Get ready for a new technology that will enable a truly free, peer-to-peer economy far better than blockchain ever can

I've seen loads of articles on blockchain, but usually they suck in explaining anything in a way that even my mother could understand it. So it's now time to explain the Hashgraph / blockchain problem and solution in a really simple way that everyone should get. I won't get into the complex bits and math because that's not the goal here, the goal is to just explain the basics as well as to provide you some great resources if you want to understand Hashgraph in more detail.

Below is an excellent video by Mike Maloney on the topic that I highly encourage you watch, but I will also summarize most of what Mike gives in the video as well as additional insights that I think he didn't emphasize enough.

The basics for newbies that might not already understand this stuff (ignore if you aren't a newbie)

• At the heart of it, a cryptocurrency is nothing more than a shared ledger of transactions (called a Distributed Ledger Technology or a DLT) with a unit of value (usually called a "coin" or "token") that it is transacted via shared recording and verification of transactions on the ledger. At it's essence, every cryptocurrency is simply a ledger of transactions in units of value called "coins" or "tokens". That's all it is at its core.

• A blockchain is a specific type of algorithm / data structure utilized to manage a shared ledger. Just about any algorithm / data structure could be used to manage a shared ledger, but when you have millions or billions of machines accessing a ledger, it becomes a really difficult problem to solve. Blockchain was the first solution devised to solve this problem and was implemented in Bitcoin.

• The most difficult problem is how to make sure you can ensure reliability of entries with people you don't know or trust. So if you have millions of computers and some are malicious, how can you ensure they aren't trying to deceive the community and add wrong entries in the ledger to steal from or sabotage the ledger? The solution should provide something known as "Asynchronous Byzantine Fault Tolerance." There's an explanation of this is in the video above by Mike Maloney as well as in the Nasdaq article here on Byzantine Fault Tolerance.

• Bitcoin developed the idea of "mining", where miners are responsible to solve the problem of coming to consensus on transactions and thereby safeguarding the ledger. It is done in a way that ensures that the network is probabilistically correct through solving complex hashes and through multiple confirmations of transactions. It is an insanely expensive computational exercise that is totally unnecessary based upon newer algorithms / data structures.

• Mining always drives the incentive to create larger and bigger pools that could then manipulate the blockchain. The Bitcoin blockchain can be "taken over" if more than 50% of the miners are all owned by the same entity. They could they swap out the blockchain with a different version of the blockchain that could allow the theft of all Bitcoins. (There is also a 34% attack that can happen with blockchains as well, but we'll come to that later.)

• Some blockchains (like Bitcoin) even have been designed to go slow - Huh? Why would they do this? This is because as the chain of blocks is being built, they can't have the competing chains grow faster than they can verify the transactions, otherwise they would lose control of the growth of the chains and never catch up. The incredibly complex and expensive mining process slows the blockchain down enough so that there is time to reach consensus before chains are built further. Talk about a worthless waste of time and energy. (See Leemon Baird's Harvard presentation below for more on this.)

• A "wallet" is thoroughly misnamed. It is an application to hold your public and private keys which allows you to read as well as transact on the shared ledger. No coins or tokens are ever contained in your "wallet"

Enter Hashgraph and Directed Acyclic Graph (DAG) algorithms / data structures

Again, I won't go into all the details of Hashgraph and DAGs, but will leave you resources to understand them in detail such as the three videos above. Below are some of the key points that makes Hashgraph unique as a truly inexpensive, secure, and fully peer-to-peer technology:

• Hashgraph is both an algorithm and data structure that doesn't use blocks or wait for blocks to be confirmed. There are no blocks of transactions, but instead streams of events that can be segregated into clear transactions. Since there is no waiting for blocks, Hashgraph can do hundreds of thousands of transactions per second. In comparison, Bitcoin can do 7 transactions per second and Ethereum 15 transactions per second, but even these rates are at their best performance and not their worst.

• Hashgraph requires no miners and is computationally very inexpensive. Hashgraph uses something called the "gossip protocol." The gossip protocol is extremely efficient in sharing information between computers since basically it's just what it says it is. Each machine tells each other machine it can "see" all it knows about the specific transactional events they are concerned with. This is in turn used to come up with a consensus image of all transactions. It is so efficient that even a smartphone can easily participate in updating the hashgraph. No insanely expensive mining rigs are required. No electricity to power a small country is required either.

• Hashgraph consensus is mathematically guaranteed vs. Bitcoin which is only probabilistic. Hashgraph is unique in that it uses a protocol called "Gossip about Gossip" where it adds and sends additional information about the "gossip" history to each participant. This provides enough information, along with something called "virtual voting", so that assured consensus (Asynchronous Byzantine Fault Tolerance) can be reached by mathematical proof within seconds. Bitcoin can never achieve this and therefore requires numerous confirmations to get closer and closer to being sure that consensus is achieved on any transaction that has occurred. This incredibly improves speed, efficiency, security, fairness, and even stops hard forks. It basically blows away any other technology out there for consensus purposes.

• Hashgraph is completely fair - So the immediate question that arises here is, "What is "fairness?" Fairness in a distributed ledger environment is where the ordering of the transactions is correct and therefore "fair". If someone could alter the order of transactions in an auction or a securities exchange, then it's not fair since someone was given preferential treatment and this was not based upon the timing of their bids and/or asks. Hashgraph can ensure that this never happens.

• Hashgraph is not the same as other Directed Acyclic Graphs (DAGs). The Hashgraph protocol of using "Gossip about Gossip" is patented and unique. I've heard many people compare IOTA to Hashgraph, but it's nowhere near Hashgraph in performance. Other DAGs that exist (e.g. IOTA, Byteball, RaiBlocks, etc.) have the advantage as well that there are no miners and no use of blocks, but this is where the similarities basically stop. Hashgraph can run truly peer to peer, but the other DAGs use nodes and frankly, IOTA's performance is known by many as a complete disaster. It has been a highly questionable marketing campaign that has sold IOTA as being something similar to Hashgraph in terms of performance and security. It's simply not anywhere close.

• Hashgraph is encryption agnostic - Any encryption / privacy method can be added on top of Hashgraph for a cryptocurrency solution. That can even be quantum computer resistant encryption and privacy protocols. This makes Hashgraph incredibly safe as well.

• There is only one major weakness to Hashgraph and that there is something called a 34% attack. When more than one third of the nodes are controlled by a single actor, then the same style of attack as the the Bitcoin 51% attack mentioned earlier can occur on Hashgraph. What most people fail to realize (and this is pointed out by Leemon Baird in the 1st video above) is that Bitcoin can also suffer from a 34% as well as a 51% attack. Therefore Hashgraph is just as safe as any other blockchain solution out there. The advantage with Hashgraph over a blockchain like Bitcoin is that because it is computationally cheap, you don't get the same concentration risk that you do with miners (think Chinese Bitcoin miners), however, it's also possible that a state actor could add insane amounts of cheap nodes on the network to hijack the network as well. Yet, this potential problem also exists with other blockchains. The Hashgraph team is working on solutions for such issues as well, but right now they are at least as good as any blockchain out there in this regard.

The vision of Hashgraph

The best person to give the vision of Hashgraph is it's inventor, Leemon Baird. He outlines it in the video above and the vision is extremely compelling. The key points to this vision are as follows:

• Using true peer-to-peer technology to disintermediate everything! - The history of the control of humanity is based upon key monopolies and oligopolies that control all the key facilities of humanity. They then can manipulate and control these to gain all the wealth and power in society. These monopolies include money creation, securities trading, ledgers of ownership, communications channels, etc. By having a completely fair and fully peer-to-peer network for these activities (which is what Hashgraph enables and blockchains can't), then no select actors can monopolize, manipulate, hijack, or control these channels. This means all the traditional intermediaries such as banks, stock exchanges, government organisations, etc. are taken out of the picture. They are no longer needed and therefore can no longer hijack the systems that humanity uses for their own interests. Blockchain still can't yet fully guarantee this in it's current technological state. Hashgraph can.

• New social communities / worlds - Social interactions with likeminded people that are totally decentralized and secure will provide the basis for a radical transformation of society to totally free expression, interaction, and even new legal and business models within these communities. Hashgraph looks to enable that anyone can develop these newly at any time. Since Hashgraph is incredibly cheap to use, this becomes a real possibility. Disintermediation of systems like Facebook is the goal here.

• No more Google as a search engine intermediary - Disintermediate Google with a massive distributed service directory that publishes the latest on every information and service available.

Hopefully you can agree that Hashgraph is an extremely compelling model. I very much look forward to seeing public solutions such as new cryptocurrencies based upon it in the near future.

Please do contribute you questions and comments below. I will be sure to update the above post accordingly as it is still available for editing in Steemit.