A Detailed Explanation of Hedera's Rise: From Blockchain to Hashgraph

Original Title: 《From Blockchain to Hashgraph: The Rise of Hedera》

Author: Kadeem Clarke

Compiled by: Cointime Freya, CoinTime

An increasing number of cryptocurrency startups are striving to improve blockchain technology to make it more scalable and accessible. They believe that as long as the blockchain is fast enough, it can become the infrastructure of the future.

Cryptocurrencies are competing to be the frontrunners in this race. The creation of Hedera aims to address the issues brought by blockchain technology and to provide an alternative for developers and users to conduct transactions and deploy decentralized applications using public distributed ledger infrastructure. This significant feature sets it apart from other products.

What is Hedera?

Hedera is a new type of public distributed ledger technology model used for developing and deploying decentralized applications (dApps) and microservices. Hedera's public distributed ledger technology facilitates the efficiency of transactions and the consensus of a decentralized network to ensure confidentiality and fairness.

Hedera is a project built on blockchain and directed acyclic graph (DAG) technology, with DAG technology used for data storage in Hedera as an alternative to traditional blockchain technology.

Driven by Hashgraph consensus, Hedera's proof-of-stake public network achieves the highest level of security, lightning-fast transaction speeds, and low bandwidth consumption.

History of Hedera

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

Baird, who resides in Dallas, is the chief scientist of Hashgraph and is widely regarded as the inventor of the Hashgraph algorithm.

Before founding Hedera, Baird had already established several companies, including Swirlds Inc and BlueWave Security. He also served as a senior research scientist at the U.S. Air Force Academy's Cyber Space Research Center, where he earned a bachelor's degree in computer science. Baird obtained his Ph.D. in computer science from Carnegie Mellon University.

Mance Harmon, the CEO of Hedera, studied computer science at Mississippi State University. Harmon has over 20 years of experience in entrepreneurship and business leadership. He co-founded BlueWave Security and Swirlds Inc with Baird.

• In 2018, Hedera was renamed Hedera Hashgraph, LLC. During its token sale, Hedera Hashgraph raised $120 million. The mainnet of Hedera went live, with circulating HBAR tokens reaching 50 billion.
• In 2019, Hedera announced its first batch of governing council members.
• Hedera Hashgraph partnered with Google in 2020 to establish a governing council.
• On September 15, 2021, the HBAR token reached an all-time high of $0.5518.

Currently, a "governing council" consisting of up to 39 global companies and entities owns and manages Hedera.

What is Hashgraph?

The technology behind this new type of blockchain is relatively complex.

Hashgraph nodes share information using a "gossip" protocol. This means that messages about new transactions spread rapidly and continuously throughout the community.

To share transactions with the community, Hashgraph creates a data structure that contains the payload of these transactions, a timestamp, a digital signature, and two hashes pointing to previous gossip structures.

According to the protocol documentation, the information sharing known as "gossip about gossip" is unique to this platform. This information tracking allows nodes to participate in a virtual voting protocol, which is also unique to this ecosystem. Using the gossip protocol, nodes can quickly exchange information with other nodes in their local virtual community.

The platform claims that due to the development of this new blockchain iteration, previous limitations have been eliminated. Hedera claims that "data is evidence" because it can handle around 10,000 transactions per second (tps).

The average fees on the Hedera cryptocurrency platform have also significantly decreased. The average fee on Hedera is $0.0001.

Transaction confirmation times have also shortened, with Hedera's protocol requiring only 3 to 5 seconds.

Because it uses a proof-of-stake model instead of proof-of-work, Hedera claims to be more energy-efficient and sustainable than Bitcoin and Ethereum 1.0. Hedera consumes only 0.00003 kWh.

Blockchain vs. Hashgraph

Will Hashgraph Replace Blockchain?

Hashgraph is key to solving the current issues in blockchain development. It has the potential to fundamentally change the economy. However, it is still too early to claim that blockchain is superior to Hashgraph. In terms of maturity and use cases, Hedera Hashgraph is still in its infancy compared to blockchain, so it is premature to predict that it will soon surpass blockchain.

The only way to determine whether Hedera Hashgraph can become a viable alternative to blockchain technology is to wait for both systems to mature and for all issues to be resolved. After all, only then will the true potential of blockchain and Hedera Hashgraph be revealed.

However, there are several advantages to using Hashgraph compared to using blockchain technology: the adoption rate of blockchain continues to grow, and private blockchains make it more attractive to enterprises.

Problems Addressed by Hedera

Hedera and Hashgraph are attempting to solve five issues. Hedera believes that addressing these issues can promote the widespread adoption of distributed ledger technology.

1. Performance

Hedera claims its speed is extremely fast, capable of processing over 10,000 transactions per second and completing transactions within 3-5 seconds.

Previously, Hedera's testnet achieved a throughput of 50,000 transactions per second. In one test, constrained by a single continent, the platform achieved a speed of 500,000 transactions per second.

2. Security

Hashgraph's consensus algorithm is Asynchronous Byzantine Fault Tolerance (aBFT), which is considered one of the most secure consensus methods.

Hedera ensures that no member can disrupt community consensus or alter records after reaching consensus through aBFT. Less than one-third of the nodes can be attackers, ensuring that the network can tolerate faulty nodes.

When the network reaches consensus, the community is notified in real-time, ensuring that consensus is not disrupted. This means that even if some network nodes go down or are compromised, aBFT protects Hedera from malicious nodes and DDoS attacks.

3. Governance

Hedera Hashgraph defines two governance models.

The council governance model we mentioned is Hedera's overall governing body responsible for maintaining the decentralization, trustworthiness, and stability of the network.

Each council member can serve a maximum of two consecutive terms, with each term lasting three years.

This configuration allows individuals or organizations to wield more power. The consensus model is the second governance model, allowing anyone who wants to run a node to do so.

The consensus model allows anyone to run a node, contribute to consensus, and earn rewards for their efforts. The team expects the number of nodes to increase rapidly, significantly enhancing the decentralization of Hedera Hashgraph.

4. Stability

Hedera Hashgraph has stated that it will never fork, as the platform maintains stability through legal and technical controls to prevent forks. This can prevent the emergence of competing platforms, reducing confusion and uncertainty.

The technical controls create two functionalities. First, the software client can always verify the lineage of Hashgraph using a shared state mechanism. This shared state includes all nodes providing verification information and the consensus state of the network.

In such a shared state, malicious actors cannot disrupt the network and can also prevent any node from forking or making changes, then pushing it as valid information throughout the network.

The second functionality ensures that any software changes made by the governing body are legitimate, as they will automatically update and be specified across the network.

5. Compliance Regulation

Through an optional identity mechanism, Hedera achieves KYC/AML compliance.

It is known as the Opt-in Escrowed Identity System, which allows verified identities to be associated with other anonymous wallets.

As governments continue to increase regulation in the cryptocurrency space, this feature makes it easier for Hedera to achieve widespread adoption.

HBAR Token

Hedera Hashgraph (HBAR) is the native governance token of the Hedera ecosystem, used to support decentralized applications and protect the network from malicious activities.

Developers use HBAR to support network services such as HBAR transfers, token management (both fungible and non-fungible), and data recording.

HBAR tokens are also used for the following utilities:

• Payments: HBAR tokens are used to pay transaction fees on the Hedera platform.
• dApp Access: HBAR holders can access dApps published on Hedera.
• Staking: HBAR tokens are used for staking and becoming transaction nodes.
• Rewards: Users will receive HBAR token rewards for participating in node processing.

Currently ranked 33rd on CoinMarketCap, with a real-time market cap of approximately $2 billion (as of April 14, 2023).

Its circulating supply is 3.06 billion HBAR tokens, with a maximum supply of 50 billion HBAR tokens.

Network Services

Hedera offers four main services: Token Service, Consensus Service, Smart Contract Service, and File Service. Developers can connect to the network using JavaScript, Java, and Go.

1. Hedera Token Service:

You can configure, mint, and manage native fungible and non-fungible tokens on the Hedera network without deploying expensive and potentially faulty smart contracts.

2. Hedera Consensus Service:

You can record immutable, verifiable, and relatively ordered event data for any application or permissioned blockchain framework. Tracking assets throughout the supply chain, creating auditable event logs on advertising platforms, or using it as a decentralized ordering service are all valuable.

3. Hedera Smart Contract Service:

Ability to build scalable decentralized applications and protocols on Hedera using Solidity smart contracts. This service is EVM compatible, allowing Solidity to run on the Hedera network without any changes. Smart contracts on Hedera are optimized for Hashgraph.

Due to the efficiency of Hashgraph, your contracts can run quickly in seconds while having low carbon energy usage and always predictable gas fees.

4. File Service:

You can store smart contract bytecode, address books, credentials, and other critical documents on the Hedera network.

Hedera Ecosystem

Since Hedera recently launched an open-source SDK for developers, around 100 dApps are committed to building on the Hashgraph platform. Additionally, over 5,000 developers are actively participating in the Hedera Hashgraph Discord channel, discussing the development of applications based on Hedera Hashgraph.

Hedera Hashgraph is poised to disrupt the finance, real estate, gaming, media, and entertainment industries through smart contracts, file storage, and native cryptocurrencies.

Web3 projects are building the next generation of applications on Hedera, covering areas such as DeFi, NFTs, creator economy, and sustainability. Here are some examples of Web3 applications on Hedera:

Enterprises are using Hedera to improve business processes and procedures across CBDC, supply chain, finance, fraud mitigation, and more. Here are some examples of enterprise applications on Hedera:

Over 4 Billion Transactions

Hedera appears to be rapidly expanding, as they announced in a tweet on February 13 that the Hedera mainnet has officially processed over 4 billion transactions:

Hedera's Carbon-Negative Network

In the field of distributed ledger technology, Hedera's carbon-negative network offers a sustainable option. The use of a proof-of-stake consensus mechanism significantly reduces carbon emissions. Additionally, the network actively addresses climate change through various initiatives, including developing sustainability tools, supporting green projects, and donating to climate trading organizations.

Hedera's carbon-negative network provides a sustainable option for distributed ledger technology and outperforms other blockchain alternatives in performance.

Compared to leading blockchain networks like Algorand, Cardano, Ethereum, and Solana, Hedera has the fastest transaction speed, the highest transaction volume per second, and the lowest energy consumption.

This is not just a claim. It proves that Hedera's network is an excellent choice for enterprises seeking reliable, efficient, and environmentally friendly blockchain solutions.

Energy Solutions on Hedera

1. Verde Block

Verde Block is leveraging Hedera's distributed ledger technology to create history by providing a platform that allows for transparent, trustworthy, public, verifiable, and renewable energy purchases.

2. BlockScience

BlockScience is a complex systems engineering company that has developed a pricing mechanism for semi-fungible assets on the Hedera network through The Guardian. This mechanism, known as the Automated Regressive Market Maker (ARMM), allows for effective and transparent pricing in sustainable value energy markets such as renewable energy credits (REC) and carbon offset/removal credits (CORC).

3. Tamuwa

Tamuwa is an African company that converts carbon waste into renewable alternative fuels, using the Hedera network to digitize verified emissions reductions through its platform Cynk.io.

Tamuwa is the first African organization to receive funding from the HBAR Sustainable Impact Fund.

4. Energy Transition

Hedera has also partnered with Power Transition to fundamentally change how government personnel use electricity and energy. Users will obtain energy through peer-to-peer exchanges of HBAR.

Conclusion

The technology of Hedera Hashgraph is revolutionary in the world of blockchain. The addition of technologies such as virtual voting, gossip protocol, and aBFT makes the network more secure, faster, and fairer.

As the first participant in the Hashgraph field, their technology has the potential to become the next wave in the cryptocurrency space. With the features of a third-generation public ledger, they certainly belong to the underestimated category.

While Hashgraph technology outperforms blockchain technology in distributed ledger solutions, broader adoption is still needed.

Blockchain is also continuously improving, but the potential offered by Hedera Hashgraph is exciting, and we look forward to seeing what kind of technology it will become.