How is Hedera Hashgraph Fair?

by Apr 18, 2019Hedera Hashgraph

Hedera Hashgraph fairness in market

Summary: How the structure of the Hashgraph algorithm can make Hedera fair is through a breakthrough consensus mechanism that allows all users fairness of access, fairness of order and fairness of timestamp. This allows Hedera the public distributed ledger platform built on the Hashgraph consensus mechanism to extend itself into millions of use cases, including fair auctions, fair stock trading, fair transaction, fair access to first-come, first-serve opportunities as well as many many more.

No other distributed ledger technology (DLT) currently in all of blockchain or directed acyclic graphs (DAG) can be like Hashgraph in fairness. The blockchain consensus method uses many confirmation blocks in order to secure the network in addition to using proof-of-work. However, due to the scrambled ordering of transactions amongst miners, blockchains do not allow for a consistent or predictable ordering between any two block producers.

Therefore a timestamp in blockchain is only pertinent for a single transaction based on the total block’s timestamp and not within a block. This means that the order of transaction in a block is arbitrary.This is also due to the unfair blockchain design of “gas” or transaction fee variability that is up to a user to offer more towards miners to get their transaction ahead of others. This is blockchain unfairness of ordering and access and creates an environment of miner bribery.

Finally, timestamping in blockchain suffers from a time resolution that is both blurry and vague. For example, in the bitcoin network, if a stock purchase was to be recorded in a block the timestamp would only state that it occurred approximately 10 min or more since the prior. Considering the high-speed transactional rate of the current stock market, no blockchain could ever hope to support such use cases. Auctions, time-sensitive concert ticket purchases and many other time- dependent purchase could never be secured fairly by any blockchain.

There are three ways that makes Hashgraph fair. Fair ordering of transactions in Hedera Hashgraph occurs because the nature of transactions is not bundled into any kind of block. Instead the entire Hedera network operates in parallel in a non-synchronized or asynchronous manner. This means that any transaction is free to enter the Hashgraph network and be finalized without any rearranging of timestamp or order. This is Hashgraph fairness and permits a numerous amount of fair use cases.

Hashgraph fair timestamps are created network wide allowing for a globally distributed sense of ordering as well as a perfect sense of time for each transaction independent of others. No order or transaction is ever bribed or rearranged by a node to a different rank order no matter what the transaction fee is. The Hashgraph fee schedule is a separate topic that is determined by the Governing Council and network nodes system wide.

For instance, if an international auction occurred and a person using the Hedera public DLT signed an order for a bid, the transaction would propagate to all network nodes within seconds and a timestamp of each node would be tabulated. Then the median, or middle value, of the timestamp list would be selected as the central timestamp relative to the entire globally distributed network. No one geographic location would have a network timestamp advantage. This is fairness that is only possible in the Hedera Hashgraph network.

Conclusion: In order for any blockchain or distributed ledger technology to produce fair ordering, fair access and fair timestamps they must be based on a fair algorithm and consensus mechanism. No blockchain is currently capable of achieving this kind of fairness regardless of speed, scale, or security.

What gives Hashgraph fair order, fair access and fair timestamps is its uniques consensus mechanism which is based on asynchronous parallel processing of events without any sense of bribery or arbitrary rearranging of transactions into blocks. Only blockchains use this bundling method of orders or transactions to secure the network at the cost of fairness. The consensus method that makes Hedera Hashgraph fair is what also will allow it to become the dominant public decentralized network for hundreds of thousands, if not millions of use cases.

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