Coin vs Coin Comparison
Hashgraph: Hashgraph is a proof-of-stake consensus algorithm with DAG-based distributed ledger technology, that uses 39 term-limited elected Governing Council members with top speed, global scale and bank-grade security.
Hedera, the public network built on Hashgraph, can scale to millions of nodes and uses a utility token, the hbar, for network and transaction fees as well as security. Hashgraph offers a cryptocurrency, smart contracts, and distributed secured file storage in a multi-use platform.
Bitcoin: Bitcoin is a proof-of-work consensus algorithm using blockchain-based distributed ledger technology. Bitcoin uses a dynamic node network of mining block creators that compete in a cryptographic puzzle computation to win a chance to publish a block of bundled transactions.
The blockchain network competes in a globally-distributed race to receive Bitcoins if successful solving the puzzle and publishing a new block of transactions. Bitcoin is solely a cryptocurrency with no smart contract functionality or secured file storage.
|Coin vs Coin||Hashgraph||Bitcoin|
|Speed||100,000 TPS/shardParallel ProcessingLow Latency (seconds)High Throughput||7 TPSSerial ProcessingHigh Latency (10-60 min)Very Low Throughput|
|Scale||100’s of Millions TPS/sharding3 Phases of Node TopologyMassive Global ScalabilityMinimal CPU RequirementsMinimal Bandwidth||↑Block Size to ↑TPSScaling DebateVery Low ScalabilitySupercomputer Miner RaceLarge Bandwidth Requirement|
|Security||Math-Proven aBFTDeterministicDDos ResistantSybil Resistant|
Botnet ResistantFirewall Partition ResistanceLow Collusion Risk of Gov Coun
|BFTProbabilisticDDos Resistant51% Attack Risk|
Botnet ResistantVulnerable to SybilVulnerable to PartitionsCollusion Risk of Mining Pools
|Stability||Governing Council39 Members w/ 2.56% vote/eachMax of 2 elected 3yr termsAnti-Fork Controls||De Facto GovernanceFew Mining Pools-Collusion10-yr Impressive Track Record100’s of Forks|
|Fairness||Fairness of OrderFairness of AccessFairness of TimestampFairness of Node Entry (Phase 3)Censorship-ResistantMathematically-Proven Fair||No Fair OrderingFairness of AccessNo Fair TimestampFairness of Node EntryCensorship-Resistant|
|Consensus||Proof-of-StakeProxy Staking EarningsGossip-about-GossipVirtual Voting Algorithm||Proof-of-WorkMining RewardsGossip ProtocolNon-Voting Algorithm|
|Efficiency||High EfficiencyLowest Energy Consensus||Very Low EfficiencyHighest Energy Consensus|
|Regulatory Compliance||SEC-Compliant FundraiseNot a Security per HinmanNo ICO or ERC-20 Token raiseGov Council removes illegal files||No SEC Fundraise RiskNot an SEC Security TokenUnable to delete illegal files|
|Development Team||Hashgraph, LLCVery Experienced TeamSmall Developer GroupGrowing Social Media||Bitcoin FoundationVery Experienced DevelopersMost Developed EcosystemLargest Social Media2nd Most Developers|
|Decentralization||No Central AuthorityOpen-Review CodePatented Algorithm|
39 Nodes Phase 1
1000 Nodes Phase 21 Million+ Nodes Phase 3
|No Central AuthorityOpen-Source CodeNo Patent Protection|
10K Nodes>75% Hash in 6 Mining PoolsSmall Group of Developers
|Use Cases||CryptocurrencyMicropaymentsSmart ContractsSecured File Storage|
Financial ServicesCertification ServicesGovernment ServicesHealthcare ServicesCommercial ServicesSocial Media ServicesMany more
|Miscellaneous||ACID CompliantFormal Coq ProofFLP Theorem Compliant||ACID CompliantNo Formal Proof to DateFLP Theorem Compliant|
Hashgraph Speed: The Hedera Hashgraph public DLT is capable in a single shard of performing at least 100,000 transactions per second in a globally distributed mesh of peer-to-peer nodes. This is the current top speed of any public DLT to date. The throughput is high due to parallel, asynchronous processing and has low latency even at high scale, measured in seconds.
Hashgraph Speed Limit: The speed of the network is only limited by the bandwidth and speed of one’s internet connection. If internet connection speed increases, the speed of hashgraph will also increase in speed proportionally.
Transactions occur asynchronously, meaning that maximal throughput can occur without fixed time intervals or bundled transactions. A global 5G network with low earth orbit satellites could allow anyone in the world to host a node and earn hbar from staking.
Bitcoin Speed: The bitcoin network is only capable of performing approximately 7 transactions per second, in 10 minute block intervals in a globally distributed mesh of peer-to-peer nodes. In order to control the synchronization of the network in 10 minute blocks, hashing rate increases or decreases (called mining difficulty) to ensure a fixed speed. Approximately 1500 transactions occur in each block at current time.
Bitcoin has very low throughput due to the serial processing design of synchronized blocks in the data structure. Bitcoin also has very high latency with probabilistic confirmations, measured in 10-60 minutes.
Bitcoin Speed Limit: The bitcoin network has previously used increasing block sizes (measured in megabytes) to accommodate more transactions per second as the network has grown, but currently is fixed at 1 MB per block. If the block size was increased, more transactions could be included per block, but would still be fixed at 10 minute intervals.
Bitcoin will never be able to scale on-chain to any level to support financial payments due to these fundamental design limits. Also, applications such as real time auctions, exchanges and internet-based commerce rely heavily on the necessity of fast transactions of which bitcoin cannot facilitate.
Hashgraph Scale: Hashgraph is able to perform at 100,000 TPS in a single shard (database). Hedera the public DLT built on Hashgraph has the ability with multiple shards (database divisions) to expand to 100’s of millions TPS with marginally decreased performance and latency.
Hedera is able through PoS consensus to scale to millions of nodes and allow any one the ability to earn hbar in their wallet with minimal CPU requirements, memory and bandwidth. These features of a public cryptocurrency are fully able to accommodate micropayments and major global enterprise solutions.
Bitcoin Scale: Bitcoin is able to scale globally with millions of nodes without changing the time interval of blocks, but can accommodate more transactions per second if block sizes are increased. However, the scaling debate has not resulted in an increase in block sizes in order to increase the network speed.
Unfortunately, Bitcoin blockchain will never be able to scale on-chain, and must compromise security with off-chain designs such as the Lightning Network. What’s more is that the current arms race of supercomputers that only a few mining pools monopolize prevent general users of the large Bitcoin rewards, currently at 12.5 BTC/block (~$60K USD).
Hashgraph Security: Using a proof-of-stake model, Hedera Hashgraph has achieved bank-grade, asynchronous Byzantine Fault Tolerance, which has been formally-verified in a Coq proof. Karl Crary, Associate Professor of Computer Science at Carnegie Mellon University verified the aBFT property mathematically in a computer proof. The entire network by extension is also aBFT, maintaining on-graph consensus between shards at scale through the use of state proofs.
This level of security is the highest possible and was not thought possible for a public network since it is 100% final within seconds. Speed and scale are completely preserved without reducing throughput or latency. Hashgraph is immune to the trilemma.
Bitcoin Security: Using a proof-of-work model, Bitcoin is Byzantine Fault Tolerant (BFT) through Nakamoto consensus, which is robust but uses probabilistic finality of transactions. This means that any transaction in the Bitcoin network will become more and more secure with each additional block addition, confirming that the original block is most likely accurate. That also means that no consensus decision is truly final.
After 1 block, there is a low probability it will not be reversible by the entire network, but by the 6th confirmation block (~60 min) it is above 90% secure. The longer the blockchain extends in time the more secure it will become, but will never achieve 100% finality and is therefore not aBFT.
In order to send the value of at least $1 million USD, at least 144 confirmations (~24 hours) are recommended. Unfortunately, blockchains suffer from the trilemma, which means that speed, scale and security cannot be optimized without one or more being compromised.
Hashgraph Stability: Hashgraph is managed by both technical and governance controls in order to prevent the network from being copied or forked (split into to rival networks). By technical control, no node could use the Hashgraph algorithm due to the immutable genesis address book and its reference to the founding network as primary.
Additionally, Hedera is stabilized by a 39-member, term-limited Governing Council comprised of multinational, multisectoral mega-cap corporations that host the Phase 1 nodes. Each member holds a vote with a 2.56% weight per member, serves an elected 3-year term with election allowing only two total terms.
The Hashgraph algorithm of consensus is patent protected, and has an irrevocable license in perpetuity to the Hedera public DLT. This legal control, under execution of the Governing Council is meant to prevent network forks. These controls prevent network splitting, which institutional research has determined as a major barrier in the enterprise adoption of distributed ledger technology. However, Hashgraph is open-review in order to maintain transparency of code, allowing developers and node hosts to ensure that the source code is safe and free of malicious intent.
Stability of the Hedera network is also resistant by several design elements to Sybil attacks (34% attack), Malicious Network Partitions, Round-Robin attacks (DDoS that follows the IP address leader) DDoS attacks, botnet attacks (multiple attacks from a single coordinated attacker through cloud technology). Additionally, the network is immune to mining collusion and hardware arms races due to PoS consensus.
Bitcoin Stability: Bitcoin is an open-source network, which allows any individual to copy the source code, fork the network and create a rival network at will. This is considered desirable amongst many developers, but has been seen as deleterious and a major limiting feature of mass global adoption by enterprises.
Despite being open-source, the Bitcoin network is practically controlled by a de facto group of developers, investors, influencers and mining pools. The current consolidation, or grouping of major mining pools to single digit numbers, has created a situation of potential collusion and firewall partition vulnerability. However, the time-dependent stability of nearly 10 years of the Bitcoin network is very impressive, unlike a multitude of legacy, commercial databases designs.
The fact that Bitcoin does not have strong governance, relies on forking to settle disputes, and has experienced many debates on updates has stymied its adoption. This network governance instability has allowed a thriving network of alternative cryptocurrencies to have developed and rivalled Bitcoin dominance. To date, over 100 hundred Bitcoin forks have occurred, resulting in major developer group divisions, losses, exiting member sell offs and brand confusion for users.
Hashgraph Fairness: The Hedera public network allows fairness in three separate ways: fairness of access, order and timestamps. Fairness of access is based on the randomization of transaction requests to nodes so that no single node can block a user, without having another node available for it.
Fairness of order means that the Hashgraph algorithm used for consensus, arranges all transactions fairly into the data structure so that no user can bribe any node with additional fees into advancing to an earlier state. Fairness of timestamps means that any transaction sent by a user will be arranged based on its median timestamp of all nodes, in order to fairly assess the global time that an event occurred.
These features of fairness of the Hedera public DLT will be mission-critical for applications in real time trade, auctions, stock exchanges, cryptocurrency exchanges and many more. Censorship-resistance is ensured by the design of the Governing Council who are only able to delete illegal material from file storage for regulatory-compliance. The GC are not able to delete users, block wallets, reverse transactions, amend a smart contract or even revoke a user.
Bitcoin Fairness: The Bitcoin network has fairness of access, but does not have fairness of order nor fairness of timestamps. In blockchain design, any user can submit a transaction and will be reliably received by the network due to a randomized gossip protocol, achieving access fairness.
However, when a transaction arrives at the mempool, the receiving center in the network, the transaction is arranged independently by the miner. This means that a transaction that came first in a series of transactions will often be rearranged, disregarding its true timestamp, and placed in a block at the whim of the miner. This demonstrates lack of fairness of order.
Fairness of timestamp is also not present in blockchain design, since the mining-incentive reward system allows for variable fees to nodes per user. If a user adds a high fee amount to bribe the miner to arrange the transaction first, it will appear first in the next published block ahead of others that were earlier in the order sequence.
This kind of limitation in nearly all of proof-of-work blockchain design will never permit universal adoption by stock exchanges, crypto exchanges, global auctions and many other use cases. Bitcoin is unable to censor the file storing ability of transactions (small file sizes) and is at risk of storing internationally-illegal digital material such as child pornography, dark market advertising, illegal drug rings, etc..
Hashgraph Consensus: Hashgraph uses a proof-of-stake, virtual voting algorithm of consensus that achieves universal agreement on shared data by staking hbar cryptocurrency to nodes. A node processes hbar transactions by signing digital signatures (public keys) after a uses submits a transaction by signing their private key digital signature first.
Hashgraph Efficiency: Hashgraph has one of the lowest energy requirements of any public distributed ledger due to the PoS model, simple hardware necessities, and extremely small amount of work and data load per transaction. A typical hbar transfer uses approximately 140 bytes per transaction with an upper limit of 4 kilobytes for any transaction (i.e./ smart contracts, file storage).
Bitcoin Consensus: Bitcoin uses an incentivized proof-of-work by mining (nakamoto consensus), by using CPU computational power to solve complex math problems to win the chance of entering the next block of transactions into the blockchain. Bitcoin is the reward token after mining that rewards a node for its contribution to the distributed shared state of transactions.
Consensus is held in the blockchain data structure, which requires a large amount of memory, and is a major limiting factor for small nodes (i.e./ mobile phones). Memory bloat is a major downside and is currently at ~200GB in memory demand per node, well beyond most standard cost-effective mobile phones. This will only continue to increase, further consolidating mining pools that have the most expensive mining rigs.
Bitcoin Efficiency: Bitcoin is the most inefficient of all digital currency ledgers using an excessive amount of electrical power for protection of the network to DDoS attacks and forming consensus. At the Bitcoin network’s current power usage rates, it outnumbers entire industrialized nations on a daily basis. Many believe that the PoW model is not sustainable or environmentally safe. However, if sustainable methods of energy production are used, Bitcoin could become environmentally friendly.
Hashgraph Regulatory Compliance: The Hashgraph network has technical features that permit users and developers to bind both pseudonymous Hedera accounts to Verified accounts for know-your-customer (KYC) and anti-money laundering (AML) regulations. This is an opt-in feature and can be used by developers depending on pertinent regulatory requirements.
The cryptocurrency utility token of Hedera, the hbar, is not by any community standard similar to a security since it is used to protect the network. It meets the Hinman Token Standard Definition by being sufficiently decentralized and is not at risk for SEC securities fundraising since it used a regulatory-compliant SAFT with accredited investors. No ICO or ERC-20 token fund raise was used in Hashgraph’s founding.
Bitcoin Regulatory Compliance: Bitcoin is the standard by which the SEC determined that digital token assets that are sufficiently decentralized do not qualify as securities. This means that Bitcoin will not have to require every user to KYC and AML standards with each Bitcoin transaction. Additionally, Bitcoin’s distribution by mining and long tenure in market also help stabilize it from regulatory risk.
Unfortunately, Bitcoin has been used in nefarious prior illegal activities, but is less than 1% of the most criminally used and laundered currency in the world, the US dollar. Bitcoin has gained much institutional attention, is becoming a digital asset on international legacy exchanges and is likely not at great regulatory risk.
Hashgraph Development Team: Inventor of the Hashgraph algorithm and Co-Founder of Hedera, Dr. Leemon Baird is a Professor of Computer Science at the US Air Force, trained at Carnegie Mellon University for his PhD, and has been a senior scientist in several private ventures. He has experience with previous successful new startup companies, holds multiple patents and publications in computer science, machine learning and advanced mathematics.
The CEO is a seasoned entrepreneur in multinational corporations, government agencies and technology startups. He is a former Founder and CEO of two additional prior successful companies acquired by private equity. His most remarkable achievements may be his roles as Program Manager of the US Missile Defense Agency, Course Director for Cybersecurity at the US Air Force and in a private laboratory in Machine Learning.
The team of Hedera Hashgraph, LLC is well-experienced, with master-level education with a proven track record. There remarkable funding in early phases is also a major achievement for the team. Many members have ostensible and visual profiles on LinkedIn and other social media outlets.
Since Hedera has not opened main net access for public development, the developers are difficult to estimate. However, to date over 300 separate dapp projects have been developing on the Hashgraph network.
Bitcoin Development Team: The Inventor and Founder of the Bitcoin network is considered pseudonymous as Satoshi Nakamoto, but to date is completely unknown. The early Bitcoin development team is experienced in computer science and created the network in a brilliant peer-to-peer manner without revealing the identity of the Founder. Some view this fact as both interesting but puzzling, leading to an uncertainty of management and creation.
The Bitcoin open-source development team is credited with the first-in-class uncensorable peer-to-peer financial network built by many computer science volunteers and collaborators. The profiles of many team members are visible, however, because of the open-source nature of the network, there is a general vagueness to the quality and/or quantity of developers. By number, Bitcoin has less developers than the Ethereum network. There are approximately 50 software developers working and maintaining the integrity of the Bitcoin core network.
Hashgraph Decentralization: Hashgraph is a distributed ledger technology with decentralized governance, nodal topology of 39 members (Phase 1) and can scale to millions of nodes. It is censorship-free, has pseudonymous accounts and has no majority-controlling agent. The risk of member collusion relevant to all other cryptocurrencies due to multinational and multisectoral distribution of members is very low.
Hedera Hashgraph, LLC is a network solutions software company formed by the Governing Council members and has an irrevocable license to use the patented Hashgraph algorithm in perpetuity. Due to the proof-of-stake demands of bootstrapping, the Hashgraph Treasury will have the majority of hbars for the voting algorithm. This has low initial distribution and will need clarification of future disbursement after the initial 5 year lockup.
It has been stated that the Treasury will not allow profiting by the Council, but will be used for hackathons, community development, software updates and node support. The Hashgraph Governing Council will only be stewards of the Treasury and will have to act in unison to properly spread hbars in the community to prevent Sybil attacks as the network grows and the hbar earns value.
Bitcoin Decentralization: Bitcoin is considered sufficiently decentralized by the Hinman Token Standard Definition published by the US SEC. It is not controlled by a central authority, has no controls to prevent forking, and has a wide distribution of the nodal mesh of peer-to-peer hosts. However, the mining pools have consolidated over time and is under risk of collusion per community experts due to the single digit numbers of these groups.
Current estimations approximate that >75% of miners are in 6 pools, total. This is the single greatest aspect about Bitcoin that lowers its decentralization in design of incentives for miners and the demands of supercomputers, promoting mining pools. Mining “ponds” with global, multiple separate nodes hosted by common users would allow Bitcoin to be very decentralized otherwise.
The censorship-resistance of the Bitcoin is the first-in-class and is a remarkable achievement of the pseudonymous network of developers, including Satoshi Nakamoto. The fact that the US government intelligence and US Dept of Justice have been unable to permanently cease the function of the network is an extraordinary achievement of collective peer-to-peer power.
Although the mining pools remain the largest risk to date, the network design has still not permitted a double-spend or significant cessation of function. Bitcoin should always be hailed as a wonderful technological development of monetary democracy, and hopefully will always hold an esteemed value by the community for its brilliance and libertarian spirit.
Hashgraph Use Cases: Due to the multiplatform design with hbar cryptocurrency, smart contract functionality in Solidity, and secured distributed file storage, the Hashgraph network is capable of disrupting all business sectors including public and private industries. Being fundamentally an aBFT-certified network, Hedera Hashgraph will be able to accomodate global megacap commerce through micropayments, financial technology uses in digital asset and stock exchanges as well as public auctions.
Hashgraph is fast, fair and secure and has the highest throughput and best latency for a distributed ledger. This should allow global adoption in fields such as massive multiplayer online games as well as digital assets, allowing real time payments and transfers at the speed of the internet. The use cases are unlimited in fields like medicine and law, where secured and confirmed deletion of files, licensing certificate issuance and revocation with zero knowledge proofs would be invaluable.
Bitcoin Use Cases: The original intention for Bitcoin in the whitepaper was for peer-to-peer electronic cash, or a cryptographically-secure currency. The use cases of bitcoin only pertain to its extended uses as a medium of exchange (currency), store of value (money) and its derivative benefits from transferring value in a censorship manner. There is no intended file storage function, although information can be attached along transactions. There is also no smart contract functionality to the digital currency neither.
Bitcoin’s use for charity, tipping between friends, commerce (small and large purchases) and as a crisis currency in regions experiencing hyperinflation has all been proven in market. The fundamental limitations of on-chain use has reached an impasse with the developer community after many contentious forks. The use cases of micropayments and low fee transfers will never occur on-chain.
Any development such as the Lightning Network will suffer from the trilemma and degrade security and/or scale for speed. Micropayments could possibly work in this off-chain scenario, but the ability to transfer large amounts with similar features in a less secure network is fraught with risk and liquidity issues.