Hedera is an enterprise-grade public ledger and governing body which supports new and existing decentralized applications on the web 3.0 scale. Self-proclaimed as the 3rd generation of blockchains, Hedera has introduced groundbreaking technology with high speed, low costs and effective security for its users.
Following its launch, the project has proven itself a true competitor to not just traditional blockchains but also companies like Visa and other mass payment systems. Hedera’s potential impact on society as a challenger to the existing limitations of blockchain technology, has put the project in the spotlight ever since. Backed by some of the world’s most credible organizations, Hedera now supports up to 6.5 million transactions per day, with 600K+ accounts and 6.9 seconds latency.
Hedera was created in 2018 by Dr. Leeman Bird and Mance Harmon as a decentralised public network and governing council. While the protocol serves the same purpose as any other public blockchain like Ethereum, Hedera does so faster, cheaper, safer and more energy efficient. This is a possibility thanks to their underlying algorithm – Hedera is the only existing decentralized network built on a unique hashgraph algorithm. This hashgraph consensus algorithm enables maximised bandwidth usage, allowing the Hedera network to process thousands of transactions per second in a single shard.
The Hedera network is powered by its native cryptocurrency, HBAR, which can be used to power dApps, make payments and keep the network secure. Any processes involved in the network are executed through the use of HBAR, reflecting its versatile utility. The token now ranks 35th in terms of market cap, with the total market cap standing at more than 5 billion. Hex Trust has integrated the Hedera network and the Hedera Token Service (HTS) standard into Hex Safe, enabling support for HBAR, the Hedera network’s native cryptocurrency, and all HTS issuances on the protocol.
Another crucial component of Hedera is its governing council, which comprises up to 39 enterprise bodies. Currently, there are 14 governing council members, some of which are Hex Trust’s partners: IBM, DLA Piper, Chainlink Labs, LG, Google and many more. Each of these governing bodies act as node operators and decision makers for Hedera’s network and services. To ensure decentralization, each member shares equal voting power and are only allowed a maximum three year term with up to two consecutive terms.
As any blockchain, Hedera allows third party applications on its mainnet. It currently supports a range of applications from various industries, including but not limited to real estate, health, finance, media and legal.
As a decentralized public ledger, Hedera is currently working towards being a fully public and permissionless network – meaning anyone can develop applications on the network (public) and any node can freely/anonymously contribute in return for rewards (permissionless). Right now, Hedera functions as a public permissioned ledger, as currently the governing council operates its nodes. They soon plan to fully leverage a proof-of-stake protocol and work towards providing any individual/organization access to node operation in return for HBAR. Overall, the Hedera network’s aim is to allow any participant to develop trust and securely collaborate without a need for a trusted intermediary.
The way that Hedera operates explains its cost efficiency, speed, security and many other advantages. Much like any other blockchain, the Hedera network is composed of individual nodes which work to process transactions. What makes it special is that it’s powered by a different network architecture or structure called the Directed Acyclic Graph (DAG). Instead of long, sequential chains of blocks which have to be mined (like Proof-of-Work used by Bitcoin), Hedera’s transactions are processed by the collective agreement of fully interconnected nodes. This is referred to as the gossip-about-gossip method, where nodes “gossip” to one another in order to come to consensus regarding the validity and timestamp of transactions. The unique hashgraph algorithm also ensures that every block of transactions are incorporated into the ledger, allowing maximum efficiency.
Hedera offers two main services to its users:
TOKO, a digital asset creation machine supporting value creation, uses both of these services. The project just completed the first ever tokenization of private debt, with the issuer being Calcite Limited, DLA Piper providing legal services, and Hex Trust acting as the custodian for the safekeeping of investor’s tokens.
Hedera has stated two main aims for the future: widespread coin distribution of HBAR and full decentralization of their network. It’s clear that Hedera proves itself as a solution to some of blockchain technology’s largest unsolved challenges such as high costs, vulnerable security and lack of scalability.
Hedera shows potential for revolutionizing the use of blockchain networks and enabling mass adoption by providing its many benefits. First and foremost, Hedera allows micropayments which is rarely heard of in the blockchain industry. Having this advantage could prove a gateway for mass adoption of decentralized networks and payment systems. Additionally, the network has shown enterprise grade security thanks to asynchronous Byzantine fault tolerance, a mechanism supporting distributed ledger technology security. Whilst many networks have been challenged by network attacks and security hacks, Hedera has shown resilience with their strong security, essential for applications involving financial transactions. This would provide further opportunities for financial institutions to enter the digital asset landscape, and allow greater user confidence when transacting on the Hedera network.
Use cases provided by Hedera, particularly around healthcare, also prove crucial in the mass adoption of the network – a good example is Everyware, a firm that has created tamper-proof digital records of COVID-19 vaccine temperatures. Hosted on the Hedera network, this service is now being used by UK’s top hospitals.
As the co-founders of Hedera put it, “Hashgraph is an alternative to blockchain – a first generation tech with severe constraints in terms of speed, fairness, cost and security”. Hedera could be the first of its kind to tackle the blockchain trilemma, given its efforts to achieve full decentralization in the future. Referred to as the ‘blockchain killer’, Hedera shows immense potential to tackle some of the largest challenges faced in the blockchain industry today.