Introduction:
Hedera is a public network similar to the internet and all those different type of blockchains we’ve talked about in the past.
Hedera specifically runs on a hashgraph form of technology which is a relatively new type of data management that uses proof-of-stake consensus mechanism now that may sound really really technical to you.
What is the Internet ?
The internet is a public network where anyone can create content and share it with anyone else most people have a basic understanding that the internet is basically just shared information. Few people who use the internet actually know how it works and that’s completely okay just like we don’t need to understand how all the pieces of a car work to drive it we don’t need to completely understand how the internet works. To use it still it wasn’t always as easy to create and share content as it is today different types of Technology have been introduced to help people build on the internet. More easily hedera is creating a suite of tools that will supposedly make it easier to build on a new type of decentralized network that they call hashgraphs.
What is Hashgraphs :
Hashgraphs the information sharing technology that hedera uses if you’re familiar with blockchains you may know about something called the blockchain trilemma of decentralization security and scalability. Basically this trilemma means that one blockchain cannot solve all three of these problems usually it can only solve two very well and the third one is lacking hashgraph technology.
However supposedly can it does this because hedera isn’t even a blockchain in fact it uses a special type of Technology called a dag which stands for directed a cyclic graph that orders transactions shared on the network. Now it’s a little complicated but if you know how Iota works hedera is quite similar also similar to a proof-of-stake blockchain hashgraph technology utilizes nodes where anyone can host a known that will help maintain the network. Now you might be wondering what the heck’s a node well a node is usually some software that stores and updates the transactions and The Ledger on someone’s computer so theoretically even you could be a node.
Now what a hashgraph does is make sure that every event on the hashgraph shows up in The Ledger which can be a transaction it could be a message a smart contract any other form of information sharing and it usually has these four things number one a timestamp of when the transaction reached. The Ledger number two the transaction itself whatever that transaction was number three the hash of the last message created by the node and number four the hash of the last message created by the node that sent them this message as an example to make that a little easier.
Hashgraphs Example:
To understand Hashgraphs we can think about out like a phone call as an event if you call your friend over the phone the phone keeps track of when you received that call then you tell your friend about an awesome new video game that you bought which this might be the content of the transaction you also tell your friend that you actually called your brother and told them first.
So now your friend knows four different things they know what time you called them they know what your message was they know who you talked to before talking to them and they also know what they did before you called them. So maybe they talked to a friend about something else this is basically what a hashgraph is doing it’s keeping track of all of this information for each person or node that they send and receive. Okay but what about if you lie to your friend about who you spoke to before them what if you actually spoke to your sister instead of your brother but you didn’t want your friend to know that because maybe they don’t get along or something this is actually a really big concern. When it comes to information sharing especially when it has to do with money because what if I’m trying to buy something but someone else claims that they bought it first well the thing is my sister would know that I call called her first and whoever she spoke to after that would also have the information because remember they also get the information about who she talked to last the time stamps that are a part of every message show the event of her talking to me happened before the event of me talking to my friend or her talking to her friend. So overall every single node or in our example every single person gets a copy of all of these events so every person has exactly the same information very similar to a blockchain but in the actual hashgraph technology all the contents of the messages are actually hashed to keep private and encrypted so you can’t actually tell what these messages say you just know that they’re there this way your friend wouldn’t know actually who you talked to or what was said just that you did indeed talk to someone at a specific time as I mentioned earlier. Lota also uses a dag and the way that they make sure their notes aren’t lying and that there is one single seamless list of transactions is that they use something called a coordinator which is quite controversial. But it basically means that it’s quite centralized hedera does something similar except they call it the gossip protocol in fact the system of one node telling another node about even another node has been dubbed the gossip protocol by hedera. And it’s very much like gossip in middle school where nodes are always sharing transaction data similar to middle schoolers sharing the latest gossip so since all of this gossip is in the form of hashes and hashgraph uses a dag which stands for directed a cyclic graph you can see where hedera came up with hash graph the messages are hashed in the form of a network is technically a graph. But what about that lying I mentioned earlier what about gossip that isn’t real or maybe gossip that is manipulative can hedera solve fraudulent transactions or gossip. As a fun fact the way that the math works out is that with a hashgraph two-thirds of all nodes need to have the same information and agree on it for the transactions to continue with a blockchain. 51 percent of nodes need to agree on the information this 51 number is a number that gets thrown around a lot in the crypto world because people are concerned about bad people taking over control of the network so far no one has actually reached and maintained 51 control in a blockchain. Right now while hedera is still in development there are only 39 companies that host nodes on its hashgraph Network so honestly it wouldn’t be too hard to get a group of them to agree to do something malicious they do say though that as the network grows and becomes more robust in terms of security and performance hedera will open node operations to more companies and even eventually individuals. Okay so that’s what a hashgraph does hashgraphs are patented which is personally something I don’t like seeing in decentralized technology and it basically means that only hedera hashgraph can use this technology nobody.
Who is Hedera ?
Who is hedera hashgraph and what do they specifically do so hedera hashgraph is actually a company based in Dallas Texas and founded by the inventor of the hashgraph technology. Lehman Baird and his business partner Mance Harmond hedera is like I mentioned earlier technically owned by 39 entities of which you might recognize some like Google Boeing IBM LG and Ubisoft are just a few now the board of directors and management team are all doxxed basically meaning that you can find out all kinds of information about them if you want to they’re not Anonymous despite. All these being companies that protect their use of patents they’ve apparently voted to make the hashgraph algorithm open source at some point but we’ll let you know when that happens basically hedera is a company that has created several services to help developers build applications on their hashgraph mainnet and they do all this with the intent that companies. And people all over the world can have easy access to this technology they believe that blockchain technology is too complicated that it’s too slow and it’s insecure for widespread adoption I don’t know if I agree with that but they think hashgraphs solve the speed and security issues so these services that hedera offers are there to help the use of it become less complicated. Now they do have three main Services the first is the consensus service which this is used to post messages on the hashgraph for time stamping and ordering the second service they have is the Smart contract Service and this helps developers create programs with a solidity code.
And number three they have something called a token service which allows applications to perform transactions anyone can access these Services you don’t need to host a node to use hedera services and in fact currently you can’t host a note anyway even if you wanted to.
One thing I do like about hedera is that there are already hundreds of applications running on hedera these include D5 applications stable coins decentralized exchanges and nft marketplaces there’s even some games being developed on it however since they use an evm which is short for ethereum virtual machine almost any application built on ethereum can easily. To secure the network by staking to nodes so this is pretty common just like I need United States dollars to make transactions in the US or that ethereum users need eth to make transactions on the ethereum network hedera users need hbar to perform transactions on the hedera hashgraph hbar is used by developers as well as people that use the apps and services on hodera like you and me now even though you can’t host your own node anyone can get some rewards by staking their hbar .
Basically instead of using a proof of work instances mechanism HBO uses a proof of stake consensus mechanism one note here for experienced viewers that know how the normal proof of stake mechanism works is that hbar doesn’t have slashing which means if there’s a bad actor and they’re proven to be a bad Staker they don’t get their token slashed or taken away I wonder if this is because the big tech companies don’t want that risk because the reasoning behind it is basically that slashing doesn’t work this.
HBAR Token:
On top of hedera’s documentation also mentioning that it might only take a third of the network to perform an attack is kind of alarming oh and another thing about their staking mechanism technically this is not a proof of stake. Consensus mechanism it is what is called a delegated proof of stake because you are giving your voting power to one of the main net nodes who votes for you one of the 39 big companies this is important because you can’t actually make your own votes. You can only give your power to someone else who votes for you moving forward transactions and tokens on hedera achieve up to 10 000 transactions per second in comparison ethereum can only handle about 12 transactions per sec with their current infrastructure the cost per transaction on hedera is always point zero zero zero one dollar which is something I’ve never seen before. This means it’s paid to the United States dollar so even if hbar triples in price or the network gets super congested the transaction cost is the same transaction costs are paid in h-bar but they’re always equal to point zero zero zero one dollars the h-bar token was originally released in 2018 in a private funding round. And there will only ever be 50 billion hbar tokens minted we call this a total Supply cap right now there are around 23 billion hbar tokens in circulation which is a little under half and because of this it’s probably going to be inflationary for a while another interesting thing I found is that currently there are 800 000 transactions per day and over 1.1 million accounts in comparison polygon has three million transactions per day and 175 million unique accounts so in its user base hedera is still quite small it is always a good thing to see that you can purchase them on major exchanges though like binance and kucoin and I’ve heard rumors of them being added to coinbase soon.