Unless you’ve been living under a rock these past couple of weeks, you’ll be aware of the hoopla around Facebook Libra. This being Mark Zuckerberg and company, not everyone is a fan. Take, for instance, blockchain venture Hedera Hashgraph which has taken a swipe at the social media giant in a Wall Street Journal ad. Coin Rivet caught up with CEO, Mance Harmon, to discuss the thinking behind this move and the “huge steps’ being made by his venture.
Coin Rivet: At first glance, the Facebook WSJ ad looks like a bit of fun. But there is a serious message at the heart of it. Why did you decide to go down this route?
MH: While the advertisement is, of course, in good humour, there is also a strong motivation for why we took this direction. When we founded Hedera in 2017, we knew that we were setting a new industry standard, which one day future projects would also aspire to.
We spoke with David Marcus of Facebook in February 2018, and shared our vision for Hedera, discussing aspects of the technology, the importance of a governing council, and more. Evidently, a lot of what we discussed was echoed in Facebook’s Libra, validating our approach. This is a positive development for the industry.
However, while we welcome Libra to the market we helped pioneer, we believe our governance model, security and performance are superior to it. We want the world to know there is a faster, fairer, more secure alternative out there.
Coin Rivet: Have you received a response from Facebook and what has been the general reaction to the ad?
MH: No comment on Facebook. In general, we have seen a positive reaction to the ad, particularly among our community members. We tried to make a light-hearted comparison between Libra and Hedera, particularly highlighting the similarities in governance models, and I believe it has been well-received.
Coin Rivet: Libra, blockchain without the block and the chain. Discuss.
MH: Both Hedera Hashgraph (and Libra, as currently described) are a Replicated State Machine. This means that we derive (and guarantee) state without keeping all transaction history on ledger.
Therefore, the current state of the Hedera ledger can be much smaller than the entire history of the ledger. The result is less of a storage burden, you don’t need as much compute or storage to run a node, so over time, anyone will be able to run a Hedera node (no mining rig required). This is why Hedera can be completely decentralised, and inherently more so than previous generations of distributed ledgers, over time.
“While we welcome Libra to the market we helped pioneer, we believe our governance model, security and performance are superior to it. We want the world to know there is a faster, fairer, more secure alternative out there”
Coin Rivet: You said in a recent blog post: “Facebook has set some high table stakes, and we believe we have the right approach and the necessary technology to surpass those.” Could you elaborate upon this?
MH: We anticipate the world of crypto will change dramatically with the Facebook Libra announcement. While the crypto market has a global presence, it is still a niche community. Libra will introduce crypto to a much broader market than what currently exists, and this could be hugely impactful in boosting financial inclusion and streamlining global remittances.
In addition, the Libra whitepaper has been authored by 53 very bright minds, from academics to computer scientists and economists. The outcome is a cryptocurrency that boasts some interesting and innovative features, and we are thrilled that some of those mirror our own. But we believe we have the governance, security and speed to support the next generation of consumer and enterprise applications.
Firstly, if we look at governance, it’s understandable why Libra has opted to decentralise voting rights to an association of leading enterprises – this is exactly the model we pioneered. However, based on initial review of the Libra whitepaper, it appears that the association members are not term limited, and can be re-elected indefinitely. Term limits are an important check on the power of any individual member of a governing council, and term limits incentivise companies to make decisions that are not just in their own interest.
Governing Council membership shouldn’t require organisations to put up millions of dollars up front and it definitely shouldn’t let them receive dividends or profits. In addition, membership should be term limited, to incentivise members to make decisions that are in the best long-term interests of the ledger. This is a much more open and accessible model of decentralisation.
Coin Rivet: How about Libra’s security?
MH: The blockchain achieves BFT (not ABFT), and because it is still a leader-based system, it is inherently unfair and vulnerable to DDoS attacks. Hedera Hashgraph is the only major ledger mathematically proven to be ABFT, the gold standard for security, which make us much more resilient to DDoS and other attacks.
In addition, Hedera’s performance already exceeds that quoted by Libra. Our testnets have been running 10,000 payment transactions per second, and while we will throttle the network at open access, we expect to easily go beyond this in the near future.
And finally, we have the Hedera Consensus Service, which is functionality that no other public distributed ledger has, and quite frankly no other ledger wants to do because it pushes a huge amount of transactions through the network (and most networks can’t keep up with that TPS load). The Hedera Consensus Service makes it easy and cost effective to perform trusted, decentralised ordering within any application by using Hedera. We will become the connection point between private and public ledgers, providing the distributed trust of a public network, with the cost-efficiencies and privacy of a private network.
Unlike the more opaque vision laid out by Libra, we will follow a clearly defined path from permissioned to fully permissionless. We plan to have hundreds of thousands of globally distributed nodes at scale. Hedera will be faster, fairer and more secure. And we will be publicly available this summer.
There is no market without competition. We are ready to compete.
Coin Rivet: What else can we expect to see from Hedera in 2019?
MH: In February of this year we announced the first members of our Governing Council, DLA Piper, Nomura Holdings, Swisscom Blockchain, Deutsche Telekom, and Magazine Luiza. We will soon announce another round of governing council members, as more world-renowned organisations join us. Eventually, the number of council members will reach 39, from a huge variety of industries and sectors. These organisations will help to grow Hedera and continue to deliver an unmatched combination of performance and security.
In addition, we’ll be making the Hedera Consensus Service (HCS) available for developers. HCS makes it possible for existing centralised platforms (like existing auction sites, stock exchanges, and MMO games) to achieve the trust of being decentralised while still having the privacy and performance of being centralized. Also, applications using DLT platforms like Hyperledger can use HCS with all the benefits of a public network. Developers interested in learning more about the service can watch the webinar on it with Dr. Leemon Baird (CTO/Co-Founder of Hedera) and Bryan Gross (Principle Product Manager, IBM Blockchain Platform) here.
And of course, Phase II of Hedera’s community testing has begun. Once that is complete and any necessary adjustments made, the network will be made available (open access) to the public this summer. Open access is when the Hedera mainnet beta will be available to anyone that is eligible to create an account, and create accounts for others, without having to interact with Hedera directly. This is a huge step for our project and we are very excited to share our work with the public.