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Hedera Hashgraph presents itself as a blockchain alternative capable of processing transactions swiftly and affordably.
The majority of blockchain
The verification mechanism is based on mining, an energy-intensive process that requires computers to do fiendishly difficult computations to validate transactions. Can Hedera Hashgraph avoid this issue by eliminating mining totally and employing a whole new ledger structure? We’ll find out in the next sections.
Hashgraph is not a blockchain in the sense that it’s built on a chain of blocks. It’s best to imagine it as a graph, whereby the speed of verifying transactions goes up as more transactions are added to the network. The name for the technology it’s based on is, in fact, known as a DAG , short for Directed Acyclic Graph.
This technique is intended to assist Hedera Hashgraph in exceeding 100,000 transactions per second, allowing it to compete with Visa and other mass-market payment systems.
The Hedera network presently processes 6.5 million transactions per day with an average transaction time of 5 seconds, greatly outnumbering Ethereum’s 1.2 million and Bitcoin’s 300,000 combined.
How does Hedera Hashgraph work?
The platform and software that will operate on millions of nodes worldwide are governed by a council of 19 multinational firms from around the world. Instead of mining, nodes on the Hashgraph “gossip” with each other, comparing notes on the network’s transaction history.
As the nodes chatter, a few “famous witnesses” are chosen. Each witness is an event or a transaction that becomes well-known because it is transmitted to the nodes early in the process. The gossip about these prominent witnesses is then compared in the majority of nodes by the chosen nodes.
“So all we do is we just talk the way we talk anyway to send out our transactions, we add a tiny bit of information and it gives us this entire history. The history is called a Hashgraph.”
The goal is to achieve a state known as “strongly seeing,” in which two nodes can confidently anticipate the decision—or outcome of a vote—of a third node because they arrive at the same conclusion at numerous stages of the process.
Hedera intends to make mainnet nodes permissionless in the future, letting more individuals to participate in transaction verification and protecting the network from threats.
Hedera’s Four Main Services
The Hedera Hashgraph network is made up of four primary components or services that operate together to enable value transfers, the generation and execution of smart contracts, file transfers, and other functions. They are as follows:
- HBAR: A cryptocurrency
- used for enabling low fee, highly customizable transactions on Hedera.
- Smart contracts: Used for automatically executing logic and building decentralized applications targeting numerous possible use-cases.
- File Service: For redundant, distributed file storage with granular controls, like append and deletion.
- Consensus Service: For attaining fast, fair, and secure consensus in any application that requires trust
How is Hedera Hashgraph different to blockchain?
The main difference between Hedera Hashgraph and some blockchain-based platforms is that it doesn’t require compute-heavy proof of work.
The Advantages of Hedera Hashgraph
Hedera Hashgraph promises to offer the maximum level of security conceivable, even while malevolent actors are present on the network, thanks to the nodes’ use of a mechanism dubbed aBFT (asynchronous byzantine fault tolerance).
Hedera Hashgraph is quicker than the Bitcoin or Ethereum blockchains because transactions may be processed in parallel rather than serially, and it has low latency—it only takes a few seconds for a transaction to be sent out and validated (with 100% confidence) by the network.
The Hedera Hashgraph platform supports the same object-oriented programming language, Solidity, as Ethereum does, which is often used for smart contracts. By enabling smart contracts, the platform can be used to create decentralized applications (dapps), which may be utilized for a number of applications such as gaming, decentralized finance (DeFi) goods, digital identification, and more.
It also has incredibly cheap fees and fast transactions, with transactions achieving ultimate finality in seconds and transaction fees of less than one penny. Bitcoin transactions, on the other hand, can take more than 10 minutes to confirm and have maintained an average transaction cost of more than $1 throughout much of 2020. Fees jumped beyond $10 in early 2021, reaching as high as $30 each transaction.
The Disadvantages of Hedera Hashgraph
Hedera Hashgraph, unlike many other cryptocurrencies, is not open source. Instead, the technology is copyrighted, prohibiting developers from forking the protocol to create their own public versions, as Bitcoin (BTC) was forked into Bitcoin Cash (BCH), and Bitcoin Cash into Bitcoin SV (BSV).
Swirlds, the company behind the platform, argues that the algorithm is patented to prevent the loss of network effects, which sees the value of the hashgraph climb with a growing user base. Since forks can split communities and user bases, this can represent a risk to firms building on forkable chains—which Hedera has eliminated with its patents.
Aside from that, with just 19 governors, it’s debatable if Hedera Hashgraph provides the decentralized answer that blockchain purists seek. However, because each governor is an industry-leading, highly recognized corporation, it is doubtful that they will do something that is not in the best interests of a network in which they have a significant investment.
Did you know?
Hedera Hashgraph’s co-founders Leemon Baird and Mance Harmon met while they were both in the US Airforce. They have now been working together for 25 years.
What are Hedera Hashgraphs’s aims?
Hedera Hashgraph raised $120 million in token sales in 2018. The funds will be used to build cryptocurrency as a service to allow micropayments, as well as storage in the form of a distributed file service that apps may utilize, and to allow contracts, including smart contracts, on its platform.
Since releasing its mainnet in 2019, Hedera Hashgraph has grown from strength to strength, and its boasts of being able to support more than 10,000 transactions per second (tps) for normal hbar token transfers have so far proved correct. However, for transactions that activate a smart contract, the network is currently throttled to 10 tps. This is roughly on par with Ethereum and other smart-contract capable blockchains.
The platform’s creators have said that the throttling would be gradually eased over time. Until then, it’s unknown if Hedera Hashgraph can handle the tremendous demand that popular dapps on other networks have experienced, which has occasionally damaged networks like Ethereum and EOS.
However, Hedera’s achievements took a while to be reflected in its token price. HBAR launched with a price of $0.36, but quickly slumped to $0.03, less than a tenth of its original value, where it has for the most part remained throughout 2019 and 2020. This changed in 2021, however, as the price has rocketed up to a new all-time high of $0.42—in line with the general market rally.
Hedera Hashgraph’s Partnerships
Since its initial coin offering (ICO) more than three years ago, Hedera Hashgraph has formed partnerships and collaborations with a diverse spectrum of companies and institutions, including Boeing, LG, IBM, and University College London (UCL).
Hedera Hashgraph also welcomed Google to its governing council in February 2020, possibly its most significant relationship as yet. As part of the agreement, Google will host a Hedera network node and participate in network governance.
Payments provider eftpos, Standard Bank, and energy behemoth EDF have just joined its council.
Which companies are building on the platform?
- ? Virtual trading platform TrakInvest.
- ? Agryo, a farming loan platform that’s building a decentralized data-driven prediction model.
- ? Carbon, which has launched the first stablecoin on Hedera.
- ? AdsDax — a fast and fair ad marketplace built on Hedera.
The future of Hedera Hashgraph
In February, Hedera launched the Hedera Token Service, enabling anyone to create tokens on the platform. Transferring tokens will cost just $0.001. There are already a number of projects building tokens on Hedera but this will be fleshed out in the months ahead.
Proud of the Hedera team today for lauching the @Hedera Token Service (HTS) live on mainnet. Our initial token ecosystem consists of 60+ wallets, exchanges, custodians, token issuers, council members, and more. https://t.co/1cEf54MDwt
— Leemon Baird (@leemonbaird) February 9, 2021
Simultaneously, a number of enhancements to the Hedera Hashgraph mainnet are scheduled in the next months. According to its roadmap, there are goals to decrease the amount of downtime required for network maintenance (unlike decentralized coins that run continuously even while being upgraded).
The network will also witness the introduction of scheduled transactions. This is where someone indicates a time in the future when they want the transaction to take place. Alternatively, it might be when someone requires a transaction to be signed by a certain number of persons before it is transmitted.
More enhancements are planned for the second half of 2021. These include allowing several parties to make transactions as well as sharding, which divides the network into numerous “shards” to improve the amount of transactions it can perform.
Whatever you want to say about it, Hedera’s intentions are clearly ambitious.
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