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Distributed ledger technologies (DLT) are disrupting and transforming 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 across every industry and geography. In this paper we will
examine these obstacles, and discuss why Hedera hashgraph is ideally suited to be the world’s first mass-adopted public distributed ledger, supporting a vast array of applications.
1 PERFORMANCE - The most compelling use cases require hundreds of thousands of transactions per second in a single shard (perhaps millions of transactions per second (tps) in a fully-sharded solution), 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 platforms are to facilitate the transfer of trillions of dollars of value, we have to expect them to be targeted, and we have to prepare for this. To do so requires a consensus algorithm that provides the best security one can achieve, with the security properties of the algorithm formally proven. Vectors of security vulnerabilities shouldn’t be mitigated; they should be eliminated entirely. Other public DLT platforms are trading off decentralization (and so potentially compromising security) for performance gains.
3 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.
4 STABILITY - Without technical and legal mechanisms to enforce the decisions of the governing body, public 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 increase oversight of public ledgers and associated cryptocurrencies and tokens. We consider that a distributed public ledger must be capable of enabling appropriate Know Your Customer (KYC) and Anti Money Laundering (AML) checks.