What is a Hashgraph? by@shaanray

What is a Hashgraph?

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Shaan Ray

Emerging Tech Blog

A hashgraph is a patented algorithm that promises the benefits of the blockchain (decentralization, distribution, and security through the use of hashing) without the drawback of low transaction speed. It was created by Leemon Baird and is the intellectual property of the Swirlds Corporation, which Baird founded.

While Bitcoin allows for approximately 5 transactions per second and Ethereum allows for approximately 15 transactions per second, a hashgraph can process thousands of transactions per second. This article will discuss how the hashgraph works and if it could rise as an alternative to the blockchain.

Gossip about Gossip

The hashgraph algorithm operates through two techniques.

The first technique is used to share information and is called Gossip about Gossip.

To understand how it works, imagine five members: A, B, C, D, and E. Each member starts with a transaction, which results in an ‘event’. Then, each member calls another randomly selected member and the two share their transaction history. For example, D calls B and shares D’s transaction history with B. This type of call happens repeatedly, with each member randomly calling another member and sharing its transaction history. So, B now randomly selects another member (let’s say C), and shares its transaction history, which includes D’s transaction history. Simultaneously, E may have called A, and so on. Each call results in an event, and each event holds the hashes of all previous blocks.

The graph of these events looks like a tree:

Virtual Voting

The second technique of the hashgraph is Virtual Voting, and its purpose is to reach a consensus on the order of transactions. Here’s how it works: first, the events are divided into rounds. The hashgraph algorithm has a definite mathematical answer for when a round is created. Here, for the sake of simplicity, imagine that a round has approximately ten events. Now, each member votes to determine which event should qualify as a ‘famous witness’. To understand how this happens, imagine that each of the members with an event in the next round looks backwards to each event in the current round to see if it can trace its lineage back to the current round’s event. If it can trace its lineage back to an event, it votes yes for that event, and if not, it votes no. The current round event with the most votes is crowned the famous witness for the current round, and provides the definitive order of transactions.

Private and Permissioned

As discussed earlier, the hashgraph algorithm has one major advantage over blockchain technology: speed. However, the hashgraph is used in a private, permissioned setting. Anybody can join Bitcoin, Ethereum, and other major public blockchains as a node. On the other hand, each node on the hashgraph has been approved by the network’s administrator. Additionally, unlike the number of nodes on a blockchain at any given time, the number of nodes on the hashgraph is known by the network. Therefore, each node’s identity is known, and can be trusted. This is why the hashgraph is so fast.

However, critics note that it is unfair to compare the speed of the hashgraph algorithm and blockchain protocols, since many of the latter are public and permissionless.

Hedera Hashgraph is the Public Version of the Hashgraph

The Hedera Hashgraph project is the most prominent effort to open the hashgraph algorithm to the public. Swirlds has licensed the hashgraph algorithm to Hedera Hashgraph. Swirlds will receive a 10% licensing fee from Hedera Hashgraph’s revenue.

By creating a public network, Hedera Hashgraph will lose the speed advantage of a private, permissioned setting. It will compensate for this by adopting a consensus mechanism that is very similar to the Delegated Proof of Stake mechanism, which I wrote about earlier. The network will be governed by a council of 39 trusted members, from various industries and geographies.


The hashgraph is an innovative new take on using decentralization and hashing to create a fast, distributed ledger than can process thousands of transactions per second. Though the hashgraph is a patented algorithm used in private, permissioned environments, the Hedera Hashgraph project seeks to create a public hashgraph network that it will open to developers. In adapting the hashgraph algorithm for public use, Hedera Hashgraph adopted a consensus mechanism that is similar to the Delegated Proof of Stake mechanism on the blockchain.

Once up, Hedera Hashgraph’s network will be governed by a trusted council and will offer the ability to create decentralized applications using Java. These traits will likely attract interest from enterprise users and crypto enthusiasts alike.

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