Hedera hash graph and iota

At the borders of the blockchain landscape, we find two very hyped technologies. Some say these are the future of blockchain technology. Others say they are nothing but a big marketing hype. Let’s see what this is all about.


Hedera Hashgraph is based upon the gossip protocol. All computers in the network talk to each other and tell each other not only what they know, but also what they know other nodes know. This also means that every computer in the network can speak for all other computers. That’s how the Hashgraph virtual voting mechanism works.

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At the time of voting, all computers that started a sequence of gossip are considered witnesses. So when Alice tells Bob who tells Eve, Alice is a witness. Witnesses can decide amongst each other who is a ‘famous witness’. One witness votes positive for another one when they are connected to each other through a stream of gossip. So when Eve in turn starts a stream of gossip that passes Alice, they will consider each other famous witnesses.

This voting system allows Hashgraph to process transactions much faster than public blockchains that require proof of work (PoW). In a PoW blockchain like Ethereum, computers have to show that they have a lot of computing power, which requires time. However, Hashgraph is not the only technology that seeks to solve the issue of slow PoW blockchains.

Private blockchains as an alternative

You could for example setup a private blockchain network, so you can decide for yourself how much computers can join the network. Since your network will be smaller, processing can go faster. Other than that, private blockchain setups also often seek to replace PoW by other consensus mechanisms that run faster. And finally, private networks don’t require you to pay (cryptocurrencies) for every transaction, so they can also be a more fair solution for data exchange.

This way most private blockchains offer the same advantages as Hashgraph. Since a lot of private blockchains have free open source code, they will probably be chosen over Hashgraph, which does not share all code, is not free to use and is owned by a consortium of companies

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Every new transaction in IOTA has to verify 2 older transactions. “Verifying” here means running a proof of work algorithm, just like in public blockchains. However, the difficulty level of the PoW in IOTA is much lower than it is in public chains. Once the new transaction has verified two older transactions, it also has to wait for two verifications before it is final.

This way of working creates a very lightweight and fast setup that can even run on IoT and mobile devices. However, it comes at the cost of delivering less security since the PoW is less difficult. That is why transactions only receive final validity when they are confirmed by a milestone transaction, which is issued by a node owned by the IOTA foundation. At the time of writing, IOTA does not have a smart contract functionality, which means the network can only be used for sending assets between parties and not to execute more complex logic.


In the end, what matters is that the idea of blockchain made developers and researchers think about secure decentralized setups and encryption. However, each of these setups require a lot of research and usually also a lot of processing power, for which someone has to pay the bill. Public blockchain networks solve it by using cryptocurrencies, private networks seek their own ways of having a certain return on investment, like requiring buy-in. Yet, the idea of decentralization can be an invitation for enterprises to think about business processes from a different angle, whereas the research concerning encryption can deliver us new ways of securing data.