What is a blockchain or a hash graph
This article describes the types of distributed ledger technologies and does a detailed comparison of Blockchain vs Hashgraph vs DAG vs Holochain.
Blockchain technology has been around for a decade. Interestingly, the first decade brought new and interesting sources of investment to the surface, and some enthusiasts added themselves to the billionaires list overnight.
However, the most exciting highlight of the last ten years of cryptocurrencies is the distributed ledger technology (DLT) on which digital currencies are based.
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How did the concept of distributed technology come about?
Blockchain made headlines immediately after Bitcoin, the very first digital currency. The last decade has seen interesting developments where distributed ledger technology, or blockchain in other terms, found numerous use cases in addition to powering cryptocurrencies.
However, systemic inefficiencies and scaling issues led developers to look for solutions outside of the blockchain. As such, there are novel and ingenious developments such as Holochain, Directed Acyclic Graph (DAG) and Hashgraph. Essentially, it is about keeping the original purpose of the blockchain alive in the face of new and unforeseen difficulties.
The advent of the new solutions, which are very different from blockchain-based data structures, has brought about other fundamental yet significant discussions about which network is the best. In this light, this paper aims to break down the networks and bring their various strengths and limitations to the fore.
In particular, the article will compare Blockchain vs Hashgraph vs DAG vs Holochain. Hence, it is hoped that once and for all the reader may be able to settle the debate on the importance of the networks.
Comparison of different types of DLTs
In the whitepaper that brought Bitcoin to the world, the authors stated that a network would collect transaction information in chunks. Other blocks would build on each other and form a chain of blocks, hence blockchain.
Interestingly, each block creates a unique hash that identifies the transaction. So if an attempt is made to change details of the transaction, a completely different hash is generated. This is evidence of a damaged and invalid transaction.
On the other hand, the transactions are published in a public ledger to which every node (participant) in the network has access. In essence, this distributed nature of the public ledger makes it even more difficult for parties to change information. In addition, transactions can be processed under strict transparency.
These properties of transparency and immutability (integrity) are important revolutionary aspects of blockchain features. Additionally, this ability to incorporate integrity and transparency into data storage and transactions is the main reason blockchain disrupts many industries.
Interestingly, blockchain isn't as new a concept as we might think. The mention of its basic structure and functionality comes from over 27 years ago - when the blockchain was invented. However, Bitcoin, the other cryptocurrencies, shed new light on groundbreaking technological innovation.
It's worth noting that the same cryptocurrencies created the need for solutions for the blockchain. This was the beginning of new distributed ledger technology networks such as Holochain, DAG and Hashgraph.
As mentioned earlier, at the heart of the new networks is the need to create a highly scalable network. In addition, the networks are striving for a higher TPS (Transactions per Second) capability.
Hashgraph is a type of distributed ledger technology that is based on consensus building. In particular, the DLT relies on consensus timestamps to ensure that transactions on the network are consistent with every single node on the platform. The consensus algorithm underlines the robustness and superiority of the distributed ledger technology network.
Learn more about Hashgraph here.
In contrast to the traditional network for distributed general ledger technologies, with this type of DLT build, transaction success is achieved solely through consensus. This means that nodes do not have to validate the transactions taking place on the network. Therefore, users do not need to provide proof of work (PoW).
This aspect makes two things superfluous. First, traditional blockchains based on proof of work require a lot of computation to achieve transaction success. As a result, this factor makes transactions bulky, resulting in a very low number of TPS.
On the contrary, Hashgraph only requires that the nodes in the network reach a consensus on the gossip technique and the virtual voting technique through gossip. Interestingly, these techniques do not require a proof of work to validate transactions. As a result, there is little time between the initiation and completion of a transaction.
As a result, the lack of proof of work on the DLT network means that there can be thousands of TPS. Interestingly, the team behind Hashgraph claims the network can reach over 250,000 TPS.
With virtual voting and gossip about gossip techniques, nodes on the hash graph DLT can experience fairness. Consensus time stamps in particular avoid the problem of the blockchain such as the cancellation of transactions or placement in future blocks.
Directed Acyclic Graphs (DAG)
Hashgraph isn't the only effort to correct blockchain limitations. As mentioned earlier, developers focus on the data structure of distributed ledger technology networks, which affects their effectiveness. Similarly, Directed Acyclic Graphs (DAG) use a different data structure that leads to more consensus.
In particular, the DAG is a type of distributed ledger technology based on consensus algorithms. Consensus algorithms work in such a way that predominant transactions only require majority support within the network. In such a network there is much more collaboration, teamwork and nodes are on an equal footing.
In contrast to conventional blockchain technologies, where proof of work is key, the DAG ensures fairness. This kind of fairness creates the impression that the network is sticking to the original goal of distributed ledger technology. In particular, the main purpose of a DLT was to democratize the internet economy.
For example, a private blockchain network relies on centralized management that removes democracy from the DLT. On the contrary, this type of distributed ledger technology gives the same meaning to every node present on the network. Hence, this means that not every node has to point to a different node.
There are already projects like ByteBall that use the DAG structure to create new generation networks free from the limitations of traditional blockchain - what is ByteBall? One of the most notable “new generation” networks using the DAG data structure is IOTA's Tangle.
This is where the miners / nodes can perform the dual tasks, with nodes on the blockchain running separately. This means that a miner in Tangle can simultaneously issue a transaction and validate a transaction.
This type of distributed ledger technology is characterized by blockchain technology. Despite the high dose of rhetoric in their bold statements, the Holochain team really has some solid suggestions that rival other platforms. Holochain, in particular, has completely revolutionized the Internet as we know it.
One of the interesting visions of Holochain is to change the current structure of the Internet. The Internet today is structured alongside a server-client basis. This means that the decentralization is not optimal. In addition, there is little democracy and freedom in the use of the resource.
With this in mind, Holochain wants to create a distributed network that can also form the basis for the next generation of the Internet. According to the platform's whitepaper, Holochain is an amalgamation of Blockchain, BitTorrent and Github. This means that this is a DLT that is distributed among the nodes to avoid centralized control of the data flow.
A distributed platform simply implies that each node runs on its own chain. This means that nodes or miners have the freedom to work autonomously. In what the team behind Holochain calls a Distributed Hash Table (DHT), users can store data with specific keys. However, this data remains in actual locations that are "dispersed" in different locations around the world.
Benefits of Holochain
The interesting part of this data structure is that the network is not exposed to the congestion load that is common with a traditional blockchain. This "distribution" of the storage locations for data relieves the network and offers more space for scalability. Hence, transactions over this network can easily reach millions of TPS.
Scalability is a huge problem that haunts both the public and private blockchain platforms. For example, developers usually encounter major hurdles when creating decentralized applications (dApps) on the traditional blockchain. This is because they need to be validated by the large community on the platform.
On the contrary, a developer on the Holochain platform only needs confirmation of the single chain that makes up the entire DLT network. Therefore, with this type of distributed ledger technology, there is an insignificant latency between request and confirmation.
Comparison of DLTs
Distributed ledger technology is not in itself new. As mentioned earlier, technology has come such a long way that modifications and alternatives already exist. In addition, it is clear that blockchain is the very first DLT to be introduced into the public space. This is despite the first description of the blockchain, which appeared almost three decades ago.
By breaking the ground for the innovative new way of storing, sharing and doing many other things with data, blockchain is leading the way in the race for distributed ledger technology networks. In the following sections, blockchain is therefore compared with other DLT networks.
Blockchain versus Hashgraph
It is obvious that blockchain and hashgraph have many similarities as they serve a similar purpose. Essentially, all of them are a type of distributed ledger technology designed to introduce novel monetary systems. In particular, they are all peer-to-peer transactions, so transactions do not require a central authority to regulate them.
In addition, the DLTs work with a consensus-based system in which transactions must satisfy the participants within the network. This need for consensus is the reason why transactions in these networks are transparent and flexible. In addition, the high level of security due to the cryptographic nature of the networks ensures a high level of data security.
Still, blockchain differs from Hashgraph in more fundamental ways. In particular, Hashgraph is a response to major blockchain limitations such as scalability and transaction rates. These special restrictions are responsible for the limited uses of the DLT.
Hashgraph mainly differs from blockchain when it comes to the consensus mechanism. On the one hand, blockchain mainly relies on the miners' activities within the network to facilitate the transaction process. This means that a miner can single-handedly greatly influence the success of a transaction.
Learn more about Hashgraph vs Blockchain here.
In particular, blockchain relies on proof of work, which miners can use to verify that a transaction is genuine. As a result, transaction rates are slow and expensive. In addition, the proof of work implies that the network is under a tremendous load of heavy computations that cause network delays.
Hashgraph, on the other hand, uses a consensus mechanism that doesn't give miners too much authority. On the contrary, the DLT uses consensus algorithms called gossip via gossip and virtual voting to decide which transaction is successful. In this way, the majority has a say in the transaction. Therefore, there is a lot more fairness with Hashgraph than with blockchain.
Blockchain versus DAG
Like the blockchain, the DAG facilitates transactions and one cannot reverse the transactions to an earlier step. In particular, the word acyclic in a directed acyclic graph implies that operations are strictly one-way. Similarly, immutability is an aspect that makes blockchain popular over pre-existing means of data storage.
In addition, both platforms work through a consensus-based system in which nodes decide what happens. As such, there is a certain semblance of democracy compared to platforms that go through a central command. Unfortunately, that's as far as the similarities go.
Like Hashgraph, DAG differs fundamentally from blockchain in terms of data structure. As already mentioned, blockchain arranges transactions in blocks in such a way that each body of information relating to a particular transaction forms a single block. Successful transactions therefore lead to new blocks.
On the contrary, DAG makes complete with blocks. Under DAG, the previous transaction has a stronger relationship with the subsequent transaction. For example, if you had three transactions, X, Y, and Z, you would need transaction X for Y to go through. Similarly, transaction Y validates transaction Z ..
For a transaction on the DAG network to be successful, only two of the previous transactions need to be validated. This means that the transaction just needs to ensure that two of the previous transactions do not contain conflicting information. Interestingly, this is very different from blockchain, where a transaction has to validate numerous transactions before it is valid.
This means that a transaction will take more time to complete. Also, as blocks multiply in the blockchain, it becomes increasingly difficult to get new blocks in terms of computations. Therefore, mining is becoming more energy-intensive and therefore more expensive. On the other hand, transactions in the DAG network increase throughput as there are many more validations.
Blockchain versus Holochain
Compared to DLT, the consideration of the basic structure of holochain and blockchain brings various differences to the fore. In particular, the two are very different because of their structure, although the purpose has some similarities. Interestingly, Holochain is a kind of revolutionary technology that aims to turn everything upside down.
Like blockchain, Holochain seeks to enable secure and transparent transactions between players on the network. Information on both platforms is cryptographically secure and the information cannot be changed. In addition, users of both platforms allow interaction on a peer-to-peer basis. In this way, they can interact directly without the need for a central authority.
Is Holochain Better?
Even so, Holochain is a bit more advanced compared to blockchain. In essence, Holochain is trying to introduce a new dynamic that is very different from the basic goal of the blockchain. Blockchain seeks to decentralize transactions so that users can interact directly without the need for a middle party. On the contrary, Holochain wants to distribute the interactions.
Holochain creates a network made up of various networks with distributed ledger technology. Therefore, the DLT is an important network that is unlimited in terms of scalability and the number of transactions that users can perform in a second.
In the blockchain network, nodes rely on the individual network to initiate and validate transactions. If more blocks join the chain, the computational effort and the fees associated with transactions multiply. On the contrary, nodes in Holochain run on their own chains. Hence there is more room for calculations.
The fact that each node in Holochain runs on its own chain means no miners are required. Hence, there are almost no transaction fees. This also means that there is no tokenization on the platform, but that smart contracts rule the storage space.
Nodes running in their own chains mean they can process ledgers that are exclusively theirs. In this way, the relationship between different nodes on the network is fully trusted. In addition, dApps have infinite space in which to work. Therefore, one can expect the dApps to work optimally in all cases.
Summary / concluding remarks
The comparison of DLT in blockchain against Hashgraph against Dag against Holochain brings out interesting aspects of the platform. As far as there are obvious similarities between the DLTs, differences are also noticeable. Interestingly, it's obvious that blockchain existed well before the Bitcoin whitepaper developed by pseudonymous Satoshi Nakamoto.
Blockchain was first mentioned in an article looking for a way to protect intellectual property by timestamping documents. However, after Bitcoin's fame, DLT gained in importance. With the popularity came various unforeseen problems like scalability and TPS. Even if blockchain tries to correct the constraints, other projects are creating an entirely new type of distributed ledger technology.
From the above, it can be seen that all DLTs share the common aspects of transparency, consensus, transaction, distribution, peer-to-peer and flexibility. However, there are major differences in the consensus mechanism and in the data structure within the individual DLT.
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