Hedera is a unique crypto technology that doesn’t rely on blockchain technology to survive. Almost all the cryptocurrencies available rely on blockchain technology to be effective. This raises the question of what is Hedera Hashgraph?
We will share all the essential things you need to know about this crypto project and how it could change the narrative of cryptocurrency technology.
Blockchain-based tokens rely on mining for verification purposes. Unfortunately, mining consumes energy because the computers involved have to solve complicated computations to verify transactions.
Hedera Hashgraph is removing mining using a new ledger that confirms transactions. Is that even going to be possible? Read below to find out.
What is Hedera Hashgraph?
Hedera is a public network with its cryptocurrency but doesn’t rely on blockchain. It is more secure, fast, and energy-efficient than other cryptocurrencies. It supports NFTs but doesn’t rely on smart contracts. The crypto is decentralized like Bitcoin, but it also has a governing body like Ethereum.
Hedera is best imagined to be like a graph, the speed of verifying transactions increases as more transactions are added to the network.
The technology it is based on is DAG (Directed Acyclic Graph). It is designed to help Hedera achieve over a hundred thousand transactions per second. Therefore, it is a direct competitor to mass market payment systems like Visa.
The Hedera public network is built on the Hashgraph Distributed Consensus Algorithm, invented by Dr. Leemon Baird, Hedera co-founder and chief scientist. The Hashgraph consensus algorithm allows for near-perfect efficiency in bandwidth usage and can process hundreds of thousands of transactions per second.
Hashgraph also has the highest level of security; instead of using proof of work, they created Asynchronous Byzantine Fault Tolerance (ABFT). The ABFT allows honest network nodes to guarantee and agree on the timing and order of a set of transactions fairly and securely.
What is the Purpose of Hedera Hashgraph?
The Hedera Hashgraph has some essential purposes, and some companies have built apps on the Hashgraph Distributed Consensus Algorithm. However, like all cryptocurrencies, the Hashgraph has its use case. It is used for transactions using the native token HBAR.
The Hashgraph is also used for NFTs through the ARIA exchange, a carbon-negative NFT run by the ARIA Network. Material Science company Avery Denison uses the Hedera Hashgraph to connect their products through the cloud by turning them into NFTs. They are tracked as they move through supply chains.
Safe Health System uses the Hedera Hashgraph to store patient information for users on their platform privately. ServiceNow also uses the Hedera Hashgraph to record correspondence between entities that may directly compete with one another.
The Hedera Hashgraph is used to power decentralized apps, just like what we have with Ethereum, Solana, Cardano, and others. It is also used to make fast and secure payments. The significant difference why the Hashgraph is perceived as a blockchain killer is because transactions are quick, safe, and cheap on the network.
Hedera Hashgraph History
The Hedera Hashgraph was founded in 2018 by Leemon Baird, an American scientist and co-founder of Swirlds; the company holds patents covering the Hashgraph algorithm. The Hedera Hashgraph LLC is based in the US, and 39 term-limited global enterprises govern it. These companies manage the Hedera Consensus nodes while working together to determine the project’s future.
The governing members are responsible for council membership, regulating network rules, tokens, and approving changes to the protocol. They also elect sub-committees that operate other corporate functions like marketing and finance. Governing members receive fees from operating nodes to compensate for the security and governance. They, however, cannot take profit from the entity as members.
Right now, only the governing members are allowed to run nodes. However, after the distribution of the network’s native token HBAR improves, the node membership will be opened for everyone to participate and run the Hedera consensus node.
Founders of Hedera Hashgraph
Mance Harmon and Dr. Leemon Baird founded the Hedera Hashgraph. Mance Harmon has over 20 years of experience in senior-level roles across various startups and corporations. He is the Chief Executive Officer (CEO) at Hedera Hashgraph. He is an alma mater of the Mississippi State University and the University of Massachusetts Amherst, where he studied computer science.
Dr. Leemon Baird is the Chief Scientist and Co-Founder of Hedera Hashgraph. He is also the CTO and Co-founder of Swirlds Inc. Dr. Leemon has over 20 years of experience in technology and startups; he was previously a Professor of Computer Science at the Airforce Academy. He has also been the co-founder of several startups. Dr. Leemon has a Ph.D. in Computer Science from Carnegie Mellon University; he also has multiple patents and publications in peer-reviewed journals and conferences in computer security, machine learning, and mathematics.
Hedera Hashgraph also has a team of professionals appointed by the Governing body to handle the activities of the public network. Notable names include Brett McDowell, the Chair of the Hedera Council, Lionel Chocron, the Chief Product Officer. The team has a lot of experience in science, technology, Startups, and Finance.
Hedera Hashgraph Investors
Hedera has raised over $127 million in over nine funding rounds since it was founded in 2018. Their last funding round was in February 2021, and they raised $7 million from that round of funding. Their most notable investors include CMCC, BlockWall, Block Change, Eterna, Fenbushi Digital, Mind Fund, Struck Capital, Multicoin Capital, and Digital Currency Group.
Others include Boeing Horizon X Ventures, Vestinwolf Alternatives, Tata Communications, Cognisa Capital, and Elysium Venture Capital. The investors above have participated in various funding rounds: Seed Round, Venture Round, Initial coin offering, and Funding round.
In March 2018, Hashgraph Consortium, LLC was created as a Delaware limited liability company. Hashgraph technology is shared publicly at TechCrunch Disrupt in San Francisco. Potential council members sign the first letters of intent.
On the 24th of August 2019, the Hedera Mainnet was launched, and 50 Billion HBAR were minted. In addition, the first meeting of potential council members was organized to review the Hedera LLC agreement and details of council membership.
In February 2020, the Hedera Consensus Service was launched. It serves as a trust layer for any application or permission network and allows for creating an immutable and verifiable log of messages. The application messages are submitted to the Hedera network for consensus, given a trusted timestamp, and ordered before flowing to the mirror network from which applications can subscribe for notification.
The Hedera Token Service was launched in February 2021, and it offers a tokenization framework. This is for the configuration, minting, and management of the tokens on Hedera without setting up and deploying a smart contract.
Hedera Hasgraph Tokenomics
The native token of the Hedera mainnet is the HBAR. When writing this, the market cap sits at $3.9 billion, with a total supply of 18,092,792,421 HBAR. There is going to be a total supply of 50,000,000,000 HBAR at maximum.
The HBAR token serves the following purposes:
- Transaction Fees: clients pay fees in HBAR to consensus nodes for processing and timestamping transactions. It is also needed for subsequent maintenance like storing a file on token balance. In addition, fees serve to inhibit (Denial of Service) attacks. The Fees make such attacks financially prohibitive. Fees are denominated in USD but charged in HBAR. The exchange rate between the two is updated hourly to give clients stability in prices no matter the fluctuation in HBAR price.
- Securing the network: A node’s influence towards the determination of consensus timestamp and order is weighted by the number of HBAR the node holds in its account.
- Incentivize Security: Nodes will receive daily reward payments to validate transactions during that period.
The Hedera public network has continued to grow and evolve. Many crypto heads are saying that it can compete with Ethereum, but that is yet to be precise. The scalable technology processes transactions faster and cheaper than the Ethereum Blockchain, making it a better alternative.
Hopefully, this is going to help you understand what Hedera Hashgraph is. If you have any questions, ask them in the comment section below.