an online purchase.Many other developers involved in multiple projects like Elements, ACINQ, and Lightning Labs are working on the implementation of Lightning Network project.
Link for its whitepaper: https://lightning.network/lightning-network-paper.pdf
Link to its GitHub Repository: https://github.com/lightningnetwork/lnd
The Co-founder and CTO of Swirlds, Leemon Baird founded distributed consensus algorithm, i.e., Hashgraph. The CEO of Swirlds, Maance Harmon is the co-founder of Hashgraph.
Link for its Whitepaper: https://www.swirlds.com/whitepapers/
Link for its SDK: https://www.swirlds.com/download/
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