Political Economy & Finance
There’s a new technology in town, and it might just be saying… “Move over Bitcoin!”
This new software based value transfer system, is called “Hedera Hashgraph” and it’s been making tidal waves in crypto circles.
It claims to be able to do everything that blockchain technologies like Bitcoin and Ethereum can do, but much, much faster, and better.
According to its white paper [Download it], it can process over 250,000 transactions per second (tps).
That’s better even than what VISA can do, by about 5x. About 12,500x what Ethereum can do, and an unbelievable 30,000x what Bitcoin can do.
It will allow smart contracts, just as Ethereum does, and is built using Ethereum’s Solidity programming language.
It will do away with miners, because it uses a “Proof-of-stake” mechanism, rather than “Proof-of-work” like Bitcoin, and it is this proof-of-work mechanism that is causing Bitcoin to use so much time, and energy.
You can’t buy into its initial coin offering (ICO). It doesn’t need the money – we’ll get into why that is in a second. But it will soon be available on exchanges and released for developers to build on.
It sounds like the ideal crypto, doesn’t it? Smart contracts, super-fast and super-scalable (it also claims to be super-secure).
But is it… Really?
What is Hedera Hashgraph?
I first learned of Hashgraph, some months ago, so, today we’re going to take a “deep look” into Hedera Hashgraph, and find out if it is a friend or a foe.
According to one prognostication, “Bitcoin will go to $40,000 this year. . .” – Simon Black – May 07, 2018 at the Daily Bell
But, Hedera Hashgraph, may have other ideas…
Firstly, what is it exactly?
Hedera Hashgraph is a Distributed Ledger Technology (DLT) based on a Directed Acyclic Graph (DAG) – WHAT!?*
All cryptos are DLTs, but none are DAGs. (except Hashgraphs)
So, although it’s called a “Hashgraph” it’s basically just another DAG with a different algorithm.
The hashgraph is a patented data structure developed by Professor Leemon Baird. The hashgraph stores and updates information in accordance with a unique algorithm which allows a distributed and decentralised community to reach consensus between nodes/members in a fast (250,000 transactions per second) and secure (Strong Form Byzantine Fault Tolerant) way with mathematically proven fairness in the absolute ordering of transactions.
The data structure is a directed acyclic graph, where each vertex contains the hash of its two parent vertices. A hashgraph is updated by gossip where each member repeatedly chooses another member at random who gives them all the events that they don’t yet know.
The hashgraph utilizes an entirely new protocol called “gossip about gossip” for information sharing. This means that part of the information transferred between members is an abbreviated history of how members have spoken to other members. This is similar to how friends may “gossip about what Bob did.”
So the first thing that should jump out at you is that Hashgraph is patented. In the world of crypto that is a huge red flag.
Its creators claim that this is to stop Hashgraph from forking, like Bitcoin. If anyone tried to change the code for a better one and fork it, Hashgraph – or the company that owns it, Swirlds – would sue them.
So basically, if you’re using Hashgraph, you will behave as Swirlds wants you to behave. The fact that it is patented also means it is not open source. This goes against what almost every other crypto out there stands for. It means people can’t check or improve the code. Even IBM’s Hyperledger is open source. I can’t think of a single crypto that isn’t.
That stops the Wild West atmosphere that has pervaded the Crypto world since 09, but means that they dictate the world going forward, and THAT is a problem. Any corporation with that much control eventually does not serve the users interests, but its shareholders, and executives.
The second thing you might notice is the DAG structure works in the same way as IOTA. In IOTA, in order to process your transaction you must verify two others.
Hedera Hashgraph is a for-profit foundation
Another thing you realise, once you study the white paper, is that unlike many cryptos, which form non-profit foundations, Hedera Hashgraph has formed a for-profit foundation.
From the white paper
Hedera Hashgraph Council is a for-profit LLC that will be governed by up to 39 renowned enterprises* and organizations, across multiple industries and geographies.
And yet it wants to be “the new internet”. If the internet had been created as a for-profit foundation and built on closed-source software, the world would be a very different place now. A much less collaborative and much less technologically advanced place.
Most cryptos see this and pride themselves on building open-source platforms and protocols. But not Hedera Hashgraph. Hedera Hashgraph is all about its own profit.
You must pay fees to use Hedera Hashgraph.
One of the main benefits DAG cryptos provide is they can be fee-free. Two of the biggest DAG cryptos at the moment, IOTA and NANO, process transactions for free.
The fee-free model is perhaps one of the most important breakthroughs in crypto.
For a pure payment coin like NANO, what you send to someone is exactly what they get. If you send 0.005p worth of NANO to a shop or a friend they will receive exactly that.
And for a machine-to-machine crypto like IOTA this is also massive. It means machines can make millions of micro transactions to each other without paying fees on these many, many micro transactions.
Hedera Hashgraph will not be free to use. You have to pay fees to send transactions and to store files on it.
And what’s more, the Hedera Hashgraph Council (HHC) will also get periodic dividend payments from network users. (JUST like a REAL Central Bank)
Again, this just has one brief mention in the white paper:
DIVIDEND PAYMENT – Periodically, Hedera may make payments to the Governing Members to reward them for their role in governance. The fees that are collected by Hedera are divided between incentive payments and dividend payments, as determined by Hedera.
I guess that brings us to the question of who the HHC is. After all, it will be the one with the power to hard-fork Hedera Hashgraph at will and change its protocols.
Hedera Hashgraph is ruled by corporations
There are 39 corporations who make up the HHC. The HHC says what happens to the Hedera Hashgraph protocol and users must oblige.
From the white paper:
“Hedera Hashgraph Council is a for-profit LLC that will be governed by up to 39 renowned enterprises and organizations, across multiple industries and geographies. Its vision is a cyberspace that is trusted, secure, and without the need for central servers. Its licensing and governance model protects the community by eliminating the risk of splitting, guaranteeing the integrity of the codebase, and providing open access to the protected core. Under the governance model, all Governing Members will have equal governing rights and each Governing Member (with the exception of Swirlds) is expected to serve a limited term, ensuring that no single Governing Member or group of Governing Members has centralized control. “
I could explain why this is a huge red flag. But why not let someone else do it…
Hedera Hashgraph Council plays the role of rule-maker, indirectly sets the rules, fees, and approve new software updates via Governing Board which is elected by HH Council, and the community just plays the role of rule-enforcer, running nodes to verify transactions and apply only the rules of the software written and approved by the Governing Board.
This worries me, because in my opinion, it is the complete opposite of the typical politic model we often see: the people, the masses, the community – the DEMOS, plays the role of rule-maker (via electing a parliament etc…), and the government only plays the role of rule-enforcer.
From the Whitepaper:
GOVERNANCE – A general-purpose public ledger should be governed by representatives from a broad range of market sectors, each with world-class expertise in their respective industries, and also selected to provide global geographic representation for all markets. Those that are governing need technical expertise so they can competently manage the technical roadmap. They need business expertise so they can manage business operations of the organization. They need expertise in economics and currency markets so they can manage the cryptocurrency. They need legal expertise to help navigate the evolving regulatory environment. In other words, governance should be by those globally recognized as world leaders in their respective industries, and representative of every market in the world.
So, how should we be sure this HH Council will not become corrupted or make the decisions that optimize the benefit for themselves but not the mass? Especially according to the whitepaper, Hedera Hashgraph Council is a for-profit LLC!
It’s not necessarily to be something hugely and clearly evil to be concerned about, the Council is obviously not incentivized to sabotage the network. But it could be some decision that just slightly lean toward the Council’s benefit instead of the whole, small changes over time, steer the development to a path that optimize the benefit for them. (Rather like a Central Bank)
Say, if some day Hedera Hashgraph is mass adopted around the world, many crucial global applications run on Hedera platform, then the HH Council (especially Swirlds) would become an organization with supreme power. Even if the Council becomes corrupted, people would have no way to change it because we have no right to vote, because the HH Council is a closed group which could make the decisions that benefit themselves best, then elect the new Council members who have the same minds, then the new Council repeats,… This is the endless loop and the degree of corruption might rise over time this way.
I think the idea that Hedera Hashgraph is designed to run in the opposite way to democracy is a very important point. Especially as most crypto is about the democratisation of technology. This is exactly the opposite of Hedera Hashgraph’s approach.
The idea of the HHC also brings up another major red flag.
HHC owns 60% of the supply. Given that Hedera Hashgraph runs on fees, we can ask how those fees be distributed.
Hedera Hashgraph will run a proof-of-stake protocol (POS). This means people who own it can “stake” what they own to secure the network and in turn get rewarded in fees.
So, given that HHC owns 60% of the supply, it will collect 60% of the fees for itself. That’s on top of its unspecified dividend payments. Oh, and because it has total control of updates and upgrades to how Hedera Hashgraph works, it could allocate itself even more at any time. And all users would have to go along with it.
Ripple gets derided for its centralisation – But even Ripple pales in comparison to the centralisation of Hedera Hashgraph.
And the more you dig into it the murkier it gets.
Hedera Hashgraph was created by two ex-military men. The co-founders of Hedera Hashgraph are ex US Air Force.
This brings up all kinds of questions about government collusion and makes the patenting and secrecy behind Hedera Hashgraph’s code all the more significant.
Just what is in there that it doesn’t want people to know about?
I’m sure some people would even go so far as to say that given it’s private code, created and patented by military men, it could have backdoors built in. Of course, I wouldn’t suggest that.
Still. Knowing all of the above, does Hedera Hashgraph really seem like the crypto we want “the new internet” built on?
In conclusion: Don’t believe the hype
I went into this completely neutral about Hedera Hashgraph, but I have come out of it fiercely convinced it is not a good crypto.
It is incredibly centralised. It uses fees. It is closed source. Its corporate leaders can change its code and rules at will. And it could even lead to patent wars in crypto – something most cryptos have worked hard to avoid.
Personally, I won’t be investing in Hedera Hashgraph. (and whilst I am not a Financial Adviser, If, I were, I’d be telling you to give a wide berth also.)
That’s not to say that it won’t do well. It has a lot of money and power behind it, and it makes some very big claims. Most people will not look into it this deeply, and even if they do they may not see these red flags in the same way I do. Some people may even see its centralisation and structure as a benefit. I do not.
Once it gets its full release it will be very interesting to see how the crypto community and the wider media respond.
How do you feel about Hedera Hashgraph?
Am I wrong, is this the future of crypto? Or is it yet another way to control the masses, using a coin with big claims that is fundamentally anti-democratic?
Let me know@ WA1Marketing@aol.com – With the Subject line – HEDERA HASHGRAPH.
And if you want to tell the world, put your comments in the Comment box below, and if you like this stuff, and want more of it, hit the subscribe button Up there to the right. And of course you can share it using the buttons below to your social media.
Long, Long time ago,
I can still remember,
How the music used to make me cry.
I can’t remember if I cried,
when I read about that widowed bride,
but something touched me deep inside,
the day the music died.
So, “Bye Bye, Miss American Pie.
Drove my Chevvy to the Levy but the Levy was dry.
Them good ol’ boys are drinking whisky and rye.
Singin’ this’ll be the day that I die.
This’ll be the day that I die.
The day, the music died.”
The Gold market is at the moment a bit like the old parlour game of yesteryear, when we all played ‘Musical Chairs’ after dinner on sundays, before wall to wall TV, and other distractions began to isolate us from each other – except via digital means.
The game – for those who don’t know – involves putting together enough seats for all the participants, while playing music, and then removing one chair.
When the music stops, the last one to sit, is out.
The game continues until all the participants are out as each turn gradually reduces the number of chairs to one.
The gold market is gaily playing the game, blissfully unaware that the gold (Chairs) are being continually reduced and one day soon, the Bullion Bank Gold Vaults, will be empty, and one of the big players will want to walk away from the game, with their chair, (Gold) and the chair won’t be there.
The day that that happens, will be like the day in the song above.
For those unaware, the song was a reference to the crash in 1959, when Buddy Holly, and the other musicians Ritchie Valens, and J. P. “The Big Bopper” Richardson were killed in a plane crash near Clear Lake, Iowa. They disappeared off the radar on a snowy journey on February 3rd.
The evidence is stacking up for all to see. Those with even a small stash of Gold and silver will be the lucky ones.
Exhibits A, B, C, and all the rest are from a web-site I visit on occasion, but which in recent days has been just full of evidence that the number of chairs is quietly, and incessantly being reduced, as the Chinese take all the chairs east.
The day the music stops, will be like the story of the Emperor who was wearing no clothes, until the small boy pointed out the truth.
Gold (and silver) will be worth a whole lot more, no matter what Harry Dent Junior says:
Students of Literature, will recognise the title from the warning given to Julius Ceasar, as epitomised in the Shakespearean play of that name.
It was a warning to the general, to beware, by a soothsayer (who remains nameless). A warning that apparently he ignored. Of course, as the conspirators – the Senators, stabbed at Ceasar, and Marcus Brutus a former long-time friend plunged his knife into the man, Shakespeare’s Ceasar uttered those now immortal words – “Et tu Bruté” (And you Brutus?)
Of course, in the modern era, the last major play, that resembles this drama, is the death of John Fitzgerald Kennedy on November 22nd 1963, as he was brutally slaughtered by a conspiratorial cabal operating in the upper echelons of the power political scene in America.
Who all these conspirators are, has remained largely unspoken… But some people, are doing what should have been done 50+ years ago, by the Dallas Police, before the CIA and the FBI took over the post assassination conspiratorial machinations, to cover up their involvement, and to plant the idea in the public’s mind, that “it was a lone gunman” a Russian Sympathiser, who spent three years in Russia, but who was in receipt of $200 per month from the FBI as an informer, and who received special training by the CIA to learn Russian, before he allegedly dropped out by going to Russia and staying there for three years…
Those invoved in the Conspiracy carefully massaged the images and the Warren Commission headed up by the very man, that Kennedy had fired just a few months earlier as Head of the CIA to ensure the story remained “on message”.
Of course George Herbert Walker Bush, when asked where he was at the time of the shooting, had vague recollections of where he was, despite someone of that name making a call to J. Edgar Hoover’s office – Head of the FBI just hours after the shooting proving he was in a hotel in Dallas. And his recollections apparently varied on subsequent questioning of the same incident, The same George H. W. Bush who went on to be Carter’s head of CIA, and then Vice President, during the 8 years that Ronald Reagan was President, and almost made it to the presidency when President Reagan was shot, by a lone nutter… But the President in true Cowboy hero fashion, survived.
JFK’s brother Robert Kennedy who also later ran for political office also met a sudden death when yet another lone nutter (CIA – MK-Ultra participant?) allegedly shot him at close quarters as he emerged from the hotel kitchen into the glare of waiting reporters, TV cameras and waiting dignatories – and CIA operatives?
Here is the best documentary I’ve seen on this and other subjects…
JFK Jr., had his 3rd birthday just three days after his father’s death, and after growing up and becoming by, all accounts, an honourable man, handsome, suave, considerate and latterly a pilot and publisher of a magazine called “George” – Was this a clue to the mystery surrounding his father’s demise?
And of course, John F Kennedy Junior ALSO met an untimely demise, when his plane came down late in the evening, as his plane disappeared off his flight path and plunged into the Atlantic, just 1 minute after he called in to the Martha’s Vineyard Airport, to say he was at 2,500 feet and ready to descend to the airport… But he never made it, falling out of the sky almost vertically just 60 seconds later… Meanwhile, George Bush Junior, for the three days, was nowhere to be found… Hmmmm… “Curiouser, and Curiouser”…cried Alice…
You can get a better description of events here…
So what does this have to do with the Ides of March?
Well, as President Trump has already made known to the world, some of the things he wants to do is to “Drain the swamp”, and began the process, though CIA leaks have been made to discredit him, but even the MSM have had to eat some of their words. However, many things seem to be happening that suggests he won’t see out his full-term – one way or another…
Already people are setting Trump up for a fall… Here’s how Zero-Hedge put it
Roberto Gualtieri, chairman of the European Parliament’s economic and monetary affairs committee, also criticized Trump. “Some first concrete confirmations of a new more unilateral policy stance by the new U.S. administration, including on sensitive financial markets regulatory issues, raise concerns and require both thorough reflection and action from the EU side,” he told the committee.
Meanwhile, Draghi deflected accusations lobbed at him over the weekend by German finmin Schauble, who said not Germany, but the ECB and Mario Draghi, are responsible for the undervaluation of the euro:
And SGTReport who holds views similar to my own, regarding the economy, believes much the same with regard to Trump’s likely outcome, as those behind the scenes are attempting to undermine, discredit, or if they can’t impeach him, probably develop a plan to slay him, when they produced this video…
And of course #Pizzagate is just another FAKE News story…
And of course, it was Trump and those Russian hackers who stole the election… Except it wasn’t…
BUT, at least Trump is fighting back, and so are the Americans…
Those evil Bankers, Oil-men, Military Corporate CEOs and multi-million share-holders, and those working for them in the secretive security organisations – all 16 of them, are now going to have their teeth pulled as the fight-back begins…As Ron Paul, that arch-enemy of the Federal Reserve has already had his £0.02 worth..
So, if you’re in the markets, now might be prudent to lower your risk somewhat… Events have a habit of coming out of the blue, and given recent rises to bubble territory… and Cliff High’s, Jim Rickards’ and Bill Bonner’s and JIm Willie’s and Peter Schiff’s, David Morgan’s and Dr. Paul Craig Robert’s warnings a pull-back is long overdue.
This is an important adjunct to the above piece, as events come into focus:
The 15th March (Ides) is the day that Netherlands goes to the polls to elect a new leader. One in which the populist Geert Wilders is steadily making progress in the polls and is looking increasingly likely to win. BUT as Turkey and the Dutch go head to head over the latest political intrigue, will this mean Wilders gets more of the sympathetic vote, against the population concerned about the (as they see it) invasion of Islamists guaranteeing him the vote?
The second concerning thing is the reaching of the $20 Trillion debt ceiling in the U.S. on that date, while also the Federal Reserve on that day too will decide whether to raise interest rates for just the 3rd time in 10 years.
And, in the UK, after the House of Commons rejected the amendment voted for by the House of Lords, this frees the PM’s hands to announce the formal Brexit process.
And finally, Clif High – researcher, has been announcing over the last two months that March onwards is likely to be tumultuous, and after all that, I found this…(below)
Anyone who has been reading this blog for any length of time, will know my feelings on Precious metals, and this just threw petrol on the bonfire.
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