What is Hashgraph and How Will it Replace the BlockChain?

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Hashgraph, like Blockchain, is a distributed ledger technology. The HBAR is the energy-efficient cryptocurrency of Hashgraph just as Bitcoin is the cryptocurrency of the Blockchain. Hashgraph is regarded as a successor to Blockchain. On several occasions, it has been referred to as ‘The Future of Blockchain.’


The Status Quo.

Conventional money transfer methods require the use of a trusted third party to move funds from one entity in one location to another.

This is a leader-based transaction model where the third party acts as the leader that mediates transactions between the other parties.

This is the centralised transaction model. An example is wire transfer of funds across countries, whereby the sender provides the bank or money transfer institution with the recipient’s details and the amount to be transferred, and the transaction is made.


The Downside of the Third-Party-Mediated Transactional system.

The conventional third-party-mediated transfer method takes some time before the transaction can be completed, depending on how fast the third party operates.

If it is a domestic wire transfer between accounts in the same institution, it can take 24 hours or less. However, if it across different countries and different institutions, it can even take three days or more to have a transaction completed.

Additionally, the third party must be paid by the sender or it chops off a certain percentage of the sent funds as a fee for mediating the transaction.


Challenging the Status Quo

Blockchain attempts to solve the problem of the lead time spent in waiting before a transaction is completed.

Block chain deals with instant transfer of digital assets like bitcoin from one individual to another on the network.

This technology does not deal with physical money but with digital assets. Block chain eliminates the need of a third party for the transfer to be made.

The quality of direct transfer in block chain eliminates the transfer fee required when a third party is used.

The Blockchain.

Blockchain contains an incorruptible, digital distributed ledger. It is a chain of blocks containing information that is difficult to change and is shared to all the nodes on the network.

The blocks represent transactions that are linked to each other within the block chain system. The transactions are made by nodes.

A node is a computer or system that is part of a network in a block chain system. The nodes in the system are interconnected.

A block contains data, it’s unique hash and the unique hash of the block before it. All of the blocks contain hashes of the blocks before them except the genesis block, which has no other block before it.

The data in the block includes the details of that particular block for example in the case of Bitcoin, the block includes the details of the sender, the recipient and the amount of coins.

A hash is a specific combinations of letters, numbers and/or symbols, collectively known as characters that distinctively identifies a block and all of its contents.

It is specific and no two blocks can ever have the same hash. It is like a human fingerprint that is unique to each human and varies from individual to individual.


How does the Blockchain ensure security?

1. Hashes

Any changes that are made to a block in the chain can be detected via cryptographic hashes. When a block is created, the algorithm calculates a hash that it assigns to it.

Since each block except the genesis one contains the hash of the block before it, tampering with the contents of the block will change its hash, making the ‘previous-block hash’ stored in the closest subsequent block in the chain to become invalid.

Changing a single block will change its hash which will make all the following hashes to become invalid.


2. Proof-of-Work

Proof-of-work is another security mechanism against alteration in the block chain. It is a well-known fact that computers in the present era have ability to make millions of calculations per second.

Therefore, it could be possible to tamper with information in a block and then re-calculate and update all the hashes and information in the other blocks.

This pitfall is by-passed via proof-of-work. Bitcoins, for example, require 10 minutes before another block can be added or before any alteration can be made by miners on the network, who carry out the task of adding blocks on the chain.


3. The Peer-to-Peer consensus requirement.

The peer-to-peer nature of the network creates transparency that enables the network to be monitored for any changes by the member nodes.

When a new block is added, each node verifies the new block’s data, hash and the hash of the block before it and if everything is matching well, the node then adds this block to its own block chain.

Tampered blocks are rejected by others and not added. Consensus is reached when everyone on the network accepts this new block and adds it to their block chain.

No single node on the block chain takes on the complete administrative authority. There’s total equality on the network.

The network can only be manipulated when a particular node has more than 50 percent control over the system, which is not the case since there is no single authoritative node on the network.


Transparency; Distribution of Ledgers

Each node on the network has a copy of the transaction ledger. Any change in the ledger can be seen by all the nodes who actually have to concede to it before it is made.

Additionally, only miners can add blocks and after a computational process of figuring out the nonce.

Therefore, security in the block chain network is maintained through a number of ways which are; hashes, distribution of ledgers to everyone on the network, proof of work and peer-to-peer consensus.


How does Block chain address the money transfer issue?

These are the principles and identifying features of the Block chain.

a) The Open Ledger

This is a chain of chronological transactions that is open to the public. The word ‘public’ here denotes everyone on the network.

They all can see where the money is, how much each has and each can make the decision of whether a certain transaction is valid or not.

This is due the open accessibility of the data in the system. This is unlike the setting in conventional third party transfer where the transactional data of all members in the system is only accessible to the third party that maintains the ledgers.


b) Decentralisation

Block chain eliminates the exclusivity of the ledger to just a particular party. All nodes on the network have a copy of the same ledger.

The ledger is synchronised. This ensures that every node on the network has the same version of the ledger.

There is no single authority on the network and everyone has equal access to information.


What Happens When an Entity on the Network Wants to Make a Transaction?

a) Proof of Work:

The concept of miners comes in here. The role of miners is to validate the intended transaction. The intending sender broadcasts their intended transaction.

There is a number of miners on the network. These, in a competitive manner, verify transactions and add them to the common ledger.

The first miner to complete the verification process and broadcast this accomplishment earns a financial reward.

The process happens in a way that the miners check and verify that the intending sender has enough digital assets to successfully complete the transaction.

The miners then use computational power to figure out the unknown random key that will enable everyone on the network to update their ledger copy to contain this new transaction.

The first miner to successfully establish this publishes the key to the network and earns their digital financial reward.

Miners are thus special nodes on the network that validate transactions and add them to the ledger.


b) Proof of Stake:

This mechanism uses randomly-chosen validators to validate transactions. Bitcoin uses proof of work while newer cryptocurrencies employ the proof of stake method.



Now that we’ve gotten the Blockchain background, we can dive into Hashgraph because Hashgraph builds upon and is more or less an improvement of Blockchain.


Is Hashgraph the future of Blockchain?

Unlike Blockchain, Hashgraph does not use miners to validate transactions but instead uses an algorithm that employs a ‘gossip-about-gossip’ protocol.

Here, individual nodes gossip about transactions. Direct acyclic graphs are created that sequence transactions in terms of time.

In each message, there is one or more transactions and a digital signature time stamp hashes of two earlier events.

The decentralised economy where there is no central governing entity requires a guarantee for security, fairness and performance in the transaction process.


How Does the Hedera Hashgraph Attempt to Achieve these Objectives?

News of any new transactions spread throughout the community of nodes in a gossip about gossip fashion which makes the message to be transmitted far and wide in a short period of time. The Hashgraph system has resilience in message transmission in that a small number of nodes being offline does not halt the gossip about gossip transmission process.

The structure of the transmitted data in the gossip Hashgraph system constitutes of a payload of the transactions, a digital signature, a timestamp and two hashes pointing to earlier gossip about gossip nodes.

The ‘gossip about gossip’ data transmission model is a unique identifying feature of the Hashgraph.

In this arrangement, the data notes not only transmit the ‘gossip’ but also include in the ‘gossip’ they pass on information on where the gossip came from, at what time the immediate source got it and more.

The nodes in the Hashgraph algorithm engage in a virtual voting process on which the algorithm bases to order transactions.

This guarantees fairness in the system because it is free from manipulation; security because the algorithm-controlled information does not suffer from external influence and can be encrypted; and performance because the ordering process is both efficient and takes a very short period of time.

A crucial point to make in the contrast between Blockchain and Hashgraph is that the Blockchain uses a gossip information transmission system while the Hashgraph is built upon the gossip-about-gossip model.

The gossip model of the Blockchain is liable to manipulation whereby a node can bribe the miner to include their transaction in the ledger for the purpose of prestige.

The Hashgraph gossip-about-gossip model involves the relay of new and amplified information by a node on basis of the received information while the gossip model of the Blockchain relays the same magnitude of information.

A current difference between Hedera Hashgraph and Blockchain is that Hashgraph is currently patented. Leemon Baird, the inventor of hash graph determines who uses and builds on hash graph.

Hashgraph has thus not yet been tested on the public network, but nonetheless has features that makes it better than Blockchain.

This brings us to the argument of how Hashgraph will eventually replace Blockchain once it is released for use by the public domain.

There are prominent differences between Hashgraph and Blockchain. Generally, although both are built on similar foundational principles, Hashgraph is better than Blockchain in a number of respects.



Hashgraph has a higher performance rate compared to Blockchain. Hashgraph can process a whopping 250,000 transactions in one second.

On the other hand Blockchain can only process a maximum of 7 transactions per second. This difference in performance will ultimately make Hashgraph the better choice as more people opt for transacting via digital modes.

Hashgraph definitely can handle many more transactions. Hashgraph does not require proof of work for consensus to be reached unlike in Blockchain.



Fairness, in this context, is defined as the ability of a distributed ledger technology to prevent manipulation of the order of transactions by nodes.

In Blockchain, miners have the ability to edit blocks and their order. Hashgraph does not allow any node to manipulate transactions.

Cryptographic time stamping is used to serialise the transactions.


Storage space

Hashgraph requires way less storage space than Blockchain. Hashgraph requires less than 1 GB storage space unlike Blockchain which requires 60 GB.

This difference is brought about by the different fundamental storage operations of the two technologies.

In Blockchain, all the transactions are stored in the ledger without deleting any while in Hashgraph, once a transaction has been seen by every node, it is deleted within a few seconds.


Cost of Operation

Hashgraph has a way lower cost of operation compared to Blockchain. The validation system in Hashgraph does not involve individual miners that are given a financial reward like in Blockchain but transaction verification and ledger update in Hashgraph is done by an algorithm.


Transactional Time

The time required to complete a transaction in Hashgraph is way lower than that required in Blockchain.

There’s time wasted in Blockchain in the transaction validation process. Here, miners have to carry out two processes; one to verify the feasibility of the transaction and two, depending on their computational abilities, figure out the key which will be used to update the new transaction in the ledger.

The setup of Hashgraph by passes this protocol and ensures that transactions are validated in such a short period of time, and without requiring the payment if any miner who successfully completes the validation process.


Conservation of Efforts

In a Blockchain, a number of miners strive to figure out the nonce, which is the number that is used to open up the ledger for editing.

It is the ‘key’ referred to earlier in this article. A number of miners work simultaneously independent to figure out the nonce whereby if one gets it and publishes it, the efforts of the other miners are discarded.

Hashgraph does not involve all this because the transaction validation protocol does not need any node to go through all this.


The Byzantine Generals Problem

The Byzantine Generals analogy describes a situation whereby the lack of a way of determining the authenticity of a communicated message stalls a process.

The conventional government-controlled monetary system carries trust issues that the government tries to control through its various economic policies.

One aim of Block chain is to create a trustless setting whereby one does not necessarily need to personally know the details and background of the individual they are transacting with but can use the knowledge from other individuals on the network.

This poses a perplexing situation in Blockchain. The consensus system here can be tied up before the necessary preconditions are met.

In Hashgraph, meanwhile, no single entity can hinder the community from reaching consensus and once consensus is reached, it cannot be changed.

It is broadcast instantly across the whole network. This makes Hashgraph both faster and more effective than Blockchain.


Addition of blocks

In Hashgraph, each member can add blocks that directly get incorporated into the network which makes it more efficient and faster than Blockchain that requires a consensus process to be undergone before a block can be accepted as part of the system.

You can also check out this video to understand more on how Hashgraph could potentially replace Blockchain.



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