Hedera Hashgraph review: A comprehensive analysis in 2024

Our Verdict

Our Verdict

Hedera Hashgraph is a project that has sparked immense enthusiasm within the cryptocurrency community. With impressive network statistics such as 10,000 transactions per second, it's easy to see why. The Hashgraph represents a groundbreaking technology tailored for corporate clients. Nonetheless, the project has unveiled an open-source iteration of its technology, which numerous industry insiders believe could pose a challenge to established blockchains.

Pros

• Energy efficiency
• Low transaction fees
• Fairness and security
• Governance and stability

Cons

• Limited decentralization
• Dependency on council members

4.7

Our ratings take into account a product's cost, features, ease of use, customer service and other category-specific attributes. All ratings are determined solely by our editorial team.

Starting price

$0.106725

Distributed Ledger Technology (DLT)

Yes

Decentralized Applications (dApps)

Hedera Hashgraph supports the development

What is Hedera Hashgraph?

Hedera refers to its innovative distributed ledger technology (DLT) as the Hashgraph. DLT involves a network of computers communicating to achieve consensus on various matters. In the context of Hedera, this consensus pertains to the validity of transactions, and the network operates in a decentralized manner to uphold security and equity.

If you're familiar with blockchain technology, this concept likely resonates, as blockchains also function as a form of distributed ledger technology.

Hedera Hashgraph platform

Hedera Hashgraph was conceived by Dr. Leemon Baird and introduced by Swirlds, a company he co-established, in 2016. Utilizing patented Hashgraph technology, it operates as a public ledger and is characterized by its asynchronous Byzantine Fault Tolerance (aBFT) consensus algorithm, which effectively safeguards the platform against potential attacks.

Notably swift, secure, and equitable, the Hedera Hashgraph platform demands minimal computational resources to maintain network security. With Hedera, individuals have the capability to operate a node, develop decentralized applications (dApps), or utilize the service without the necessity of licensing the technology.

The exclusive aspect retained was the Hashgraph technology, patented by Swirlds to prevent the emergence of competing ledgers utilizing Hashgraph technology.

Originally designed for enterprise applications, the Hashgraph platform served as the foundation for Hedera. The mainnet beta launch of Hedera Hashgraph was successfully executed in August 2019.

This facilitates the provision of Hedera's three primary services: the HBAR cryptocurrency aimed at facilitating micro-transactions, a decentralized file system, and support for solidity smart contracts.

Challenges addressed by Hedera Hashgraph

Hedera and Hashgraph aim to address five specific issues, believing that by resolving them, they can promote widespread adoption of distributed ledger technology. These problems include:

Performance

Hedera boasts exceptional speed, processing over 10,000 transactions per second with consensus reached within 3-5 seconds, ensuring finality. Testnets have demonstrated even higher throughput, exceeding 50,000 transactions per second. In a geographical constraint test, where transactions were confined to a single continent, speeds of 500,000 transactions per second were achieved.

Indeed, Hedera's platform appears to be primarily constrained by network bandwidth. When compared to other networks, the speeds achieved by Hedera far surpass them. For instance, Bitcoin processes just 7 transactions per second, while even the Visa network achieves speeds of only 2,000 transactions per second.

Security

Hashgraph employs asynchronous Byzantine Fault Tolerance (aBFT) as its consensus algorithm, recognized as one of the most secure methods for achieving consensus.

By utilizing aBFT, Hedera ensures that no member can disrupt community consensus or alter records post-consensus. The network can withstand faulty nodes, provided that fewer than one-third of the nodes are compromised.

Real-time dissemination of consensus within the community guarantees its integrity, rendering it immune to compromise. This security feature shields Hedera from malicious nodes and Distributed Denial of Service (DDoS) attacks, even if certain network nodes are compromised or offline.

Compared to blockchain technology, Hashgraph offers greater security through the immediacy of consensus. Additionally, it addresses fairness concerns through Consensus Time Stamping, which ensures Mathematically Proven Fairness via democratic voting. Fairness encompasses three aspects:

1. Fair access: Prevents manipulation of transaction flow by individuals or falsification of transactions by nodes.
2. Fair timestamps: Reflects the accurate time when a transaction is broadcast to the majority of the network.
3. Fair ordering: Achieved through equitable timestamp assignments.

Governance

Hedera Hashgraph introduces two governance models outlined in its whitepaper. The first is the Council Government Model, serving as the overarching governing body responsible for upholding the decentralization, trustworthiness, and stability of the network.

This council comprises 39 reputable organizations spanning five continents globally. Each council member is subject to a limit of two consecutive three-year terms.

This structure prevents the concentration of excessive power within a single individual or entity. The second governance model, the Consensus Model, enables anyone interested to operate a node.

Under the consensus model, individuals can run nodes, contribute to maintaining consensus, and receive rewards for their participation. The team anticipates a rapid increase in the number of nodes, significantly enhancing the decentralization of Hedera Hashgraph.

Stability

Hedera Hashgraph has committed to never forking, ensuring platform stability through legal and technical controls that prohibit such actions. This approach prevents the emergence of competing platforms, minimizing confusion and uncertainty.

Technical controls have introduced two capabilities. Firstly, the Hashgraph's pedigree can always be verified by the software client through a shared state mechanism. This shared state comprises verified information from all nodes, reflecting the consensus state of the entire network.

Within this shared state, it is impossible for malicious actors to compromise the network or for nodes to fork or make unauthorized changes and distribute them across the network as valid.

The second capability ensures that any software alterations made by the governing body are automatically validated and disseminated across the network.

Besides the technical controls, there are legal safeguards in place to prevent forks and the emergence of competing platforms. Despite Hedera Hashgraph's open-source codebase, updates can only be implemented through the Governing Council.

By patenting the Hashgraph technology, Swirlds has effectively prevented other teams from creating platforms utilizing this technology unless they obtain a license from Swirlds.

Regulatory compliance

Hedera has facilitated KYC/AML compliance by incorporating an optional identity mechanism. Known as the Opt-in Escrowed Identity System, it permits verified identities to be linked to otherwise anonymous wallets.

This functionality streamlines Hedera's path to mass adoption, particularly as governments implement increasingly stringent regulations within the cryptocurrency sphere.

Hashgraph consensus algorithm

Hedera Hashgraph utilizes a consensus algorithm founded on Virtual Voting and the Gossip Protocol.

The Gossip Protocol serves as a method for swiftly and efficiently disseminating information throughout a network. Through this protocol, a node can randomly select another node it's already acquainted with and exchange all available information. This process propagates across the network, exponentially increasing until all nodes are informed.

Moreover, the Gossip Protocol extends beyond merely transmitting transactional data; it also facilitates "gossip about gossip," enabling historical information to propagate across the network. Consequently, nodes with slightly varied information at the network's top can swiftly converge to consensus by continually exchanging information. Over time, this process ensures consistency, facilitating scalability while optimizing communication within the network.

Virtual voting on Hashgraph represents a more advanced form of voting, achieving robust guarantees with efficiency. Unlike traditional voting methods that involve sending voting messages, Virtual Voting allows the network to execute a voting algorithm without the need for actual transmission of such messages.

This is facilitated by the Gossip Protocol, which enables each node to maintain a complete copy of the Hashgraph, containing the transaction history. As a result, nodes can "compute a total order on the events based on any deterministic function of that hashgraph," ensuring consistent outcomes across the network.

Through Virtual Voting, nodes can reach consensus on transaction validity as long as the majority of the network has witnessed the transaction. The Hedera Hashgraph algorithm stands out among distributed ledgers for its minimal bandwidth requirements and its promotion of honesty and transparency among network nodes.

Hedera team

The Hedera Hashgraph team comprises highly skilled and experienced professionals with extensive expertise in blockchain technology and business.

Dr. Leemon Baird, the Chief Scientist and co-founder, is the inventor of the Hashgraph algorithm. With over 20 years of technology and startup experience, Dr. Baird previously served as a Professor of Computer Science at the U.S. Air Force Academy and holds senior scientist positions at various labs. He has founded or co-founded several startup companies, including two in the identity field. Dr. Baird earned his Ph.D. in Computer Science from Carnegie Mellon University and holds numerous patents in computer security and machine learning.

The second co-founder and current CEO of Hedera is Mance Harmon. Harmon brings over two decades of experience as a technology executive, having worked with multinational corporations, high-tech startups, and government agencies.

Before joining Hedera, Harmon co-founded two tech startups and held senior executive roles in several companies. His expertise spans cybersecurity and machine learning, and he holds a Master of Science degree in Computer Science from the University of Massachusetts.

In addition to the skilled core team behind Hedera Hashgraph, the project enjoys support from a diverse array of investors, partners, incubators, and accelerators.

HBAR coin

HBAR serves as the native cryptocurrency fueling the Hedera public network. As a utility token, it powers decentralized applications, facilitates peer-to-peer payment models, and safeguards the network against malicious actors.

In the context of running decentralized applications, HBARs are utilized to cover computational expenses associated with smart contracts and for storage or cryptocurrency transfers. This functionality resembles the role of Gas on platforms like Ethereum and Neo.

To bolster security, HBARs are staked or proxy-staked to a network node, with voting power weighted based on the amount of HBAR held by each participant. This mechanism, akin to other Proof of Stake protocols, incentivizes honest behavior among network nodes by requiring a monetary commitment.

In terms of economics, there exists a total supply of over 50 billion HBAR coins. However, the initial release of coins upon network launch accounted for only 3.6% of this total supply. Subsequently, the outstanding supply is set to increase annually according to a predetermined coin release schedule.

This gradual coin release strategy aims to ensure the stable and orderly growth of the platform, allowing it to scale effectively without compromising the safety necessary to establish full trustworthiness of the network.

Price performance

The HBAR token was introduced alongside the mainnet beta launch of the Hedera Hashgraph platform on September 16, 2019. Prior to this, an ICO was held in August 2018 for accredited investors, followed by two additional funding rounds, bringing the total raised to $124 million.

During the August 2018 ICO, the token price was $0.12 per token. Upon opening, the HBAR token's price was $0.416009. However, by the end of the first trading session, it had dropped to $0.090177. Over the subsequent month, the price continued to decline, reaching its all-time low of $0.025871 on September 25. As of October 14, 2019, HBAR is trading at $0.035864.

Buying & storing HBAR

Since its recent release, the token is currently available on six exchanges, including major platforms like Binance and OKEx, which boast the highest trading volumes. Other exchanges offering HBAR include Upbit, Bittrex, Liquid, and HitBTC.

Regarding coin liquidity, the majority of HBAR trading volume occurs on Binance and OKEx. Analysis of individual order books reveals deep liquidity and strong turnover across the HBAR/BTC, USDT, and ETH markets.

Once you've acquired your HBARs, it's advisable to store them in an offline wallet due to the risks associated with large centralized exchange hacks—following the principle of "not your keys, not your Crypto."

Unfortunately, there is limited support for HBAR wallets at present. Available options include the Hedera Hashgraph mobile wallet, the MyHBAR Browser Wallet, the Hashing Systems browser wallet, and the hbarprice.com mobile wallet.

Although hardware wallet support is currently unavailable, Hedera anticipates Ledger Nano support to be forthcoming, as indicated on their wallet page.

In conclusion Hedera Hashgraph introduces groundbreaking distributed technology amidst a predominantly blockchain-driven landscape. Features such as virtual voting, the gossip protocol for consensus, and aBFT ensure a secure, fast, and equitable network.

While the codebase is patented, it remains open-source, allowing anyone, including developers, to participate in the network and develop dApps without requiring a license.

Hashgraph has made strides in addressing scalability issues, particularly in transaction volume. However, the scalability of network nodes, currently limited in number, remains an area for further exploration.

It's worth noting that while Hashgraph technology surpasses blockchain technology in certain aspects of distributed ledger solutions, this superiority doesn't guarantee widespread adoption. Blockchain technology continues to evolve, but the potential offered by Hedera Hashgraph is promising, and there is anticipation regarding its future developments.