Hedera is a blockchain-based decentralized ledger platform used to store and manage data and transactions. The platform uses a unique technology called Hashgraph, which is capable of processing transactions quickly and securely. Hedera offers a variety of services, including decentralized applications (dApps), cryptocurrency payments, and identity management.
How does Hedera work?
Hedera (HBAR) consists of a group of decentralized nodes that validate and add transactions to the shared ledger. The Hashgraph consensus mechanism, present on the Public Hedera Network, is designed for high transaction speeds with low latency, improving transaction processing and speed. Developers can build smart contracts on the Hedera platform, allowing decentralized applications to run and execute transactions.
HBAR is the platform’s native cryptocurrency, used to process and secure transactions on the network. The platform is governed by a council and a technical board, with HBAR holders having the ability to influence important decisions regarding the future of the project.
The Technology Behind HBAR
The technology behind HBAR is based on a unique mechanism called Hashgraph, an alternative to more well-known blockchain technologies. Instead of relying on a chain of blocks to record transactions, Hashgraph uses a directed acyclic graph (DAG) structure to organize the transmission of information.
- Hashgraph Consensus Algorithm
Ensures the integrity and consistency of the ledger. This algorithm uses a combination of digital signatures, asynchronous Byzantine fault tolerance, and a gossip protocol to determine the state of the ledger. The result is a fast, secure consensus process.
- Nodes
Responsible for validating and recording transactions on the ledger. Nodes are selected based on their ability to contribute to the security and reliability of the network. The Hedera network also supports decentralized applications (dApps) and smart contracts.
- Hedera Services
Including cryptocurrency payments, file storage, identity management, and consensus as a service (CaaS). These services leverage Hashgraph technology, providing scalability, security, and speed.
- HBAR Token
The native cryptocurrency of the Hedera platform. It is used to process and secure transactions on the network, as well as to vote on important decisions within the platform.
- Hedera Software Development Kit (SDK)
Provides developers with the tools and resources needed to build dApps and smart contracts on the Hedera platform. The SDK provides multiple programming languages and integrations with other development tools and platforms.
Features of Hedera Network
Hedera offers several key services that leverage their hashgraph technology. Token Services; Allows for the easy creation of both fungible and non-fungible tokens. Consensus Services; Provides a layer of trust for applications that need secure and verifiable logs. Smart Contract Tools; Supports the development of decentralized applications. These features allow Hedera to handle a variety of use cases, including payments, identity verification, and decentralized finance (DeFi) solutions.
Pros and Cons of Hedera
- Pros of Hedera
Each cryptocurrency has its own pros and cons. Low fees and fast transactions through parallel processing. Support for Solidity, a programming language for smart contracts. Suitable for the enterprise sector. Focus on energy efficiency.
- Hedera’s Disadvantages
Nobody is perfect, and neither is Hedera Hashgraph is not open source, but patented. There are only 19 council members, which raises concerns about decentralization. The platform is relatively small compared to its competitors.
Who founded Hedera?
Hedera was founded in 2017 by American technologists Leemon Baird and Mance Harmon. Baird and Harmon also launched Swirlds Labs, the company that develops Hedera’s underlying technology. Both founders have experience in software development and the technology industry, and possess extensive expertise in AI, security, defense, identity, and more.
The development of Hedera is mandated by the HBAR Foundation and governed by the Hedera Governing Council, which consists of up to 39 companies, including Google, Dell, and IBM. Approximately 11% of the initial HBAR supply was distributed to accredited investors through a SAFT (Simple Agreement for Future Tokens) sale.
Conclusion
The Hedera Hashgraph project is certainly ambitious in its attempt to compete with blockchain technology. While Hashgraph is still a form of distributed ledger technology, it is not exactly a blockchain. Initially, Hashgraph was not open source until the creators of the Hashgraph algorithm patented it.
However, in October 2018, Hedera released the Hedera SDK in Java. Since the release of the SDK, developers have been able to develop Hedera-based applications for use on the platform. It also supports three previously offered services: cryptocurrency, smart contracts, and file storage. The SDK can be found on GitHub here.
Hashgraph is still relatively new, and it remains to be seen how powerful it can become. It seems that all the foundations are in place.
However, there are still lingering questions about how decentralized it is. This is because they have a governing council consisting of 39 companies. Hedera believes that the board will ensure that “no single member has control and no small group of members has influence over the entire mechanism.”
Despite Hedera’s assurances, it is not exactly decentralized if there is governance overseeing the platform. It is not that the board is inherently bad, but it is unclear what their role is and what power they have. It is not that they will do anything wrong, just that they might. This is a concern shared by many, as Reddit user u/quyhp pointed out in 2018.
The virtual voting consensus algorithm could have major implications for all decentralized applications in the future. By doing away with proof-of-work, it would allow applications and platforms to operate much faster. Time will tell whether it works well or not.
