What Is Hedera Hashgraph & How Does It Work? Who Created HBAR? (2024)

What Is Hedera Hashgraph (HBAR)?

Hedera Hashgraph is a decentralized distributed network that is structurally quite different from the Bitcoin and Ethereum blockchains, but which performs equivalent functions. It is based on security and validation algorithms that are more efficient than those used on blockchain networks.

Hedera Hashgraph implements its distributed open ledger on hashgraph technology instead of blockchains. Advanced algorithmic details lurk under the hood, some of them challenging enough to cross the eyes of a computer science Ph.D. The bottom line is that hashgraph-based networking represents a practical alternative to blockchains for implementing an open ledger and supporting a cryptocurrency.

Hashgraph technology has several important benefits compared with blockchains. There’s no mining, which means the environmental impact of implementing the technology is dramatically reduced. Transaction costs are potentially lower too. A hashgraph can implement an open ledger with the same security and anonymity benefits as a blockchain-based ledger, with additional benefits like better performance and higher capacity.

Today, the only open ledger based on hashgraph technology is Hedera Hashgraph. The only hashgraph-based currency is HBAR. However, Hedera provides detailed instructions and source code examples to API calls that allow developers to create their own tokens that run on the Hedera Hashgraph network.

HBAR is both a general-purpose cryptocurrency and the utility token of the Hedera network. HBARs are used on the network to pay fees for transactions. The tokens are also staked to network nodes to provide a weighted voting system to validate transactions. This Proof of Stake mechanism is not the same as PoS systems implemented by Ethereum and other blockchains, but it serves much the same role.

How Does Hedera Hashgraph Work?

The Hedera Hashgraph network is based on a concept from graph theory called directed acyclic graphs. These graphs allow the creation of data structures and flows that never loop back to previous states. When used as the foundation for a distributed open ledger, acyclic graphs ensure that transactions cannot be altered once they have been added to the network.

Hedera uses these graphs and negotiations among nodes to implement what computer scientists call an asynchronous byzantine fault-tolerant consensus algorithm. This algorithm is an alternative to the slow, cumbersome, cryptography-based mechanisms employed by blockchain-based ledgers. Hedera says ABFT consensus is more efficient, fair, and secure than conventional transaction-verification methods and that transactions are added to the network with much lower costs and energy consumption. It is ABFT technology that makes the Hedera Hashgraph network secure.

Instead of adding bundled transactions to the network as blocks, Hedera uses a protocol called “gossip about gossip” to verify time sequence and validity before adding transactions individually.

HBAR runs on the Hedera Hashgraph network much as the Ether cryptocurrency runs atop the Ethereum blockchain.

The Hedera Hashgraph supports smart contracts, so it is a potential host for distributed apps in finance and other fields. Smart contracts allow developers to create applications that support the transfer of value and goods without intermediaries like banks or stock exchanges. They can also be less costly, faster, and more secure than real-world conventional contracts.

Who Are the Founders of Hedera Hashgraph?

The history of Hedera Hashgraph begins with American computer scientist Leemon Baird. A former professor of computer science at the United States Air Force Academy, Baird invented the hashgraph distributed consensus algorithm that serves as the heart of Hedera Hashgraph. In 2015, Baird co-founded a corporation called Swirlds, which holds the patents for his hashgraph innovations. Swirlds has licensed the technology to several customers who are building bespoke dApps for internal use in diverse industries.

Baird co-founded Hedera Hashgraph in 2017 after lining up a management team and key investors. The company was publicly launched in March 2018 before a live New York City audience and 50,000 livestream viewers. Hedera launched the website, cryptocurrency, governing council, and whitepaper.

Today, the Hedera Hashgraph governing council includes Boeing, Deutsche Telekom, DLA Piper, FIS WorldPay, Google, IBM, LG, Magalu, Nomura, Swirlds, Tata Communications, University College London, and Wipro.

What Makes Hedera Hashgraph Unique?

Hedera Hashgraph is unique because it is a secure public cryptocurrency that is not based on blockchain technology. This is both the strength and the weakness of the open ledger and the HBAR currency.

Although the source code for Baird’s hashgraph-based network is available publicly, the algorithms remain patented. The Hedera Hashgraph network is the only licensed public ledger based on hashgraph technology. Hedera’s vision is a future in which developers create dApps that run on Hedera’s hashgraph network – which will involve paying transaction fees and other charges to Hedera.

That said, the strengths of the network and the Hedera open ledger are striking. Hashgraph networks are not subject to the same scaling issues as blockchains and there is no mining to consume inordinate amounts of electricity and harm the environment. Hashgraph transactions are, according to Hedera, more secure, fast, and inexpensive than their equivalents on blockchains.

Hedera says the Hedera Hashgraph mainnet is already handling more than 4.5 million transactions per day. The current mainnet is throttled to a maximum of 10,000 transactions per second, but Hedera says the capacity is potentially unlimited through a sharding mechanism. HBAR users pay a $0.0001 transaction fee, validation takes three to five seconds, and each transaction requires 0.00017 kilowatt-hours of electricity, compared with an average of 885 kWh for Bitcoin and 102 kWh for Ethereum transactions.

What Gives Hedera Hashgraph Value?

Hedera Hashgraph is interesting to technology partners and investors because it promises to deliver many of the benefits of blockchain technology while sidestepping technical issues that have kept conventional blockchains and cryptocurrencies from scaling up to handle real-world transaction volumes.

The HBAR token takes its value from multiple uses. First, it is the utility token of the Hedera network. If you take part in validating Hedera transactions as a PoS node, you will earn HBAR tokens. You can also earn tokens by staking them to a validation node. These tokens have value when converted to other crypto or fiat currencies at exchanges like Kriptomat.

HBAR is also of interest to investors who expect its value to rise as the Hedera Hashgraph network achieves greater market prominence, more users, and more transactions. Big companies like Boeing, Google, and IBM serve on the governing council because they think Hedera technology has merit. This is a good sign for investors. Hedera could also profit as governments tax or restrict the use of cryptocurrencies based on energy-hungry PoW algorithms. This would give HBAR a competitive advantage.

How Many Hedera Hashgraph (HBAR) Coins Are in Circulation?

The total supply of HBAR coins is limited to 50 billion. are currently in circulation.

Since minting HBARs does not require the execution of a difficult cryptographic algorithm, Hedera Hashgraph minted all 50 billion coins before launching the mainnet in 2018. Hedera’s governing council has established a 15-year release schedule for the coins.

How Is the Hedera Hashgraph Network Secured?

Hedera Hashgraph is secured by an algorithm called asynchronous byzantine fault-tolerant consensus. This algorithm has been mathematically proved to provide optimal security for a distributed network.

The algorithm’s source is a computer science exercise called the Byzantine Generals Problem. Programmers imagine four armies, one on each side of a city under attack. The armies must coordinate their efforts by sending messages, but some of the messages they receive could come from enemies impersonating reliable messengers.

The solution is an algorithm called byzantine fault tolerance, in which it is possible to reach a reliable solution despite the presence of some false messages. That solution is the basis of Hedera’s approach to validated transactions on a distributed open ledger.

How To Use Hedera Hashgraph

Hedera Hashgraph offers its mainnet to developers who wish to create dApps. The network supports smart contracts and it offers all the speed, economy, and security benefits that Hedera’s own cryptocurrency enjoys.

Hedera says its hashgraph network is ideal for dApps that accept or make payments, verify identity, generate private tokens, secure health information, or perform many other tasks. Detailed case studies of companies implementing hashgraph-based solutions are available at the Hedera Hashgraph website.

How To Choose a Hedera Hashgraph Wallet

Because hashgraph networks are fundamentally different from blockchains, conventional blockchain wallets are not suitable for storing and using HBAR tokens.

The Hedera website includes a list of HBAR-compatible wallets that includes BitGo, Fireblocks, Kingdom Trust, Atomic Wallet, BRD, Coinomi, Exodus, Guarda, Wallawallet, Hex, Ivy Wallet, and MyHbarWallet.

For extra security, a hardware wallet can ensure that your HBAR funds can’t be accessed if your passcode is lost. Hedera recommends the Ledger Nano.

Many exchanges also offer storage solutions for HBAR. However, as you will probably be trusting the platform to manage your HBAR, you should make sure to pick a reputable service with a track record in security and custody.

Kriptomat offers a secure storage solution, allowing you to both store and trade your HBAR tokens without hassle. Storing your HBAR with Kriptomat provides you with enterprise-grade security and user-friendly functionality.

Buying and selling HBAR, or trading it for any other cryptocurrency, is done in mere moments when you choose our secure platform as your storage solution.

Hedera Hashgraph Proof of Stake

Hedera’s ABFT consensus algorithm is a PoS system in which stakeholders execute a “gossip about gossip” protocol to verify and timestamp transactions. This is not the same as the PoS algorithms used by blockchains like Ethereum, but it is similar because users are eligible to become validators on the basis of their HBAR holdings.

Validators earn fees in microtransactions upon participating in the validation of Hedera Hashgraph transactions. Users who are not validators can stake their HBAR holdings with validators and receive a proportional share of the fees.

Bottom Line

HBAR is a promising cryptocurrency based on a unique technology that sidesteps many of the limitations that have hindered the adoption and usefulness of conventional blockchain-based digital assets.

The patented algorithms that fuel Hedera Hashgraph and HBAR are relatively new and they are only now scaling up to handle real-world loads. Weaknesses and flaws in hashgraph-based open ledgers may emerge as more people begin testing the technology and using it for dApps.

Want to get involved in this promising technology? You can purchase HBAR today at Kriptomat.

Hedera Hashgraph FAQ

There’s lots more to say about Hedera Hashgraph and HBAR, though much of it is highly technical. You’ll find whitepapers and more at the Hedera website. In the meantime, here are the answers to common questions.

How To Buy Hedera Hashgraph

You may need an advanced computer science degree to understand hashgraph theory and ABFTs, but how to buy Hedera Hashgraph is a much simpler problem. Kriptomat is the easy-to-use, low-cost platform of choice for purchasing HBAR.

How To Sell Hedera Hashgraph

Want to cash in or trade HBAR for another currency? Kriptomat offers the fastest, least expensive trades in the industry.

Hedera Hashgraph Price

HBAR’s price is influenced by market factors, news reports, economic developments, and the general state of the economy. The price also fluctuates in response to announcements regarding Hedera Hashgraph and Swirld, including new customers and governing council members.

Kriptomat always delivers the most current Hedera Hashgraph price – plus the prices of hundreds of other cryptocurrencies. It takes just minutes to set up a portfolio and begin trading. Why not start today?

The current HBAR price is EUR and the 24-hour trading volume is EUR.

HBAR ranks among all cryptocurrencies by total market capitalization, with a market cap of EUR. It has a circulating supply of HBAR and a max supply of HBAR.

Register now to get involved with this unique, intriguing project.

If you’re experiencing any issues or have any questions at all, please don’t hesitate to reach our Customer Support Team. We’re always here to help!