Why HBAR Is The Future Of Cryptocurrency - A Dive Into Hedera’s Superior Technology (2024)

Hedera (HBAR) is a public ledger that contains information about transactions that anybody can read from or write to. Unlike traditional blockchain technology, Hedera uses a proprietary consensus mechanism known as Hedera Hashgraph. This is the focal point of its uniqueness and advantage over similar ledger technologies.

Hedera Hashgraph is a Decentralized Ledger Technology (DLT) that offers a faster and more secure alternative to the traditional blockchain consensus mechanism. This technology was developed by Leemon Baird, Hedera’s co-founder.

Instead of linking blocks of information together like traditional blockchain technology, nodes in the Hedera network communicate by building and sending a graph of information about the information they have. This method is called “gossip about gossip”. It ensures fast dissemination of data, security, and fairness in the network.

Apart from its unique consensus mechanism, Hedera (HBAR) sports some cool features and use cases including:

• Real-World Asset Tokenization: With the Hedera network, users can tokenize both real-world and digital assets at scale, while enjoying high performance, compliance, low fees, and security.
• Payment: Web3 projects and enterprises can take advantage of the Hedera network to build applications that leverage HBAR, institutionally-backed stablecoins or even their native cryptocurrency, for real-time payment solutions.
• NFTs: Mint, sell, and trade NFTs on the Hedera network with the lowest fee, while leaving a carbon-negative footprint.
• DeFi Application: The Hedera network offers low and fixed fees, scalable transactions, and immediate settlement, making it the perfect network for building dApps (Decentralized Applications).

HBAR is the native token of the Hedera network. It is mainly used to pay application transaction fees and to protect the network through staking.

For every network service such as deploying or calling smart contracts, minting fungible and non-fungible tokens, and logging data, users are required to pay using HBARs.

By holding HBAR and staking it to a network node (a computer that participates in the network), users get to have a weighted influence on the consensus process of the network. HBAR tokens enhance network security by making it costlier and more difficult for any malicious actor to influence the consensus process.

HBAR boasts some pretty impressive features like high throughput, low fees, and instant block confirmations. The Hedera network processes 10,000 HBAR cryptocurrency transactions per second without compromising on security, a feat that few networks can presently achieve. Despite this, the network maintains an incredibly low fee of around $0.0001 PER HBAR transaction. Finally, the Hedera network achieves finality between 3–5 seconds — a record time. This means that payments and transactions are almost instantaneous.

We’ve established that the Hedera network has some unique and innovative features that make it stand out. Now, let’s compare HBAR to other cryptocurrencies and see how it measures up.

Solana (SOL)

Solana is an open-sourced project that leverages blockchain technology to provide DeFi solutions. The project employs both proof-of-history (PoH) consensus and proof-of-stake (PoS) consensus to provide scalability. Solana is well-known in the DeFi space for its short processing time, but how does it compare to Hedera (HBAR)?

• Security: On the security front, Hedera does it better. Considering the fact that HBAR’s staking mechanism requires that transactions are approved when they are processed by nodes that represent more than two-thirds of the total HBAR supply in the network. This ensures maximum security as it’s going to be expensive for fraudsters to buy that much HBAR to manipulate the consensus process. Solana’s Proof of History (PoH) and Proof of Stake (PoS) hybrid model on the other hand, while impressive, has experienced several network outages. This raises the question of how reliable it is.
• Predictable Fees: Hedera (HBAR)’s transaction cost maintains a predictably low value that averages $0.0001 per transaction, making it a cost-effective solution for developers and institutions. Solana’s transaction fees range between between $0.003 and $0.030. It’s not as predictable as HBAR’s and certainly not as low.

Algorand (ALGO)

Algorand is a decentralized blockchain-based network that provides a base for decentralized applications. The Algorand network aims to solve the blockchain trilemma — scalability, security, and decentralization. As of 2020, Algorand network claims to handle 1 million transactions per day. How does it measure up to Hedera (HBAR)?

• Consensus Mechanism: Algorand uses Proof-of-Stake, while Hedera uses the Hedera Hashgraph. Hedera’s technology offers a faster and fairer consensus when compared to Algorand’s.
• Transaction Speed: Currently, Algorand blocks are produced in less than 3 seconds with instant finality. The network can process 10,000 transactions per second.

Cardano (ADA)

Cardano is a blockchain platform built on Ouroboros proof-of-stake consensus protocol. The platform was created to support real-life use cases, systems, and applications. It also has a mission of providing banking services to the unbanked. Cardano (ADA) is faster at processing transactions than cryptocurrencies like Bitcoin and Ethereum. However, when compared to HBAR, how well would it do?

• Transaction Finality: As stated above, Hedera’s transaction finality is 3–5 seconds — almost instantaneous. Previously on Cardano, finality is achieved in 24 hours. Currently, though, transaction finality on Cardano takes anywhere between 20 seconds to a few minutes.
• Transaction Fees: Cardano has generally low transaction fees because it uses a Proof of Stake consensus mechanism. However, the transaction fee also depends on network usage at any given time. Transaction fees for an average user on Cardano hang around $0.07. Hedera, on the other hand, not only has very low transaction fees, but the transaction fees are constant and predictable.

Hedera (HBAR) stands out in the market thanks to its unique consensus mechanism. The Hedera Hashgraph allows the platform to offer its users unparalleled security, fairness, high transaction speed, and low transaction fees, setting it apart from traditional blockchain-based systems. Because of these features, the platform is a go-to for developers and institutions looking to build real-world applications.

Compared to similar blockchain-based applications, Hedera offers better infrastructure and services while maintaining a high level of decentralization and security.