Hedera Hashgraph: The Sustainable, Scalable & Secure Distributed Ledger
A growing number of crypto start-ups are working to improve blockchain technology to be more scalable and accessible.
👀 They have the hope that blockchain can become the infrastructure of the future if it is sufficiently fast.
💪 Cryptos are competing to be the frontrunners in the race.
💭 Hedera was created as a solution to the problems caused by blockchain technology.
Hedera was created as a substitute for developers and users to transact and deploy decentralized applications using public distributed ledger infrastructure.
This distinguishing feature sets it apart from others.
🤔 What is Hedera?
Hedera is a novel public distributed ledger technology model for developing and deploying decentralized applications (dApps) and microservices.
Hedera’s public distributed ledger technology promotes consensus in transaction validity and a decentralized network to ensure confidentiality and fairness.
Hedera is a project built on a chain of blocks and the Directed Acyclic Graph (DAG) technology, which is used for data storage in Hedera as an alternative to traditional blockchain technology.
The Hashgraph consensus-powered Hedera Proof-of-Stake public network achieves the highest level of security, lightning-fast transaction speeds, and low bandwidth consumption.
📜 History of Hedera
Hedera was founded in the United States by Leemon Baird and Mance Harmon.
Baird, based in Dallas, is Hashgraph’s chief scientist and is widely regarded as the inventor of the hashgraph algorithm.
He founded several companies before Hedera (HBAR), including Swirlds Inc and BlueWave Security. He also worked as a senior research scientist at the United States Air Force Academy’s Academy Center for Cyberspace Research, where he earned a BSc in computer science. Baird earned his doctorate in computer science from Carnegie Mellon University.
Mance Harmon, the Hedera cryptocurrency’s CEO, studied computer science at Mississippi State University. Harmon has over two decades of experience founding and leading businesses. He and Baird co-founded BlueWave Security, and Swirlds Inc.
Hedera changed to Hedera Hashgraph, LLC, in 2018. In its token sale, Hedera Hashgraph raised $120 million. The Hedera mainnet went live with 50 billion HBARs in circulation.
- The first Hedera Governing Council members were announced in 2019.
- The HBAR token reached an all-time high of $0.5518 on September 15, 2021.
- Hedera Hashgraph began a partnership with Google for its governing council in 2020.
- A “governing council” of up to 39 global companies and entities now owns and manages Hedera.
🔗 What is Hashgraph?
The technology behind this novel blockchain is relatively complex.
Hashgraph nodes share information using a “gossip” protocol. This means that news of new transactions spreads quickly and persistently throughout the community.
To share transactions with the community, a data structure is created that contains the payload of those transactions, a timestamp, a digital signature, and two hashes pointing to previous gossip structures.
According to the protocol’s documentation, sharing this information, dubbed “Gossip-to-Gossip,” is unique to the platform. This information trail enables nodes to participate in a virtual voting protocol, which is also unique to the ecosystem. Using the gossip protocol, nodes can quickly exchange information with other nodes in their local virtual community.
The platform claims that previous limitations have been removed due to the development of this new type of blockchain iteration. Hedera claims the proof is in the numbers, as it can process around 10,000tps.
The Hedera cryptocurrency platform’s average fees are also significantly lower. The average fee for Hedera is $0.0001.
Transaction confirmation time is also reduced, with Hedera’s protocol taking only 3 to 5 seconds.
Because it uses a proof-of-stake model rather than proof-of-work, Hedera claims to be much more energy efficient and sustainable than Bitcoin and Ethereum 1.0. Hedera consumes only 0.00003kWh.
⚖️ Blockchain vs. Hashgraph
🤔 Will Hashgraph Replace Blockchain?
Hashgraphs are the key to resolving the current Blockchain development issues. It essentially can turn the economy on its head.
However, it is a long shot to claim that Blockchain is superior to Hashgraphs. Hedera Hashgraph is still in its infancy in terms of maturity and use cases when compared to Blockchain; thus, it is premature to predict that it will overtake it anytime soon.
The only way to determine whether Hedera Hashgraph is a viable replacement for Blockchain technology is to wait until both systems have matured and all issues have been resolved. After all, only then will the true potential of Blockchain and Hedera Hashgraph be revealed.
However, there are several advantages to using Hashgraph instead of blockchain technology. Blockchain adoption continues to grow, and private blockchains have made it more appealing to businesses.
There are some blockchain issues, but they need to be more significant to make this technology unpopular.
🛠️ Problems Solved by Hedera
Hedera and the Hashgraph are both attempting to solve five problems. Hedera believes addressing these issues can encourage the widespread adoption of distributed ledger technology.
Hedera claims to be extremely fast and can handle more than 10,000 transactions per second, achieving finality in 3-5 seconds.
Hedera testnets have previously achieved a throughput of 50,000 transactions per second. In one test, with only one continent as a constraint, the platform achieved speeds of 500,000 transactions per second.
Hashgraph’s consensus algorithm is asynchronous Byzantine Fault Tolerance (aBFT), regarded as one of the most secure methods of consensus.
Hedera’s use of aBFT makes it impossible for any member to break community consensus or change records once consensus has been reached. Less than one-third of the nodes are attackers so that the network can tolerate faulty nodes.
When the network reaches consensus, the community is notified in real-time, ensuring that the consensus cannot be compromised. This means that aBFT protects Hedera from malicious nodes and DDoS attacks even if some network nodes are down or compromised.
Hadera Hashgraph defines two governance models.
The Council Government Model, which we already mentioned, is Hadera’s overall governing body that upholds the network’s decentralization, trustworthiness, and stability.
Each council member may serve up to two consecutive three-year terms.
This configuration allows a single person or organization to utilize more power. The Consensus Model is the second governance model, which allows anyone who wants to run a node to do so.
The consensus model allows anyone to run a node, contribute to consensus, and be rewarded for their efforts. The team anticipates that the number of nodes will rapidly increase, significantly improving the decentralization of Hedera Hashgraph.
Hedera Hashgraph has stated that it will never fork because the platform is kept stable through legal and technical controls that prevent forking.
This prevents the creation of competing platforms, which reduces confusion and uncertainty.
The technical controls create two capabilities. The first is that the software client can always verify the Hashgraph’s pedigree using a shared state mechanism. This shared state consists of all nodes providing verified information and the network’s consensus state.
A bad actor cannot compromise the network in such a shared state, and it also prevents any of the nodes from forking or making changes and then pushing them to the entire network as valid.
The second capability guarantees that any software changes the governing body makes are legitimate because they are automatically updated and specified across the network.
5. Regulatory Compliance
Through an included, optional identity mechanism, Hedera has enabled KYC/AML compliance.
It is known as the Opt-in Escrowed Identity System, and it allows verified identities to be linked to otherwise anonymous wallets.
As governments continue to add regulations to the cryptocurrency landscape, this feature makes it easier for Hedera to achieve mass adoption.
💰 The HBAR Coin
Hedera Hashgraph (HBAR) is the Hedera ecosystem’s native governance token, used to power decentralized applications and protect the network from malicious activity.
Developers use HBAR to power network services such as HBAR transfer, token management (fungible and non-fungible), and data logging.
HBAR token is also used to serve the following utilities:
- Payment: HBAR token is used to pay transaction fees on the Hedera platform.
- dApps access: HBAR holders can access dApps released on Hedera.
- Staking: HBAR token is used for staking and becomes transaction Nodes.
- Rewards: Users are rewarded with HBAR tokens when participating in the processing of Nodes.
The current CoinMarketCap ranking is #33, with a live market cap of around $2Billion. (as of 14Ap23)
It has a circulating supply of 30.6B HBAR coins and a max. supply of 50M HBAR coins.
🌐 Network Services
Hedera Token Service (HTS):
You can configure, mint, and manage native fungible and non-fungible tokens on the Hedera network without deploying expensive and potentially faulty smart contracts.
Hedera Consensus Service (HCS):
You can record immutable, verifiable, and relatively ordered event data for any application or permissioned blockchain framework. Tracking assets across a supply chain, creating auditable events logs in an advertising platform, or using it as a decentralized ordering service is valuable.
Hedera Smart Contract Service:
Enables building decentralized applications and protocols that scale with Solidity smart contracts on Hedera. This service is EVM compatible to run Solidity, unchanged, on the Hedera network. Smart contracts on Hedera are optimized for hashgraph.
With hashgraph efficiency, your contracts run fast with finality in seconds, carbon-negative energy use, and always predictable gas fees.
You can store smart contract byte code, address books, credentials, and other critical files on the Hedera network.
🌿 Hedera Ecosystem
Since Hedera’s recent open-source SDK for developers, approximately 100 dApps have committed to building on the Hashgraph platform. Furthermore, over 5000 developers are actively interacting in the Hedera Hashgraph Discord channel to discuss the development of Hedera Hashgraph-based applications.
Hedera Hashgraph is ready to disrupt the finance, real estate, gaming, media, and entertainment industries with smart contracts, file storage, and native cryptocurrency.
Web3 projects are building next-generation applications on Hedera across DeFi, NFT, creator economy, sustainability, and more.
Some of the Web3 applications on Hedera:
Enterprises use Hedera to improve business processes and procedures across CBDC, Supply Chain, Finance, Fraud Mitigation, and more.
Some of the Enterprise applications on Hedera:
💹 Over 4 BILLION Transactions
Hedera appears to be rapidly expanding, as they tweeted on February 13 that the Hedera mainnet had officially processed over 4 billion transactions:
🌱 Hedera’s Carbon-negative Network
In the world of DLTs, Hedera’s carbon-negative network offers a sustainable option. The use of a proof-of-stake consensus mechanism significantly reduces carbon emissions.
Furthermore, the network actively addresses climate change through various initiatives, such as developing sustainability tools, supporting green projects, and donating to climate trade organizations.
Hedera’s carbon-negative network provides a sustainable option in DLTs and outperforms other blockchain alternatives.
Compared to leading blockchain networks such as Algorand, Cardano, Ethereum, and Solana, Hedera has the fastest transaction speed, the most transactions per second, and the lowest energy consumption.
This is more than a claim; it is evidence that Hedera’s network is an excellent choice for businesses seeking a dependable, efficient, and environmentally friendly blockchain solution.
💡 Energy Solutions on Hedera
Verde Blocks is making history with Hedera’s distributed ledger technology (DLT) by providing a platform that allows for transparent, trusted, public, verifiable, and renewable power purchases.
BlockScience, a complex systems engineering company, has developed a pricing mechanism for semi-fungible assets through The Guardian on the Hedera network. Known as an Automated Regression Market Marker (ARMM), this mechanism allows for the efficient and transparent pricing of sustainable value energy markets, such as Renewable Energy Credits (RECs) and Carbon offset/removal Credits (CORCs).
Tamuwa, an African company transforming carbon waste into renewable alternative fuel sources, uses the Hedera network to digitize verified emissions reductions through their platform Cynk.io.
Tamuwa is the first African organization to receive HBAR sustainability impact fund funding.
Hedera has pulled out another ace card from its sleeves by signing a partnership with Power Transition to revolutionize how government personnel use electricity and power. Users will be leveraging a peer-to-peer exchange of HBAR for energy.
There is a lot of exciting stuff Hedera plans to do in 2023, and you can see their entire roadmap on their website.
Hedera Hashgraph’s technology is revolutionary in what is primarily a blockchain world. The addition of technologies like virtual voting and the gossip protocol for consensus, as well as aBFT, results in a secure, fast, and fair network.
Their technology, as the first player in the hashgraph space, has the potential to be the next new wave in the cryptocurrency space. They certainly fall into the category of being undervalued, owing to their function as a third-generation public ledger.
Although Hashgraph technology outperforms blockchain technology in distributed ledger solutions, greater adoption is required.
Blockchains are also improving, but the potential offered by Hedera Hashgraph is exciting to see what it could become.