The rise of cryptocurrencies in the last decade is nothing short of remarkable and has forever changed the way people see and think of currencies. In that context, the global finance industry has evolved significantly since Bitcoin was released in 2009, following an economic slump, when the new, digital, and decentralized financial currency captured and kept the interest of investors all over the world.
The new sort of currency has become popular throughout the world due to its independence and ease of use. Since then, many different types of cryptocurrencies have been established with the goal of serving as an alternative source of cash. Thousands of cryptocurrencies are now available on the market, each with its own properties.
The acclaimed technology known as Blockchain is the primary reason behind this change. The Blockchain is a distributed database that is shared across nodes in a computer network. It functions as a database, storing data in a digital manner. Blockchains are well-known for their vital role in keeping a secure and decentralized record of transactions in cryptocurrency systems such as Bitcoin. The basic role of the Blockchain is to assure the security and reliability of a data record while also establishing confidence without the need for a trusted third party, such as a centralized financial institution.
But now, another platform emerged on the market that promises to be a faster and more secure alternative to Blockchain. It evades the high energy-consuming mining with a novel technology called a directed acyclic graph. It is called Hedera Hashgraph.In this article, we will make a detailed comparison between the Blockchain and Hedera Hashgraph technologies, to keep you informed about the novelties in cryptocurrency. Most people familiar with crypto already know what Blockchain is and how it works, so first, let’s see what Hedera Hashgraph actually is.
What Is HBAR And How Does Hedera Hashgraph Work?
In a few words, HBAR is the Hedera Hashgraph native Token. On the Hedera public ledger, the Hedera Governing Council stores and runs the consensus nodes. Members of the Council have access to the current Mainnet. Hedera intends to make its network permissionless in the future, enabling anybody to host a consensus node. Node impact will be defined by HBARs possessed when Hedera switches to a permissionless state. Hashgraph will serve as the network’s consensus and security layer.
The HBAR Token is used to pay for transaction fees, security, and security incentives. Users of the network pay consensus nodes in HBAR for the processing and arranging of their transactions. Users can stake their HBAR tokens to ensure network security.
In the sense that it is not based on a chain of blocks, Hashgraph is not a blockchain. It’s easiest to see it as a graph, with the speed of confirming transactions increasing as the network grows. A DAG, or Directed Acyclic Graph, is the term given to the technology on which it is built.
Hedera Hashgraph will be able to process more than 100,000 transactions per second using this technology. Its capacity for high volume transactions is incredible – Hedera’s network presently processes 6.5 million transactions per day, with an average transaction time of 5 seconds, considerably outpacing Ethereum’s 1.1 million, and Bitcoin’s monthly combined 250,000 transactions.
As a substitute to the blockchain consensus method, Hedera employs the Hashgraph consensus algorithm for Hedera Mainnet consensus. Hashgraph generates a consensus timestamp for each transaction. The timestamp indicates when the transaction is received by most of the network. Every node participates in every round of agreement in this asynchronous Byzantine Fault Tolerant (ABFT) consensus. Because the method does not rely on a single node, it makes no difference if one is defective.
Hedera Hashgraph VS Blockchain
Patented vs. Open-source
Because blockchain is an open-source DLT platform, many individuals are contributing to the development of cryptocurrencies and utility tokens. After establishing their quality, several blockchain enthusiasts acquired the trust of institutes and capitalized on blockchain’s decentralized character.
Hashgraph, on the other hand, is based on a proprietary algorithm developed by Swirlds. As a result, each new addition must go via Swirlds.
Hedera Hashgraph employs the chatter about gossip protocol to achieve quicker transaction rates by requiring less information to spread and allowing for more events to occur. It has a transaction rate of up to 500,000 per second.
The implementation of protocols such as Hyperledger, solutions such as Bitcoin, and blockchain platforms such as Ethereum, Corda, and others, determines the speed of transactions in a blockchain.
The block method of blockchain makes it tough for miners to work on it because when two blocks are mined at the same time, they must choose between them. As a result, the other block is rejected, and the effort is squandered.
Because Hashgraph does not employ the block technique, it is deemed 100% efficient because it does not encounter these issues. Because all happenings that are constantly talked about on the network are reserved, no resources are squandered.
Mechanism Of Consensus
The following techniques based on currency and cryptography are utilized by Blockhain: Proof-of-Stake, Proof-of-Elapsed Time, Proof-of-Work, Practical Byzantine Fault Tolerance, and other prominent blockchain algorithms are employed.
Hedera Hashgraph achieves network consensus through virtual voting. It does not necessitate the use of any additional algorithms.
Finally, we can state that Hashgraph has several advantages. It is cost-effective and efficient, with a high speed and minimal running expenses. It has the potential to be an excellent platform for users. It may, however, be sophisticated, and you may need to purchase a patent before utilizing it. You should also bear in mind that there isn’t a lot of area for mining at Hashgraph. This significant drawback makes working on it challenging for many people.
Using blockchain, on the other hand, would be low-cost and decentralized. The nature of blockchain, its technical advancements, and its ability to conduct transactions quickly may make it the user’s preferred option. It may, however, have storage concerns.