Hedera Whitepaper

Distributed ledger technologies (DLT) have the potential to disrupt and transform existing markets in multiple industries. However, in our opinion there are five fundamental obstacles to overcome before distributed ledgers can be widely accepted and adopted by enterprises. In this paper we will examine these obstacles and discuss why Hedera Hashgraph is well-suited to support a vast array of applications and become the world’s first mass-adopted public distributed ledger.

1. PERFORMANCE – The most compelling use cases for DLT require hundreds of thousands of transactions per second, and many require consensus latency measured in seconds. These performance metrics are orders of magnitude beyond what current public DLT platforms can achieve.

2. SECURITY – If public DLT platforms are to facilitate the transfer of trillions of dollars of value, they will be targeted by hackers, and so will need the strongest possible network security. Having the strongest possible security starts with the consensus algorithm itself, with its security properties formally proven mathematically. Security vulnerabilities and attack vectors shouldn’t be mitigated; they should be eliminated entirely. To improve performance metrics, some public DLT platforms are making compromises with regard to decentralization, and in so doing are potentially compromising security.

3. GOVERNANCE – A general-purpose public ledger should be governed by representatives from a broad range of market and geographic sectors, each with world-class expertise. Those responsible for network governance need technical expertise so they can competently manage the platform’s underlying software. They need business and economics expertise so they can manage business operations of the organization and its cryptocurrency. They need legal expertise to help navigate the evolving regulatory environment. In other words, the network should be governed by a decentralized group of globally recognized industry leaders, representative of every market in the world.

4. STABILITY – Without technical and legal mechanisms to enforce the decisions of the governing body, public DLT platforms are at risk of devolving into chaos. Strong security and mature governance will enable a stable platform — one that engenders the necessary trust and confidence among those that would build commercial or sensitive applications on it.

5. REGULATORY COMPLIANCE – We expect that governments will continue to extend policy objectives to users, enterprises, and developers utilizing public ledgers and associated cryptocurrencies and tokens. We consider that a public distributed ledger must be capable of providing necessary tools for all members of its ecosystem to comply with applicable laws and regulations, such as the European Union’s General Data Privacy Regulations (GDPR), and enable appropriate identity management to conduct sanctions screening and facilitate Know Your Customer (KYC) and Anti Money Laundering (AML) checks.


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