What is Hedera (HBAR)? Your ultimate guide

Unlike most blockchains, Hedera is built on a novel ledger technology called Hashgraph

Hedera logo                                 
Hedera charges much lower fees per transaction than Bitcoin and Ethereum – Photo: Shutterstock
                                

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An increasing number of crypto start-ups are engaged with improving on blockchain technology in order to make it more scalable and more accessible, with the view that blockchain can, if adequately fast, become the infrastructure of the future, and cryptos are battling it out to become a frontrunner in the race.

Hedera is one of these projects. It first raised capital during an initial coin offering in the summer of 2018, before launching its mainnet in September the following year. Using a novel kind of distributed ledger technology called Hashgraph, the project claims its offering is a dramatic improvement in terms of transaction speed, cost and scalability compared with other blockchains.

According to its website: “The Hedera proof-of-stake public network, powered by hashgraph consensus, achieves the highest grade of security possible (ABFT), with blazing-fast transaction speeds and incredibly low bandwidth consumption. By combining high-throughput, low fees, and finality in seconds, Hedera leads the way for the future of public ledgers.”

But how does Hashgraph work? Does the project have legs? Before we do a deep dive into the technology, let’s look at the platform’s founders.

Founders of Hedera (HBAR)

Hedera was founded by Leemon Baird and Mance Harmon in the United States.

Baird, based in Dallas, is the chief scientist at Hashgraph and is widely credited as the inventor of the hashgraph algorithm.

Before founding Hedera (HBAR), he launched a variety of companies including Swirlds Inc and BlueWave Security. He also worked as a senior research scientist at the Academy Center for Cyberspace Research, part of the United States Air Force Academy, where he had gained a BSc in computer science. Baird completed a PhD in computer science at Carnegie Mellon University.

Mance Harmon, chief executive of the Hedera cryptocurrency, studied computer science at Mississippi State University. Harmon has more than two decades of experience in founding and leading companies. He co-founded BlueWave Security and Swirlds Inc alongside Baird.

What are Hedera, HBAR and Hashgraph?

The technology behind this novel blockchain is fairly complex. With Hashgraph, the nodes share information with one another via a “gossip” protocol. This means that news of new transactions spreads through the community quickly and with resilience. To share transactions with the community a data structure containing a payload of those transactions, a timestamp, a digital signature and two hashes pointing to earlier gossip structures is created.

The sharing of this information, named “Gossip-to-Gossip”, according to the protocol’s literature, is unique to the platform. This trail of information allows nodes to engage in a virtual voting protocol, also unique to the ecosystem. Using the gossip protocol, nodes can quickly exchange information with other nodes in their local virtual community.

The salient point is that through the development of this new kind of iteration of blockchain, the platform claims, previous limitations have been done away with. The proof, Hedera says, is in the numbers. While Bitcoin can only process around 3 transactions per second (tps), and Ethereum 1.0 only 12tps, Hedera can process around 10,000tps.

The average fees on the Hedera cryptocurrency platform are also significantly lower. While Bitcoin charges $22.57 and Ethereum charges $19.55, Hedera’s average fees come to only $0.0001.

Transaction confirmation time is also slashed, the company says. While on the Bitcoin platform it takes 10 to 60 minutes to confirm a transaction, and on Ethereum it takes 10 to 20 seconds, on Hedera’s protocol it takes only 3 to 5 seconds.

Hedera also claims to be much more energy efficient and sustainable than Bitcoin and Ethereum 1.0, because it uses a proof-of-stake model rather than proof-of-work. In fact, while BTC uses 885 kilowatts per hours (kWh) and Ethereum uses 102kWh, Hedera says it only uses 0.00017kWh.

While this comparison certainly seems impressive, as it stands Hedera has far fewer transactions to process, because it is much smaller and much newer. The technology is relatively much less tested.

But what about the Hedera coin? And what is the Hedera coin used for?

Hedera coin overview

The HBAR coin is used to power applications on the Hedera (HBAR) network. Developers can use HBARs to pay for network services including managing fungible and non-fungible tokens. HBARs are also used as the staking coin as well as a governance token.

There is a current circulating supply of 18.63 billion HBAR coins and a total supply of 50 billion HBAR coins. The project has a current market cap of $5.14bn.

Hedera has surged sevenfold over the past year, but lost 16% of its value in the 14 days to January 10 2022.

There are 18.63 billion HBAR coins currently in circulation. There is a total supply of 50 billion HBAR coins.

Hedera was created by Leemon Baird and Mance Harmon in the US.

Hedera is unique because it has developed a novel kind of distributed ledger technology called Hashgraph. The project claims Hashgraph is a dramatic improvment on transaction speed, cost and scalability. 

Further reading

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