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Hedera, the public hashgraph network in the spotlight

Camilla Marziani

By Camilla Marziani

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Claiming to be a fast, carbon neutral alternative to blockchain, Hedera is a public hashgraph distributed ledger looking to shape the digital future for all in cooperation with global leading companies.

Hedera in a nutshell

Unlike most projects in the crypto industry, Hedera doesn't run on a blockchain, but introduces an alternative to blockchain technology instead: a new type of patented distributed ledger. Hedera claims to be the “most used, sustainable public distributed ledger”. Its public hashgraph network is powered by the hashgraph consensus algorithm working to provide a safe and secure space to build and implement decentralised applications for its users while positioning Hedera as the leading distributed ledger platform. As stated by Hedera’s team

“The network supports the potential for an exceptionally wide range of applications — from music-streaming services to pharmaceutical supply chain management to energy microgrids to multiplayer online games.”

Hedera’s users can enjoy several features, such as: 

At the time of its launch, Hedera wasn’t an open-source network. However, the issue was in discussion from the project’s beginning days, and Hedera finally became open source in August 2020. In the pursuit of becoming an even more accessible network, the Hedera Governing Council has recently decided to buy the intellectual property rights to the hashgraph distributed consensus algorithm from Swirlds, the start-up founded by Dr. Leemon Baird, Hedera’s co-founder, chief scientist and the inventor and patentee of the algorithm. By doing so, the Governing Council will make the algorithm open source under Apache 2.0 in 2022. 

Hedera Crypto ID

Hedera’s mainnet was launched in September 2019 and it was an immediate success, reaching around 2.2 million transactions in a week. 

Before deep diving into some of Hedera’s talents, take a look at the overview of the project to get some more information about the network in a straightforward and clear layout. 

How does a distributed ledger work? 

Even though the terms “blockchain” and “distributed ledger technology” (DLT) happen to be used interchangeably, they’re not the same thing: while blockchains are types of distributed ledgers, there are other DLTs in circulation, including Hedera. You can picture a distributed ledger as a database system with no central authority, held in place by its own participants, also called nodes

Data in a distributed ledger is spread between nodes independently, which process the data and draw certain conclusions. Afterwards, nodes vote on these conclusions until a majority is formed - which is when a consensus is reached. Since there is no central authority in a distributed ledger, everyone’s contribution is vital to the functioning of the system: each node is preserving and updating the data on the distributed ledger, voting to reach the consensus and finalising the operations.

The Hedera Hashgraph network claims to be more efficient than blockchains in several regards. Contrary to Proof of Work blockchains, this distributed ledger doesn't require mining or chains of blocks to be created  in order to process transactions. Instead, the nodes together decide which transactions will be added to the ledger by validating data and reaching a consensus. The ledger will then be updated to include them with 100% finality, resulting in a faster and more eco-friendly process. 

Hedera’s hashgraph distributed consensus algorithm 

Hedera is built on the hashgraph distributed consensus algorithm created by Dr. Leemon Baird. The two core components of this consensus algorithm are the gossip protocol, known as “gossip about gossip” and virtual voting.

When a node receives information, they will communicate it to another random node. Then, they will gossip together about it, an event called gossip sync. Both the nodes will keep a record of the gossip sync, which includes a set of data - a timestamp, two hashes of two events below the gossiping, transactions, digital signature. All the records about who gossiped with whom and in which order is collected in the hashgraph. By giving information about this order, the transactions can be inserted in the ledger without the creation of blocks. However, all the nodes need to agree.

That's when virtual voting comes into play: even though the gossip protocol ensures every node knows about events taking place in the network, they still need to agree on the order. Instead of sending votes to each other in single or multiple rounds, the nodes can find the others’ votes by looking at the copies of the hashgraphs they have and apply an algorithm - the virtual voting algorithm.

Thanks to the team work of the “gossip about gossip” and virtual voting, the network can reach a consensus by agreeing on both the validity of every transaction and its timestamp in a short time, allowing thousands of transactions per second to be processed by the network.

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The Hedera Governing Council 

Hedera wants to achieve a decentralised governance model but with no anonymous or unknown leading groups. Instead, the network is governed and owned by the Hedera Governing Council, a committee of leading global enterprises. The Council doesn’t take part in the consensus on the network but acts to maintain the network’s stability and decide on Hedera’s direction and roadmap. There can be up to 39 members in the Council. Each has an equal vote and can have up to two consecutive, three-year maximum terms. 

To maintain transparent governance, council meetings are made available on the website within 30 days of their approval. 

At the moment, the Hedera Governing Council consists of 26 international companies from diverse industries, including: Boeing, Deutsche Telekom, Google, IBM, Chainlink Labs, Ubisoft and the University College London (UCL).

What is HBAR? 

HBAR is the native token of Hedera. HBAR has a fixed supply of 50 billion tokens and can be used for various payments on the network: for peer-to-peer micropayments, for applications’ transaction fees, for services such as smart contracts and for powering DApps. 

HBAR is also used for network protection purposes, as Hedera’s public network uses weighted voting. Hedera’s official website reports: 

“Weighted voting with hbars makes it difficult and expensive for a bad actor to maliciously affect consensus — it would require them to own and stake over one-third of the network’s total supply of HBAR, which will not be possible for the first 5 years.”

Where to start your research 

A good place to start your research is the official website of the asset you’re interested in. Head over to hedera.com to learn more about the network and what are its plans for the future. Check also our educational content in the Bitpanda Academy and in our Bitpanda Blog to get insights on investing and the crypto industry. 

Where can you buy Hedera (HBAR)? 

On Bitpanda, you can buy Hedera (HBAR) in a safe, fast and uncomplicated way. All you need to do is to register and verify your account on Bitpanda and you’ll be set to invest in HBAR, more cryptocurrencies, crypto indices, precious metals and other digital assets right away.

Camilla Marziani

Camilla Marziani

Global content specialist, blockchain enthusiast and coffee lover