7 Reasons Why Hedera Hashgraph will Fail

Distributed ledger technology (DLT) has revolutionized the way we conduct transactions and exchange data. With the rise of blockchain technology, it became possible to have a decentralized system that could validate and verify transactions without the need for intermediaries like banks.

However, as the number of users grew, the limitations of blockchain became apparent, including low transaction throughput and high latency. To address these issues, a new DLT called Hedera Hashgraph was developed.

Hedera Hashgraph is a public distributed ledger system that claims to be faster, fairer, and more secure than existing blockchains.

It uses a consensus algorithm called gossip about gossip (GAG) to achieve high throughput and low latency, making it suitable for high-performance applications.

How does Hedera Hashgraph work?

Hedera Hashgraph Logo Wallpaper

Hedera Hashgraph is a decentralized public ledger technology that uses a directed acyclic graph (DAG) to store transactions. Unlike traditional blockchain technology, which stores transactions in a linear and chronological order, a DAG stores transactions in a non-linear structure where each transaction is linked to its predecessors and successors.

The DAG structure allows multiple transactions to be processed in parallel, improving the transaction throughput and reducing the overall transaction confirmation time. Hedera Hashgraph uses a consensus algorithm called GAG (gossip about gossip) (where as blockchain technology requires miners to validate transactions).

GAG algorithm is a virtual voting mechanism in which each node in the network randomly selects other nodes and sends them a message containing its opinion on a specific transaction. When a node receives a message, it updates its own opinion on the transaction according to the received message.

The node then gossips about the message it received to other randomly selected nodes until all nodes in the network have reached a consensus on the transaction.

Why Hedera Hashgraph Will Fail?

Just as the future of Dogecoin is a subject of great debate, wrapped in unpredictability, so too is the future of Hedera Hashgraph. Both of these digital assets demonstrate the high-risk, high-reward potential that characterizes the emerging world of cryptocurrencies.

However, while Dogecoin started as a meme and managed to garner substantial attention through social media hype, Hedera Hashgraph presents itself as a more serious endeavor, aimed at reimagining how distributed consensus is achieved.

Yet, despite this difference in their initial presentation, Hedera Hashgraph faces its own set of considerable challenges that make its future uncertain.

To answer the question of whether Hedera Hashgraph will fail or succeed, let’s first address a few aspects of Hedera:

  1. Transaction Speed and Volume: Hedera needs to handle a very high number of transactions per second (TPS) for it to succeed. Indeed, scalability is a key factor for any blockchain-based system’s success. Hedera can theoretically handle a high TPS. However, actual demand and use-cases would determine the volume required.
  2. Permissionless Nodes & Sharding: Concerns are raised about Hedera possibly remaining centralized if it doesn’t enable permissionless nodes and successful sharding. Hedera was planning to implement both permissionless nodes and sharding, but the practical execution and success of these updates remain to be seen.
  3. Competition with Ethereum: There are fears about Ethereum becoming faster and cheaper with layer 2 solutions and Ethereum 2.0, thereby attracting developers to build on it instead of Hedera. While Hedera has certain advantages like ABFT consensus and finality, the outcome depends on various factors like developer adoption, use cases, network effects, and community support.
  4. Enterprise Adoption: There are concerns about whether enterprises truly need distributed technology over traditional databases. The value proposition of distributed ledger technology (DLT) extends beyond just a database alternative—it provides trust, transparency, immutability, and disintermediation, which can be beneficial in many sectors.
  5. Hedera Council Transparency: There is a lack of transparency from Hedera’s governing council. As a governing model, the council can attract criticism regarding centralization and opacity, but it also brings stability and can foster enterprise adoption. Finding a balance between transparency, decentralization, and governance efficiency is a challenge for Hedera and similar platforms.
  6. Tokenomics: Criticisms are also raised regarding Hedera’s token economics, including the distribution of tokens and the selling pressure this might create. A sound token economy is essential for any cryptocurrency’s long-term sustainability and community growth. Hedera’s strategy aims to foster network use and stability, but some users may perceive it differently.
  7. General Perception and Adoption: Hedera is perceived as a ‘corporate’ cryptocurrency, which could impact its adoption within the broader crypto community. Perception can indeed affect adoption rates, but actual utility and performance tend to be the ultimate determinants of success.

After taking these aspects into consideration, one might argue that Hedera Hashgraph could face significant challenges from its competitors that may impact its long-term viability and eventually succumb to competition.

However, the world of cryptocurrencies is anything but predictable, and only time will reveal the true potential of Hedera Hashgraph.

In conclusion, while Hedera Hashgraph presents innovative technology and has a well-articulated vision for the future of distributed consensus, its path is strewn with significant challenges.

From achieving mass adoption and optimal scalability to competing with other established blockchain platforms, Hedera will have to face these uncertainties effectively.

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Mensholong Lepcha

Financial journalist specializing in cryptocurrencies, bitcoin scams, crypto scams, crypto investing and crypto exchanges.