Hedera Hashgraph has launched its long-awaited public network, backed by some of the world’s largest corporations and promising faster transactions and greater capacity to scale than any blockchain to date.
Since December 2018, the network had been available in a testing environment to a small group of corporations and developers. As of 00:00 UTC Tuesday, anyone can open an account or build a decentralized app (dapp) on the hashgraph, which is similar to a blockchain but uses a different mechanism to achieve consensus about the state of the ledger.
With the public network now live, the Hedera treasury is set to begin distributing the system’s HBAR tokens around 01:00 UTC. The first tokens – more than 379 million – will go to investors who participated in a $124 million crowd sale that took place in three rounds from March 2018 to August 2018.
Another 1.95 million tokens will go to advisors, vendors and other participants on day one. The balance of the 50 billion supply of HBARs is to be released over the next 15 years by the network’s governing council.
Twelve cryptocurrency exchanges and over-the-counter (OTC) desks plan to list HBAR for trading: AlgoZ, BitOoda, Bering Waters, Bittrex, Galaxy Digital, GSR, Liquid, OKEx, OKCoin, OSL, Upbit and xFutures.
A year and a half in the making, the hashgraph stands out from other distributed ledger technologies (DLTs) in several ways. Its creators claim it works more efficiently than blockchains, making it more suitable for enterprises and commerce. Specifically, Hedera says the network can support up to 10,000 transactions per second, compared to 2.8 per second for bitcoin and 15 for ethereum, the two largest blockchains.
“This is the first instance globally of hashgraph being put to the test,” Hedera CEO Mance Harmon told CoinDesk. “It’s a different data structure, different technology and looks nothing like a blockchain, but solves the same kinds of problems with better security and better performance.”
Hashgraph proponents also say its proof-of-stake consensus mechanism is fairer than bitcoin’s proof-of-work, allowing transactions to come in the order they were recorded and to all settle in the same amount of time. Hedera’s code is patented rather than open-source, a condition the network says it will enforce to deter copying of the codebase or forking.
Not least of all, Hedera boasts the imprimatur of blue-chip names, with IBM, Boeing, Deutsche Telekom, Tata, Nomura and bank tech vendor FIS represented on its governing council, whose members run nodes and vote on software updates.
Praise and pans
In the lead-up to the launch, Hedera Hashgraph has gained its share of admirers and critics.
Among its fans are Steve Wilson, a principal analyst at emerging technologies advisory firm Constellation Research, who says Hedera’s size is the key to its speed.
While regular blockchains are a couple of gigabytes large, the hashgraph is smaller because it does not store all transaction history on the ledger (though it can be optionally stored on a “mirror” network). In addition to its speed, the hashgraph promises finality and instant payments as opposed to around 70 percent of transactions settling every ten minutes for bitcoin and a handful of transactions never reaching finality, Wilson said.
“If we think crypto is going to be viable for retail transactions, it’s not acceptable for you to walk out with the merchant unsure if they’ll get paid,” he said. “Hedera has a quality of service that others are not as committed to.”
That speed, however, only applies to certain kinds of transactions, said Eric Wall, the former blockchain lead at Nasdaq-owned fintech vendor Cinnober.
“A dapp requires smart contracts and since Hedera is currently throttling 10 transactions per second with smart contracts, then it doesn’t make this any more interesting than ethereum,” said Wall, who recently wrote a pair of skeptical Medium posts about Hedera.
Hedera’s consensus service is also nothing new, Wall maintained. Sidechains have also been created off of public blockchains that take advantage of the consensus strength of the underlying system.
“I can’t predict the future of what Hedera will transition to in the future, but moving away from a model that is based on economic and game theory guarantees to a trusted model is a severe reduction in the neutrality model of the system,” he said.
Link to private networks
Since October, hundreds of developers have been building on the network and 25 are now running dapps that were integrated into the mainnet prior to launch, Harmon told CoinDesk.
Nevertheless, the hashgraph is considered to be in a beta testing phase because the network still lacks the Hedera Consensus Service (HCS) and a few other features which will be included in version 1.0.
The HCS is to serve as a link between private blockchain networks and the hashgraph. It allows a hash of transactions from another network to be ordered in the Hedera network by time, showing a searchable record of when transactions occurred with the trust of a decentralized network.
For example, Certara, a drug development and decision-support company, plans to use the HCS to create “tamper-proof” recording of health data transactions while using a private network like Hyperledger Fabric to ensure privacy, said Jim Nasr, vice president of technology and innovation at Certara subsidiary Synchrogenix.
The HCS will also allow Fabric to run on top of mirror nodes that provide insights into all the transactions flowing over the hashgraph but do not participate in the consensus mechanism like a regular node.
“Getting computational trust is why you want to go down the blockchain path for healthcare,” Nasr said. “With the consensus service, your transactions finalize on the mainnet yet can still leverage a private blockchain.”
The Oldest Private Bank In UAE Taps Blockchain To Enhance Client Security
The oldest privately owned bank in UAE, the Mashreq Bank, will utilize blockchain, according to the bank’s Executive VP. By using the technology’s security and easier integration, they will create a platform for smart banking.
Mashreq Bank To Use Blockchain
Founded in 1967, Mashreq Bank has been a pioneer in many different aspects in the banking sector. Aside from being the first UAE bank to install ATMs and the first to issue debit and credit cards, the large bank will lead in blockchain adoption in the region, as well.
A local report from earlier today had the bank’s Executive Vice President and Head of Retail Banking Group, Subroto Som, speaking on the matter. He explained their stance and vision with the ongoing digital revolution in the sector. Som informed that the bank is already implementing artificial intelligence (AI) and robotics.
Additionally, he said that “in 2019, we began investing heavily in emerging technologies, such as blockchain.” As a result, they will utilize the technology’s features to launch a platform for smart banking later this year:“Our blockchain platform exemplifies technology that is secure, easy to integrate, and automates the onboarding process for our corporate clients.
A first for the region, the platform ensures the protection of customer data while providing the convenience and flexibility of smart banking. With a launch planned for the first quarter of 2020, we aim to roll out the initiative to our business clients before exploring an expansion into additional segments.”
According to Som, the blockchain platform will ensure the bank’s position as a digital banking leader in the region.You Might Also Like:
- Deutsche Bank Sees How The Internet Compares To Blockchain Technology
- Australia Readies National Blockchain Roadmap In A Strive To Push Adoption
- Goldman Sachs and Citigroup Execute Equity Swap On Blockchain Similar To Ethereum
A Blockchain-Based Electronic Mortgage System
Last year, Mashreq Bank collaborated with the Dubai Land Department in another blockchain-based product. It’s called e-mortgage, and its purpose is to speed up and strengthen the home loan registration process.
DLD’s director-general Sultan Butti bin Mejren spoke on the matter at the time. He believes that blockchain can automate and accelerate the whole process, thus decreasing the paper transactions.
“The development and launch of the new e-mortgage system comes as part of our ongoing efforts to enhance automation applications and systems in our transactions to reduce paper transactions and the number of visits.”
Central Bankers From Canada, Netherlands, Ukraine Call Blockchain Unnecessary for Digital Fiat
KYIV, UKRAINE — Central bank digital currencies (CBDCs) have been a hot topic in blockchain circles recently, but central banks are lukewarm about blockchains.
Representatives of a number of the world’s central banks discussed their CBDC projects last week in Kyiv, Ukraine. The one-day conference was arranged by the National Bank of Ukraine, or NBU, which itself is a CBDC pioneer, having run its own digital currency pilot in 2018.
The central bank wanted to test its ideas and conclusions with the banking community and stimulate the discussion, the head of its innovative development department, Roman Hartinger, told CoinDesk. The speakers included representatives of NBU’s peers from Canada, Japan, Lithuania, Finland, Netherlands, Belarus, Uruguay and South Africa.
The discussion comes at a time when the world’s two largest economies, are each seriously exploring the possibility of issuing a CBDC, although China appears to be much further down the road than the U.S.
According to a report issued in September, NBU started exploring the idea of a digital currency, named e-hryvnia after Ukraine’s national currency, as early as 2016. In 2018, the central bank tested a digital token running on a fork, or modified copy, of the Stellar blockchain.
The pilot was run with the tech startup AtticLab, fintech companies Uapay and OMP 2013 and with “Big Four” professional-services firm Deloitte as an auditor, the report says. From September to December 2018, the NBU tested the software with a limited set of participants.
The tests showed that “there are no fundamental advantages in using specifically the DLT [distributed ledger technology] to build a centralized e-hryvnia issuance system” in which NBU is the only issuer, the report says. However, the central bank does not rule out an alternative “decentralized” model, in which multiple trusted payment processors would issue e-hryvnia.
The experiment is on hold, awaiting more input from the banking community and legislation regulating digital assets in Ukraine: while there are some drafts and concepts circulated by the country’s authorities, formal laws are yet to be passed.
Cool on crypto
The skepticism about distributed ledgers was shared by Hartinger’s colleagues from the Netherlands and Canada at the Kyiv conference.
“The essence of the DLT infrastructure is that no single party should be trusted enough, but don’t we just trust a central bank to maintain the integrity of the global ledger?” said Harro Boven, policy advisor in the payments policy department of the Dutch central bank.
Scott Hendry, senior special director of fintech at Bank of Canada, which piloted its Jasper project (built on R3’s Corda DLT platform) last year, agreed that “you don’t need a DLT to make a central bank digital currency.”
“There doesn’t seem to be a lot of benefits if you look at a DLT system and the current efficient centralized system for the sole purpose of interbank payments,” Hendry said, adding that in the back office he leads, “they wouldn’t change anything” in the technology stack currently in use.
No speaker ruled out using DLT for a CBDC in principle, but none showed much enthusiasm about the tech.
A wake-up call
Then why even bother to create central bank digital currencies – the concept that initially was pitched as a trusted, government-blessed kind of cryptocurrency? The reason is Facebook’s Libra, says Jamiel Sheikh, the CEO of consulting firm Chainhouse.
While the project met strong pushback from the governments across the globe, the thought of a big private company issuing its own digital currency sent waves all around financial circles.
“The era of private money is here, and it’s something they have to pay attention to. It’s a response to a threat that can stimulate innovation,” Sheikh told CoinDesk.
Hartinger also pointed at the atypical competitive situation central banks found themselves in:
“Central banks see Big Tech issuing stablecoins, like Libra, they see this niche of digital money and now it’s the matter of who will have a money issuance prerogative, governments or the private tech companies?” Hartinger told CoinDesk.
“Libra was a wake-up call for us. Central banks have been challenged to innovate,” Harro Boven said on stage, echoing recent comments by none other than U.S. Federal Reserve chairman Jerome Powell.
A representative of one of the central banks present at the conference, who shared his thoughts with CoinDesk off stage and asked not to be identified, said Libra catalyzed a process of exploration that has been long overdue. However, he said he’s not worried about the competition from Facebook.
“People would want to use Libra if our monetary system screwed up. Our best defense is to do our job,” he said.
Dirtying their hands
Still, not all the central banks have given up on blockchains yet.
Sveriges Riksbank, the central bank of Sweden, which recently announced a pilot for a digital krona, or e-krona, together with consulting firm Accenture, is going to use R3’s Corda blockchain.
The e-krona is a kind of electronic cash for everyday use, a tool for payments between households, denominated in the national currency and accessible 24/7, Riksbank’s senior policy adviser to the payments department Bjorn Segendorf said on stage.
Segendorf told CoinDesk that the Riksbank will try out the Corda technology not because the central bank has its mind set on a blockchain-based solution – you just need to try different things to learn.
“We need to get our hands dirty,” he explained. Now it’s trying Corda; later, it can try something else.
The main point of the exercise is to be ready for the cashless future, Segendorf said, as young adults rely less and less on cash, to see what such a world looks like and how a central bank can deal with it, so that “if we need to issue a CBDC we don’t have to start from scratch.”
Blockchain Can Help UK Savers Recover $48B in Unclaimed Pensions, Says R3
Distributed ledger tech provider R3 says it’s providing pension firms with the technology to build new blockchain-based identity solutions that could help savers reclaim some of the $48 billion in lost U.K. pension pots.
According to Abbas Ali, the head of the New York firm’s digital identity unit, pension providers will be releasing their own solutions that leverage the R3 tech throughout 2020.
More than 33 million people in the U.K. have a pension. But in a study by advice firm Profile Pensions this year, 24 percent of respondents said they had likely lost track of one of their pensions.
Estimating that there are more than 1.6 million lost pension pots nationwide, each with an average value of £23,000, the study concluded that there could be as much as £37 billion (approximately $47.8 billion) worth of unclaimed pensions in the U.K. alone.
This isn’t just a British problem. The Australian Tax Office estimated that $17.5 billion AUD ($11.3 billion) lay in unclaimed pension pots in 2017–2018. In 2013, the Pension Benefit Guaranty Corporation (PBGC) said there was more than $58 billion in unclaimed pensions in the U.S.
In R3’s view, the problem boils down to identity.
“One of the biggest and most costly exercises in pension funds is identifying the user … and verifying each year that the user is still alive and entitled to these funds and managing the process,” Ali said.
Many pension providers have little option but to verify pension holders’ identities by mailing documents to their last known address or even requesting that they present themselves for registration, he said.
As a verification system, it’s full of holes. Through ill-health, commitments or distance, many people won’t be able to show up at an office so easily. Some are simply no shows. If a user fails to disclose if they’ve moved addresses, the pension provider may have lost their only way of contacting them.
Putting users in control
Blockchain could create a whole new dynamic, Ali claimed.
“We’ve built digital identity platforms with a couple of partners that are global,” he said. “We’re actually working with tech partners, the likes of Gemalto [part of the Thales Group, one of the largest identity management companies in the world], who actually are members of government-organized pension funds.”
In the legacy system, people have to create new identity profiles for each and every pension scheme they sign up to over the course of their working lives. By using blockchain, people could instead create a single identity profile, with verifiable information like passports and driving licenses, that they themselves hold and share with their pension providers, R3 claims.
“The blockchain angle essentially gives users control over their digital identity … instead of a third party providing a service, a blockchain network could potentially mean citizens are in control of their identity and organizations including government departments would exist on the network and users would be able to selectively disclose parts of their identity as needed,” Ali said.
R3’s Corda blockchain has already been used to create identity management systems. Software company Persistent launched a self-sovereign identity solution on Corda that allowed users to create and manage their own identities. Another one, Cordentity, offers identity management that can be integrated into enterprise blockchain Hyperledger.
However, pension pot administration “is definitely one of the use cases where we can find the most economic value,” Ali said. It is already being used by pensions start-up GROW Super, which helps Australians recover missing workplace pensions.
The idea is also gaining traction in government departments. In September 2019, the German government said it would launch a pilot project for a blockchain-based digital identity sometime in the future.
Why a blockchain?
But while many experts recognize the utility in a standardized digital identity profile, some have expressed skepticism over why it should leverage blockchain.
David Birch, director at electronic transactions consultancy firm Consult Hyperion, said it was not “transparently obvious” what value blockchain really added. A centralized database, in his opinion, would function just as well at allowing users to share their digital identities.
“Does it make a difference to these verifiable identities that they are stored on a distributed ledger? I don’t think it does,” Birch said.
The only difference is blockchain makes users responsible for maintaining their own identities, Birch said, but many would probably prefer a regulated third party to handle their profiles for them.
That many blockchain-based identity management systems did not have an answer for how to deal with lost private keys presented yet another danger, he added.