After the internet, it’s the blockchain that has revolutionized the way digital world operates. From digital currency to smart contracts, everything is powered by blockchain. Gone were the days when web 2.0 ruled the internet industry, with blockchain came web 3.0
What if I tell you there’s a new technology that claims to be better and faster than the blockchain. Look no further, it’s Hedera Hashgraph. Hedera is not just another crypto project or a smart contract, it’s a completely new technology that has its own consensus mechanism and its own currency i.e HBAR.
Does Hedera have what it takes to surpass blockchain technology? Is it the next Ethereum in the making and should you invest in HBAR? All these questions will be the point of discussion in this post. Why wait more, let’s unpack Hedera Hashgraph.
What is Hedera Hashgraph?
Hedera is a public hashgraph network which was debuted as an alternative to blockchain technology. Hashgraph is a distributed ledger technology that does not use miners to confirm and validate a transaction. It is based on Directed Acyclic Graph (DAG) that uses “gossip about gossip” protocol and virtual voting to achieve consensus.
Hedera was founded by Dr. Leemon Baird and Mance Harmon in 2016. It was launched by Swirlds, a company co-founded by Dr Leemon in the same year. Dr. Leemon is the brain behind the development of the hashgraph algorithm and Harmon took care of the project’s marketing and development.
Hedera calls itself the 3rd generation public ledger that can attain high security (aBFT), speed (10000+ TPS) and finality (2.93 seconds). It is owned and operated by global enterprise governing members including Chainlink Labs.
Hedera Governance:
Hedera is governed by a Governing Council that consists of 39 global enterprises and organizations across 11 different industries. The Governing Council plays a major role in making key network decisions like treasury management, software updates, network pricing and more. It is important to note that the members do not receive any profit from Hedera.
Hedera support Smart Contract and DAPPS
What is Hedera HBAR Coin?
HBAR is the currency of the Hedera network. It serves as a utility token for supporting peer to peer transactions, decentralized applications (DAPPS) and securing the network. DAPPS use HBAR to pay for computation power used to execute smart contracts and for storing files on the network.
Hedera users can earn HBAR tokens by running the node in the network and it is achieved in two ways –
- Staking
- Proxy Staking
Staking:
Hedera ledger uses proof-of-stake consensus mechanism, in which the node’s influence on the consensus is directly proportional to the amount of HBAR staked. After HBAR tokens become widely distributed, Hedera will allow anyone holding HBAR to host a node in a permissionless manner.
Proxy Staking:
Anyone who owns HBAR tokens but does not own a node can still stake their tokens to participate in the consensus. By doing so they can earn a small amount of HBAR tokens as part of the proxy staking reward. The payment is split between the owner of the node and the user who staked HBAR.
Fee Schedule:
Node Fee:
Any action that engages the network node will attract node fee. This is charged to compensate the node for spending a small amount of energy and resources. Initially, Hedera governing council will set the node fee and later it is decided between the node and the user. The fee must be paid directly by the end-user to the node operator.
Only Node fee is paid directly to the nodes by the end user or client
Network Fee:
After a transaction is submitted to the network, it is further confirmed and validated by other nodes to reach consensus. Users pay the network fee to compensate for this effort of validating the transaction on the network.
Service Fee:
Service fee is paid to the nodes to compensate them for maintaining or supporting a transaction. For example, a transaction that requires nodes to store files for a given period of time will attract service fee and similarly, executing a smart contract will require processing power which will again be charged with a small amount of service fee.
Network Payments:
Incentive Payment:
Hedera release payments to the eligible nodes who are active for 24 hours on a per-day basis. The amount equals the proportion of HBAR staked on the node.
Dividend Payment:
Dividend payments are paid to the governing members for their role in the network.
The total supply of HBAR token is 50 billion
Hedera Hashgraph Architecture:
1. Internet Layer:
The Hedera network nodes are like computers on the internet communicating by the TCP/IP connections and TLS encryption. Nodes are addressed by IP address and port.
2. Hashgraph Consensus Layer:
The nodes carry transactions and share them throughout the network using gossip protocol. Then all nodes run the hashgraph consensus algorithm to validate and timestamp each transaction and its consensus order in history.
3. Service Layer:
The service layer is divided into sub-layers to perform a specific action –
a. Cryptocurrency:
HBAR is designed to be a fast currency that ultimately leads to lower network fees that can beat any blockchain network. Users will be able to create an account without any name or address like a blockchain wallet, although there is a scope of adding KYC to adhere to regulatory compliance.
b. File Storage:
This part allows the network to store files. The same is stored on every node that prevents it from crashing or being lost. Only the user who has the permission can delete the files stored in this layer.
c. Smart Contracts:
This part runs smart contracts. Interestingly, it can also run smart contracts written in Solidity using EVM (Ethereum Virtual Machine).
d. Consensus:
The Consensus layer gives DAPPS direct access to speed, security, and fair ordering guarantee using the Hashgraph algorithm. This process is further supported by Mirror Nodes.
A look into Mirror Network:
The Mirror network is similar to the Hedera network but in a “read-only” mode. It can pass the transactions “gossip” and verify the digital signature but cannot submit them because it is unable to create an event.
Mirror network plays an important role in reducing the network load by increasing its performance. Take for example, a smart contract is executed that checks the output of the DAPPs hosted on the network. It will use mirror network to complete its action without interfering with the design of the network (read-only).
How Does Hedera Hashgraph Work?
Hedera works on a graph like structure where every node communicate their information to each other using the following protocols –
- Gossip about Gossip
- Virtual Voting
Gossip about Gossip:
Just like human gossip, the nodes gossip with each other by sharing transaction information in a random manner to ensure each node has the information about the transaction taking place on the network.
Virtual Voting:
To achieve consensus, virtual voting is required since each node is aware of the information shared by the other nodes in the network and each node can predict what the other node would vote for. After verification, transactions are time-stamped to keep the track of historical data.
Hedera HBAR Coin ICO:
HBAR ICO took place in August 2018. The token was priced at $0.12. The total amount raised from ICO and funding rounds was $124 million. Later in 2019, HBAR was launched with the mainnet beta of the Hedera Hashgraph platform.
Hedera Hashgraph vs Blockchain:
| Parameter | Hedera | Blockchain |
|---|---|---|
| Rights | Patented & open-source | Open Source |
| Consensus | Virtual Voting, GAG | Multiple (POW,POS,BFT) |
| Applications | Swirlds | Ethereum, Bitcoin, EOS etc. |
| Speed | 10,000+ | 10 to 65,000 tps |
| Security Mechanism | aBFT | Cryptography (Hashing) |
Hedera Hashgraph Benefits:
Partnerships:
Hedera has forged noteworthy partnerships across various industries and enterprises like LG, IBM, Boeing etc. In 2020, it onboarded Google into its Governing Council. Strong connections reflect the strength of the project.
Check out the major partnerships inked by Hedera to boost the ecosystem.
Micro Payments:
Users or organizations can use Hedera as digital payment, offering faster, low-cost settlement using the Hedera network. It aims to provide cryptocurrency as a service.
Strong Team:
Hedera is backed by one of the strongest teams in this space. The founder himself is the creator of hashgraph algorithm. The project has attracted a lot of support from Governing Council like Google and IBM which will help stir the project in the right direction.
Security:
Hashgraph claims to achieve the highest level of security i.e Asynchronous Byzantine fault Tolerance (aBFT) in which the consensus can be achieved in the presence of faulty nodes. Making it the safest network to make a transaction.
Ethereum Friendly:
Hedera can run smart contracts built on Solidity which is the language of Ethereum blockchain. At the same time, making it compatible with the number one smart contract platform in the crypto space.
Hedera Hashgraph Drawbacks:
Transaction Speed:
The network currently operates at 10 transactions per second for smart contracts which is lower considering we have projects like Solana crypto (SOL) and Avalanche crypto (AVAX) operating at a much higher rate.
Not Open Source:
The project is patented and the code is not available to the public. In one way, it helped thwart the competition but in the long run, it has stopped the project from exploring its true potential that can go beyond imagination. Take for example, Bitcoin and Ethereum both are blockchain based projects but Ethereum has expanded the use case of blockchain technology beyond expectations. Now imagine if blockchain was a patented technology.
On August 2022, Hedera made its code open-source
Unclear Tokenomics:
Hedera HBAR tokenomics is as clear as a muddy glass in the dark. There’s no document explaining the percentage share of token holders. The only thing you can get from the whitepaper is the token release schedule.
Decentralization:
Though the project’s technology operates in a decentralized environment. There’re concerns around the Governing Council that owns the Hedera ecosystem and has complete control over the network treasury.
Hedera Hashgraph Coin Price:
Please check the latest Hedera Hashgraph coin price, shared below –
Hedera Hashgraph Coin Price Prediction:
HBAR ICO was priced at $0.12 per token. The coin made a good start with an opening price of nearly $0.41 per token, later it fell below $0.10 and stayed there for a long period. 2021 was the year to remember when HBAR hit an all-time high of $0.56 per token and then fell back to $0.25.
It is currently dangling in the area between $0.20 – $0.30 waiting for a breakout. The technicals aren’t strong and there’s no strong reason for the price to go beyond $1. The yearly token release schedule adds to the misery.
On the bright side, the coin responds very well to the bull market that may help it hit a price anywhere around $0.90 but hitting $1 and sustaining beyond that will be an uphill battle.
Where to buy Hedera HBAR Coin?
HBAR coin can be purchased from leading crypto exchanges like Binance & Coinbase. Since it’s a different technology, the coin won’t be available on the known decentralized exchanges like Uniswap or Pancakeswap crypto exchange.
Is HBAR Coin worth Investing?
When the world was busy exploring blockchain technology, Hedera silently launched its Hashgraph technology that competes shoulder to shoulder with blockchain. Like blockchain, Hedera is a new concept and has already made noteworthy partnerships by onboarding the global enterprises that head its Governing Council. Google, IBM, and Boeing are few among them.
The project is also financially stable from the time it raised $124 million in the ICO and funding rounds. All the good news may want you to jump in and purchase some HBAR, therefore allow me to highlight the other side of the coin.
HBAR has unclear tokenomics. It is unknown who owns the largest pie. The yearly token release is another pain point for investors waiting for big gains in the market. The technicals aren’t good and the price chart reflects that clearly.
In short, Hedera is a stable project with strong backing from investors and the global enterprise but it may not be the first choice for anyone looking for big gains in the next 3-5 years period.
This completes my review of Hedera Hashgraph. In the next post, I will put some light on buying Pavia land in Pavia Metaverse and SundaeSwap. If you’re a fan of blockchain technology then please do share it on your social handles and educate everyone around you. Do remember to subscribe to my YouTube channel for more informative content, released every week.
DISCLAIMER:
Cryptocurrency is a highly volatile market. All the information shared in the post is for knowledge purpose only. By no means, it’s financial or investment advice. Readers are responsible for their own investment decisions and should only invest in cryptocurrency after proper research.
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Paras is a blockchain writer & video creator at Katoch Tubes. In his free time, he loves watching space exploration documentaries & Hollywood movies.