Hedera Hashgraph is an alternative to the traditional blockchain technology that can process around 100,000 transactions per second. Hedera Hashgraph introduces a completely new ledger structure that doesn’t include mining because mining is an energy-intensive process. It uses a unique verification process to provide and faster and more secure alternative to blockchain.
What is Hedera Hashgraph?
Hedera Hashgraph is a cryptocurrency platform that enables users to transfer money to each other and build applications on its network. Using the Direct Acrylic Graph, it only allows a limited number of nodes to participate in the transaction processing. It processes transactions faster than traditional blockchain networks because only a few nodes are involved in transaction ordering and timestamping.
The unique thing about this network is that a group of businesses oversee its operations. And many big companies like IBM, LG, and Boeing are running nodes on this network.
Hedera Hashgraph Brief History
Leemon Bared, a computer scientist, introduced the Hedera network in collaboration with Mance Harmon, a technology executive, in 2015. The network was initially introduced as Swirlds and was later renamed Hedera Hashgraph. With a simple agreement for future tokens offering, the company raised around $124 million for this project in 2018.
Over the years, major corporations like Google, Tata Communications, London School of Economics, Deutsche Telekom, Shinhan Bank, University College London, and many others have joined this network. The governing council has decided to introduce it as an open-source algorithm under the Apache License in 2023.
What Makes Hedera Hashgraph Different from Existing Blockchain Technologies?
Although Hedera Hashgraph is a cryptocurrency network, it’s different from traditional blockchain networks.
How Does a Blockchain Network Work?
A blockchain network consists of a set of blocks that contain information about transactions conducted on the network over time. Blockchain networks use different types of consensus mechanisms.
Proof of Work – In this method, the network creates a complex puzzle whenever a user requests a transaction. The node operators need to solve the puzzle to validate the transaction. They earn a partial amount of gas fee as a reward.
Proof of Stake – In this method, the validators are chosen based on the amount of cryptocurrency they’ve staked. They can earn rewards for validating the transactions but they also have a risk of losing their own staked tokens if they verified a wrong transaction.
Proof of Elapsed Time – In this method, the validators are chosen through a fair lottery system. It saves more energy than the proof-of-stake consensus protocol. This method is commonly used on permission networks.
Leader-based Consensus – In this protocol, the transactions are validated through a leader computer. The transactions are then added to the chain in an organized manner.
Economy-based Consensus – This protocol works on a voting process. The members need to vote for the transactions to complete the validation process. The reward is equally distributed among users who participate in the process. But a user may also be fined if he/she voted for a wrong transaction.
Voting-based Consensus – This protocol is pretty much similar to Economy-based consensus. However, it requires verification from all the node operators rather than relying on a few.
How Does Hedera Hashgraph Work?
Hedera Hashgraph enables node operators to communicate with each other. The network creates a graph of connections based on the data shared in a communication. Hedera Hashgraph brings consensus to the network by incorporating two essential protocols.
Gossip About Gossip – This protocol broadcasts information to all the members of the network when a node operator transfers data to another random node.
Virtual Voting – The participants vote for the transactions based on the data they receive from the nodes. The node operators can easily predict the votes of other operators with the help of the data they receive. The votes aren’t broadcasted on the network but they’re sent to the governing council that is responsible for verifying transactions.
Transaction Confirmation Methods on Hedera Hashgraph
The users can choose between two different confirmation methods when they make a transaction on the Hedera network.
In this process, the user sends money to another node with a request to submit the transaction on the network. The recipient immediately verifies the transaction and submits it to the network. The sender can then rest assured that they will receive the goods or services they’ve paid for.
The sender can request a receipt from the node operator to confirm the status of the transaction. The receipt only contains information about whether the transaction was successfully completed or not.
Hedera Governing Council consists of 39 members including, IBM, Google, LG, and Boeing that are responsible for managing the network’s integrity globally. The governing council is limited to a few members only. The members can stay on the council for a maximum of three years and they can upgrade their membership at the end of their tenure. However, the membership can only be upgraded once.
And they have to wait for the next election once they’ve completed their six years in the governing council. As it’s mentioned above, the Hedera team is working on opening the network for anyone who wants to participate in the governance.
What are the Benefits of Hedera Hashgraph?
Hedera network can process around 100,000 transactions per second. It takes around 3-5 seconds to finalize a transaction. It costs around $0.0001 per transaction. Hedera protects its network with Asynchronous Byzantine Fault Tolerance. Thus, it can prevent malicious actors from polluting the network.
The users can also build smart contracts and decentralized apps on this network using the object-oriented programming language supported by Ethereum.
What is the Native Token of Hedera Hashgraph?
HBAR is the native token of the Hedera network that can be used for transferring money or buying products or services on the network. With a circulating supply of 20.7 billion tokens, it has a market cap of $2.1 billion. It ranks among the 40 best cryptocurrencies in terms of market cap. It has a total supply of 50 billion HBAR tokens that will be released over time.
Hedera Hashgraph is a cryptocurrency network introduced as an alternative to traditional blockchain technology. It uses a unique consensus protocol to complete the transactions. The unique thing about this network is that it’s supported by many major businesses. Feel free to get in touch with us if you need more information about how Hedera Hashgraph (HBAR) works.