Hashgraph

Hashgraph is a consensus algorithm for distributed ledger technology that puts transactions into an agreed order without using blocks, miners or a leader. Computers in the network share what they know by "gossiping" with each other at random, and each one keeps a record of who told what to whom. From that shared record every computer can work out, on its own, the order the whole network agrees on.

The algorithm was described by Leemon Baird in a technical report dated 31 May 2016 and was developed at his company, Swirlds. It is best known as the engine of the Hedera (HBAR) public network. Hashgraph is often presented as an alternative to the blockchain, although both solve the same problem: reaching consensus on one history among parties that do not fully trust each other.

Picture a group of friends trying to agree on who arrived at a party first. Instead of electing a referee, each person writes in a notebook every time they chat with someone: who they spoke to, when, and what they heard. When two friends talk, they also compare notebooks. After a while everyone's notebook holds roughly the same story of every conversation.

Because each person can see what everyone else heard and when, they can each predict how the others would vote on the order of arrivals, without actually holding a vote. They all reach the same answer independently. That is the core idea of hashgraph: gossip spreads the information, and the record of the gossip itself lets everyone reach the same conclusion.

Baird's paper describes two linked ideas, which he called "gossip about gossip" and "virtual voting".

• Events. Each time one participant syncs with another, it creates an "event" containing new transactions, a timestamp, a digital signature and the hash of two earlier events: its own last event and the last event it received from the other party.
• The graph. Because each event points to two parents by hash, the events form a directed graph (the "hashgraph") that every node builds up locally. The hash links make the history tamper-evident, in the same way that linked blocks do on a chain.
• Virtual voting. Nodes do not send votes over the network. Each one calculates how every other node would have voted, given what that node knew at each point in the graph. Since all honest nodes end up with the same graph, they reach the same result.
• Consensus timestamps. Each transaction gets a consensus time equal to the median of the times at which the network's nodes first received it. That median is what fixes the final order.

The paper proves the algorithm is asynchronous Byzantine fault tolerant: it keeps working correctly as long as fewer than one-third of participants are faulty or dishonest, even when messages are delayed for arbitrary periods. That is the same bound found in the classic Byzantine Generals Problem and in protocols such as Practical Byzantine Fault Tolerance (PBFT).

In Proof of Work (PoW) chains such as Bitcoin, miners race to produce the next block, and competing blocks are discarded when the chain forks. Settlement is therefore gradual: each extra block makes reversal less likely, a property called probabilistic finality. In hashgraph no work is thrown away, because every event becomes part of the graph, and once a transaction's order is decided it is final. Hedera markets this as fast deterministic finality measured in seconds.

The paper also stresses fairness. Because order comes from the median receipt time across the network, a single participant has a hard time pushing its own transaction ahead of someone else's. That is meant to limit front-running, which on block-based chains often depends on whoever builds the block choosing the order. Claims about speed should be read with care, though: raw transactions per second figures depend on the number of nodes, network conditions and the type of transaction.

Hedera opened its main network to the public in 2019. It weights votes by staked HBAR, a form of Proof of Stake (PoS), and has been run by a governing council of large companies and institutions that operate the consensus nodes. Because only approved operators run those nodes, Hedera has worked more like a permissioned network at the consensus layer, even though anyone can send transactions to it.

Hashgraph was originally patented and licensed by Swirlds. In January 2022 the Hedera Governing Council voted to buy the hashgraph intellectual property from Swirlds and to release the code as open source. The platform was published under the Apache 2.0 licence in August 2022. In September 2024 the codebase was contributed to the Linux Foundation as the vendor-neutral project Hiero.

• Efficiency. Gossip adds little traffic beyond the transactions themselves, and there is no energy-intensive mining.
• Finality and fairness. Supporters point to mathematically proven Byzantine fault tolerance and an order that is hard for one party to manipulate.
• Decentralisation concerns. Critics note that a small, approved group of council members ran the consensus nodes, which puts Hedera closer to a consortium ledger than to open networks such as public blockchains.
• Licensing history. Before 2022 the patents limited who could build on the algorithm, which kept the developer community small compared with blockchain projects.
• Scale of the validator set. Virtual voting needs every node to track every other node's view, which is easier with a modest number of known nodes than with thousands of anonymous ones.

Hashgraph is one of several ledger designs that are not chains of blocks. Others use directed acyclic graphs or Federated Byzantine Agreement (FBA). They show that "distributed ledger" is a wider category than "blockchain", a point also covered in the entries on distributed ledgers and sharding.

• The Swirlds Hashgraph Consensus Algorithm (Leemon Baird, 2016)
• Hiero (Linux Foundation Decentralized Trust)