What is Hedera Hashgraph? (HBAR)

The Beginner’s Guide

Hedera Hashgraph is a blockchain-like network seeking to serve as a platform on which large multinational businesses can both control software changes and easily deploy applications.

As such, Hedera Hashgraph prioritizes features it believes are desired by businesses, such as the ability to facilitate large numbers of transactions and for decisions over the development of the software to be made by a limited group of members.

This means that, by design, Hedera Hashgraph differs from other public blockchains where any user who runs the software can typically expect to help validate transactions, influence software development and compete for new cryptocurrency the network mints.

On the Hedera Hashgraph network, by contrast, the ability to make software decisions is limited to a governing council made up of large enterprises who must be invited to join.

As of 2020, the Hedera Hashgraph team has already succeeded in attracting dozens of big companies such as LG, Boeing and IBM to positions within the network.

Since Hedera Hashgraph’s software is overseen by corporations, and the goal of the network is to be adopted by corporations (or users with similar needs), proponents argue the incentives of the network are well aligned.

What is hedera hashgraph hbar

Who created Hedera Hashgraph?

Hedera Hashgraph was created by Leemon Baird, a computer scientist, and Mance Harmon, a technology executive. Together, Baird and Harmon formed a company called Swirlds in 2015.

Swirlds, in turn, spun out an entity called Hedera, which was renamed Hedera Hashgraph, to develop a live network using its technology. This network is called Hedera and it is governed by the entity called Hedera Hashgraph.
Since 2018, Hedera Hashgraph has raised $124 million from sales of its HBAR cryptocurrency.

Launched as a private network, Hedera Hashgraph plans to gradually allow more entities to join the network until it is finally made public at a later date.

How does Hedera Hashgraph work?

Hedera Hashgraph’s most unique feature is its data structure for grouping transactions called a hashgraph, which claims to process more transactions more cheaply than existing blockchains.

To ensure all the computers in its distributed network agree on its transaction history, Hedera Hashgraph uses a mechanism called Hashgraph consensus.

Using this method, the network is able to allow users to run applications on private networks, which provides added benefits of interest to enterprises like privacy and speed.

At the same time, it lets those applications transact on Hedera’s public network, thus providing greater trust in the accuracy of those transactions among other users. The public network also stores all transactions, including those that are invalid, a notable difference from other public blockchains which tend to discard this data.

As a result, Hedera Hashgraph claims to offer features that combine the advantages of both public and private blockchain networks.

Hedera Governance

Hedera Hashgraph is governed by a body known as the Hedera Governing Council.

As of 2020, a total of 14 members sit on the council with electronics giant LG being the latest member. The council’s role is to manage the software, voting on changes, ensuring funds are allocated correctly and safeguarding the network’s legal status in various jurisdictions.

Of note is that space on the council is limited to a maximum of 39 members.

Why does HBAR have value?

The HBAR cryptocurrency is used to power the Hedera Hashgraph blockchain, meaning users need to buy this asset to perform transactions and operate applications.

Of note for investors is that the supply of HBAR tokens is fixed at 50 billion, the entire supply of which was created when the network launched in 2018.

Over half of all HBAR tokens have been reserved for the Hedera team, and the remainder are expected to be released gradually to investors and users over the coming years.

Additional HBAR tokens will be distributed through a process called “proxy staking,” in which any HBAR holder will be able to lock their cryptocurrency in special contracts, allocating those funds to one of the approved nodes on the network.

By staking HBAR with another node, users would gain the ability to earn a slice of the rewards and fees these computers receive from processing transactions on Hedera Hashgraph.

Why use HBAR?

Hedera Hashgraph may be of interest should you believe it's design offers a more secure, stable and efficient platform on which major companies can build blockchain applications.

However, Hedera is not alone in seeking to build a software it believes will entice corporations, with Ethereum (ETH), Algorand (ALGO), Ripple (XRP) and others also competing in this market.

Of interest for investors is that owners of the HBAR token can gain exposure to the transaction fees and rewards offered by the network, which may grow in value with use and demand.

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