Hashgraph vs Ethereum
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 secure file storage in a multi-use platform.
Ethereum: Ethereum is a proof-of-work consensus algorithm with blockchain-based distributed ledger technology, using a multiple of nodes in a peer-to-peer mesh network. Ethereum has de facto governance by voluntary software developers, investors and influencers in an open-source collaborative network without a central authority.
Ethereum suffers from the trilemma, where speed, scale or security must be compromised by design to accommodate one over the others. Ethereum in present design has very low transactional speed and throughput, low scaling potential without sharding, and modest probabilistic security.
Ethereum pioneered the smart contract functionality in the cryptocurrency ecosystem, but does not offer on-chain secured file storage. Micropayments are difficult on Ethereum due to fees and transaction limitations.
Coin vs Coin
Low Latency (seconds)
High Latency (minutes)
100’s of Millions TPS/sharding
3 Phases of Node Topology
Massive Global Scalability
Minimal CPU Requirements
↑Block Size to ↑TPS
Very Limited Scale
Supercomputer Miner Race
Large Bandwidth (>100MB)
Firewall Partition Resistance
Low Collusion Risk of Gov Coun
51% Attack Risk
Vulnerable to Sybil
Vulnerable to Partitions
Collusion Risk of Mining Pools
39 Members w/ 2.56% vote/each
Max of 2 elected 3yr terms
De Facto Governance
Small Group of Influencers
No Fork Controls
Fairness of Order
Fairness of Access
Fairness of Timestamp
Fairness of Node Entry (Phase 3)
No Fair Ordering
No Fair Timestamp
Fairness of Node Entry
Proxy Staking Earnings
Virtual Voting Algorithm
Lowest Energy Consensus
Very Low Efficiency
High Energy Consensus
½ Bitcoin Energy Use
Not a Security per Hinman
No ICO or ERC-20 Token raise
Gov Council removes illegal files
Non-SEC Compliant Fundraise
Not a Security per Hinman
ICO Fundraise in 2014
Unable to delete Illegal files
Hedera Hashgraph, LLC
Very Experienced Team
Small Developer Group
Growing Social Media
Buterin, Lubin, et al
Largest Developer Group
Large Social Media Following
Most dapps of any Network
No Central Authority
39 Nodes Phase 1
1000 Nodes Phase 2
1 Million+ Nodes Phase 3
No Central Authority
No Patent Protection
>90% Hash in 5 Mining Pools
Small Group of Developers
Secured File Storage
Social Media Services
Social Media Services
Formal Coq Proof
FLP Theorem Compliant
No Formal Proof
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 does not require sharding to begin as a fully functional network.
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.
Ethereum Speed: The Ethereum network is currently capable of 15-20 TPS in a single shard, but has aspirations in the next few years to achieve greater throughput with multiple sharding solutions.
Since Ethereum uses blockchain data architecture, low throughput in a synchronized design requires sharding to achieve scaling. In comparison to legacy systems, Ethereum is unable to match or surpass the Visa network that averages 1,700 TPS, but is capable of up to 57K TPS.
Ethereum Speed Limit: Ethereum is a blockchain and therefore limited by the trilemma, which states that speed, scale or security must be degraded proportionately in order to improve even one of the three aspects. I.e./ If Ethereum wants to scale to a global level, they will have to increase latency or speed and compromise security.
Ethereum will reduce security substantially with hub-and-spoke node topology between on-chain and off-chain transactions to achieve modest scaling. The scaling debate has continued as well as ambitious plans to move to proof-of-stake consensus.
It is quite possible according to many critics that Ethereum will never be able to scale to mass global adoption. There have been year-long or more delays in the debating cycle of what to do to scale Ethereum, with the next phase to PoS estimated at 3 years to full implementation.
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.
Ethereum Scale: Ethereum has been an active mainnet since 2014 and has still not been able to achieve its ambitious original goals of global scale, high speed and throughput as well as top security. Instead, a constant stream of discussions and design proposals have been circulated in the open-source community to help discover and develop a solution to the trilemma.
Unfortunately, the trilemma that is common to every blockchain has limited Ethereum’s ability to expand its network without degrading speed or security. Although with a multisharding solution (multiple divided databases) Ethereum may be able to significantly increase its scale, the latency and decreased security would be far from ideal.
Off-chain or 2nd layer solutions are a proposal that relies on building less secure non-blockchain networks that rely on trust and would be vulnerable to hacks and double-spends. Understanding the compromise that the trilemma imposes on all blockchain data design, helps one realize the predicament that Ethereum is in, despite its wildly successful financial gathering and developer community.
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.
Ethereum Security: Using a proof-of-work design, Ethereum is Byzantine Fault Tolerant (BFT) through Nakamoto consensus, which is robust but uses probabilistic finality of transactions. This means that any transaction in the 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.
Currently, exchanges require up to 25-30 confirmation blocks to ensure higher probability of security against double spends, lasting up to 3-5 minutes. Due to PoW, Ethereum is resilient to DDoS attacks since the higher fees become costly to an attacker with each transaction to the network.
Ethereum is vulnerable to Malicious Network Partition attacks due to the high concentration of miners into a few pools, nearly 90% of the hashrate (computing power) is in 5 mining pools. This means that if a country, like China with undemocratic central controls, could exclude a large part of the network with a firewall. The remainder of the Ether network would be reduced to a number that could then be attacked with a smaller percent majority (34%) called a Sybil attack. Otherwise, an attacker would have to use a 51% attack which is much more costly and helps prevent a coordinated attack.
Ethereum has suffered from a major costly development hack with the Dao attack that eventually led to the Ethereum Classic fork. Additionally, a major hack on the Ether wallet service was also executed disabling the wallets of many users by a DDoS attack. Other bugs have been discovered in some private key generators that made ‘guessing’ the keys easy and were responsible for major theft of Ether from the compromised wallets with millions USD lost.
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.
Ethereum Stability: Ethereum has remained stable as a global public network since its debut in 2014. Despite the Dao hack, Ether as a blockchain network has remained intact for several years without a major security breach. The de facto governance is a statement that means that no deliberate governance exists, allowing anyone to influence and shape the network. Since it is unshaped from inception, Ethereum governance has evolved into a mix of investors, influencers, developers and miners that act to guide the source code improvements and stabilize the ecosystem.
Recently, many internally frustrated Ethereum developers and long-standing insiders have spoken out in social media about the complete lack of governance and the frustrating timelines of the developers. Many believe that Ethereum cannot scale to mass adoption and a significant part is because of the small controlling minority of de facto governance that have failed to resolve all the major issues of the blockchain network.
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 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.
Ethereum Fairness: The Ethereum 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.
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).
Ethereum Consensus: Ethereum uses an incentivized proof-of-work by mining by using CPU computational power to solve complex math problems to win the chance of entering the next block of transactions into the blockchain. Ether is the reward token after mining that rewards a node for its contribution to the distributed shared state of transactions.
Ethereum nevers arrives at complete deterministic finality of transaction, but has to use an increasing probability that the blockchain is the true state of everything over time. Each confirmation block increase the confidence of consensus, but may take hours to arrive at a high likelihood of true consensus. This is well below bank-grade security of legacy database banking systems and would not be able to replace them.
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 ~182 GB 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.
Ethereum Efficiency: Ethereum is moderately inefficient in its PoW design, using as much electricity as small nations, like Iceland. Sharing similarities with all PoW blockchains, Ethereum suffers from low throughput and modest security at the cost of power consumption. This is a significant problem in an age of growing awareness of global ecological design of energy consumption. This places a large risk on the potential on Ethereum. However, the PoS design currently being proposed could help reduce this power use, but will certainly take 2-3 years or more in implementation.
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.
Ethereum Regulatory Compliance: The Ethereum network used a public fundraise in 2014 with a Switzerland organization to raise the initial amount to fund the network. Efforts were made to avoid using an SEC-compliant accredited investor fund raise, but were also meant to be more equal access for others.
In the end, Ethereum has remained in an indeterminate security status until the Hinman Token Standard Definition, which specifically mentions Ether as decentralized. For the SEC this means, that since no central party can benefit from fundraise, the network must be distributed enough to avoid that manipulation. The SEC may not take action on the non-profit Ethereum Foundation at this point, but the fact remains that no controls are in place to promote regulatory compliance in the network, apart from the groupthink decision-making of the open-source developer community.
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 in 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.
Ethereum Development Team: There is a concern that the open-source development of Ethereum is controlled by a small cadre of developers, investors and influencers. In fact, some have even considered Ethereum ‘centralized’ by this cadre and the ‘benevolent’ dictator Vitalik Buterin. However, the developer community of Ethereum boasts one of the largest developer communities in all of crypto. This lateral co-sourcing between peers has helped accelerate the network’s growth and adoption despite the technical limitations of blockchain.
Recently, the developers of Ethereum have shared concerns with the programs elaborate scaling designs and the feasibility of each. Some insiders have even left the platform in a dramatic manner broadcast on social media due to these conflicts. Ethereum faces an existential risk that rival networks could reach the ideal position of performance and features and render Ether obsolete. This is a significant risk for the network despite its popularity, marketcap and developer community. Many rival altcoin projects have developed their platforms in the same smart contract language as Ether in an effort to directly port or transfer their projects to a faster network. This is a risk that may be critical problem as the distributed technology ecosystem matures and solves problems like the trilemma.
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.
Ethereum Decentralization: By nodal topology, or distribution, Ethereum is very decentralized as a cryptocurrency network. However, the de facto governance and influence of a few insiders, founders, developers, the network controls remains undefined to the community. This lack of strong governance is a concern for large enterprises that invest into networks with large amounts of capital and cannot risk being a part of a network that could be changed by a few undefined people without recourse.
Additionally, the mining pools, or groups of supercomputer blockchain validating nodes, have become more centralized in Ethereum than in any other network. At current estimation, Ethereum is calculated to have only 5 major mining pools with nearly 90% of the total computation power of the network (hashrate). This is a significant risk for attacks, collusion, selfish miner activity and precludes enterprise adoption.
The node number is lower than before and stands near 8 thousand global nodes. This is sufficiently decentralized and is resilient to various attacks. However, the largest concern of centralization of Ethereum by large corporations is the risk of network splitting, or forking.
If a major multinational megacap company spends millions of dollars into an application for the Ethereum network and soon after rollout a fork occurs due to weak governance, the company will be at risk. Forks in cryptocurrency have proven to be destructive of the network effect, the branding and instills fear and uncertainty in the market. Ethereum’s absence of fork controls from a commercial perspective is fraught with risk and is like a major barrier to adoption.
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.
Ethereum Use Cases: The clearest use case for the Ethereum network is its development of the first global fund raising platform in a secured public network. The ERC-20 standard that was proposed by the developer community expanded into the first massive, global multibillion dollar initial coin offering ecosystem. Other uses of Ethereum has been as a cryptocurrency, permitting better performance than bitcoin with smart contract features.
The ERC-721 token standard also spearheaded the first non-fungible token (NFT) with the creation of the sensational CryptoKitties. This is a new direction of digital assets that are not similar in value between the non-fungible tokens as the Ethereum fungible token, ether is equivalent. There is a large emerging market based on this standard, however, the Ethereum network currently is mission-critically limited by this network activity.
During the CryptoKitty frenzy in 2017, the entire network was slowed and fees escalated. Despite the success of the NFT proof-of-concept project, it has become clear that the current Ethereum network is incapable of sustaining a large or diverse ecosystem of digital assets on its platform. Although, Ethereum has introduced an amazing diversity of use cases for digital currency and asset environment, network design as it stands will not globally scale without a radically new approach. There is a design in place, however, the roadmap make take years to implement, test and adopt as an open-source project.