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Hedera Hashgraph vs Blockchain

Which is the superior Distributed Ledger technology?


Bitcoin came into existence in 2008 and introduced a digital currency to the world, which was based on the blockchain. The technology introduced a new monetary network that utilized the distributed ledger system.

Relying solely on a peer-to-peer network, the distributed ledger technology (DLT) presents a better model which could help industries harness computing power like never before. As we move ahead of the client-server compute model, we have come closer to the new trust layer of the internet.

The transition is still limited due to the problems yet to be solved around scalability, efficiency and interoperability. Founded by Leemon Baird, the co-founder and CTO of Swirlds, Hashgraph has come as an alternative to the blockchain with its features like security, fairness, cost and speed.

This article is intended to understand the difference between the two different DLTs, i.e., Blockchain and Hashgraph.

We shall first discuss the following points:

What is Distributed Ledger Database?

A distributed ledger database is described as:

  • the ledger of any transactions or shared contracts
  • synchronized and maintained in decentralized form across different locations and people (nodes)
  • eliminating the need for a central authority.

All the information on the distributed ledger (DL) is stored securely and is kept immutable using cryptographic techniques. While the centralized ledgers are prone to cyber-attacks, it is difficult to attack DLs because all the nodes will have to be attacked and manipulated simultaneously.

Blockchain and Hedera Hashgraph use different data structures and consensus mechanisms to maintain Distributed Ledger Database.

What is Blockchain?

Blockchain is a first-generation Distributed Ledger Technology, working on a sequential data structure that forms a chain of blocks.

Each block contains a set of transactions.

Blockchain relies on consensus mechanisms, like:

  • Proof of Work
    This consensus mechanism requires solving a puzzle by computation to bring a consensus in the network and secure the block. It is also known as mining, and the network’s nodes are known as miners. The members/nodes of the network have to solve these puzzles to validate transactions, add new blocks, and win rewards.
  • Proof of Stake
    It is a consensus mechanism in which a creator/validator is chosen on the basis of their contributions to the network. The validators are selected to verify and add blocks to the blockchain.
  • Proof of Elapsed Time
    By following a fair lottery system, it prevents the network from high energy consumption and resource utilization. Often used on permission networks, where participants have to identify themselves before joining the network, the algorithm offers fair winning chances.
  • Leader-based Consensus
    This mechanism has a leader computer. Every member of the network sends transactions to the leader, who sends out the transactions’ order to be added to the chain.
  • Economy-based Consensus
    Economic rationality manages consensus in this mechanism. A consensus algorithm tries to imitate how an economy works without dealing with the chaos of a real-world economy.
    To add blocks, a vote can be done.
    You might have to pay a fine if you vote for a block no one else votes for, but you might also gain a profit if you vote for a block for which everyone else has also voted.
  • Voting-based Consensus
    Nodes should be familiar and flexible in a voting-based consensus. All nodes in the network have to verify blocks together and manage the ledger.

Blockchain: Smart Contracts Immutability

Smart contracts deployed on the blockchain network are immutable. It means that the smart contracts’ code and address cannot be modified once they are written on the blockchain. However, a new contract can be used instead, which is similar to modifying a smart contract.

An intermediary smart contract can hold the current active smart contract’s address with a function “delegate call,” which would redirect all the transactions and calls to the active version.
An alternative solution is to extract the previous contract information, add it to a new one and update the address you want your users to see.

What is Hedera Hashgraph?

Hedera Hashgraph is based on Distributed Ledger technology like blockchain. It works on a graph-like structure where all the nodes communicate their information to each other. Their communication is reported by building a graph of connections.

All the information or data is stored in events.

It relies on ‘Gossip about Gossip’ and ‘Virtual Voting’ mechanism to bring consensus to the network.

  • Gossip about Gossip:
    Gossip means to transfer or sync information from one node to another random node. It is used to ensure that all data has been circulated to all the members of the network.
  • Virtual Voting:
    Using the Gossip about Gossip mechanism, each node is already aware of what the other node knows, and each node can predict what the other node would vote, which results in electronic voting or virtual voting. The virtual Voting Algorithm does not allow voting messages to be sent across the network. Each member has information about what another member would have voted, even without voting.

Hedera Consensus Service

Hedera Consensus Service is available on the Hedera Mainnet. It allows developers to:

  • Create verifiable time-stamps
  • Create ordered events for any application.

Hedera Consensus Service is really useful for applications that need

  • Transaction ordering without middle-men.
  • Privacy controls specific to the application
  • High output with conclusiveness in ordering
  • Auditability in real-time

Hedera Hashgraph Platforms

  • Open Source SDK
    Hedera Hashgraph is a next-generation distributed ledger platform that has released an open-source SDK for developers in Java. It allows developers to build Hedera Hashgraph applications.
  • Hedera’s open-source SDK supports three services on the platform, including, File Storage, Smart Contracts, and Cryptocurrency.
  • The SDK offers all the necessary tools for creating public/private key pairs and signing transactions.
  • Mainnet Testing Platform
    Hedera Hashgraph recently announced the second phase of the Community Testing Program for the Hedera Platform. This testing program allows users and developers to test various network capabilities before the mainnet opens to access. In collaboration with phase II testing, the company would make Android and iOS versions of the Hedera wallet, Hedera Browser Extension, and WordPress plug-in open-source. These applications will be used in the community testing phase to test P2P micropayments and allow developers to create use cases for the Hedera network services.

Transaction Confirmation Methods on Hedera Hashgraph 

Once a client makes a transaction on the Hedera, they may seek acknowledgment that the transaction was added to a consensus state. For example, if you have to transfer Hbars to buy coffee, the coffee shop will require confirmation that they received the customer’s payment. Hedera Hashgraph offers the following confirmation mechanisms that anyone can choose from:

  • Response
    When a client submits a transaction to a specific node with a request that the transaction should be submitted to the network, the node will quickly check the transaction and respond with the client’s result before it is submitted. The check determines whether a transaction is structured and the client can pay fees associated with it.If a check is found to be “OK,” the node will add the transaction to the network. The response sent by the node to the client is a confirmation that the honest node will add the transaction subsequently to the network. From this confirmation, the client can be confident that the transaction will change the consensus state.
  • Receipt
    After a transaction is submitted to the network and successfully reaches a consensus, nodes will know that fact and make a “receipt” for it. The client who sends the transaction can ask a node for the transaction status by querying for the receipt. A receipt provides minimal information –
    • whether the transaction was added to the consensus state successfully or not
    • the identifier of the object.

HBARs: Hedera Hashgraph Cryptocurrency

Hedera Hashgraph platform uses a utility token called Hbar to grant token holders access to Hedera Hashgraph-based distributed applications.

Hbar is designed to be fast, allowing micropayments and offering low network fees. Also, users on Hedera Hashgraph are rewarded with Hbars for contributing to the launch of the node on the network. Hbar cryptocurrency has a wide array of use cases, including Digital Content Monetization and Influencer Activity Monetization.

Hashgraph: Smart Contracts Immutability

Since smart contracts are software programs, they can also face bugs, erratic behavior in certain conditions, and design flaws.
Smart contracts, once deployed, cannot be modified whether one has to fix a bug or add new functionality, so the only option is to deploy a new contract to replace the old one.

But Hedera Hashgraph presents an optional mechanism to enable “binding arbitration” for smart contracts. No doubt that the Hedera Smart Contract would be immutable, but it can be changed if several parties designed by the smart contract developer agree.
While deploying a smart contract on Hedera, developers can have a choice to choose the contract’s subsequent mutability.

Another way is to deploy a contract with a list of the public key of arbitrators. It would allow arbitrators to edit the contract’s code, add features, reverse particular transactions, and fix bugs.

hashgraph vs blockchain


Hashgraph Vs Blockchain

  Blockchain Hashgraph
Copyright Open Source Patented
Consensus Proof of Work, Proof of Stake, Practical Byzantine Fault Tolerance, Proof of Elapsed Time Virtual Voting
Security Mechanism Cryptographic Hashing Asynchronous Byzantine Fault Tolerance
Applications Bitcoin, Ethereum, Hyperledger Blockchain Projects, EOS Swirlds
Speed 100 to 1000 transactions based on the protocol implementation like ethereum, hyperledger etc. 500,000 transactions per second
Asynchronous Byzantine Fault Tolerance Few implementations in Hyperledger are Byzantine Fault tolerance ready. 100% compliance

On the other hand, Hedera Hashgraph is also a distributed ledger technology that works on the above data structure and a better consensus mechanism that gives the benefits of blockchain without its limitations.

The Hedera Hashgraph algorithm does not require Proof of Work or Leader Based Systems. It can deliver low-cost and high performance without a single point of failure. Also, Hashgraph does not need high computation power and electrical supply.

Every blockchain platform has a different speed in terms of transactions per second. For example, Bitcoin can make 7-10 transactions in a second, Ethereum has the potential to perform 15-20 transactions per second and Hyperledger Sawtooth can make thousands of transactions in a second.

Hedera Hashgraph allows hundreds of thousands of transactions per second, as the information travels exponentially.

Hedera Hashgraph also proves to be fairer than blockchain as miners can choose the order of transactions, can delay them, or even stop them from entering the block if necessary. However, Hashgraph uses a consensus of timestamp, which prevents individuals from changing the order of transactions.

Hashgraph is a promising technology, but it also comes with some limitations. Currently, the technology has only been deployed in private and permission-based networks. It is still to be tested and explored in a public network. In the Gossip about Gossip technique, when a node passes information to another node, there are chances that the closest nodes are malicious, which may prevent the passage of information to other nodes.

The technology behind the Hedera Hashgraph is exceptionally intriguing, but its real potential and effectiveness will only be known once it is released to the public and non-permission-based network.

At LeewayHertz, we have created a workforce that has been building distributed ledger applications for multiple industrial use-cases.

Author’s Bio


Akash Takyar

Akash Takyar LinkedIn
CEO LeewayHertz
Akash Takyar is the founder and CEO of LeewayHertz. With a proven track record of conceptualizing and architecting 100+ user-centric and scalable solutions for startups and enterprises, he brings a deep understanding of both technical and user experience aspects.
Akash's ability to build enterprise-grade technology solutions has garnered the trust of over 30 Fortune 500 companies, including Siemens, 3M, P&G, and Hershey's. Akash is an early adopter of new technology, a passionate technology enthusiast, and an investor in AI and IoT startups.

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