Hedera hashgraph explained with examples

Hedera has created a unique position among the current blockchains and public networks. With an innovative consensus algorithm, it claims to be one of the fastest and most secure DLTs available in the market. For entrepreneurs, Hedera goes beyond blockchain to usher in the next era of quick, equitable, and secure applications. So, should you believe in Hedera Hasgraph or stick with blockchain? We’ll try to figure it out in this article. Read on!

What is Hedera hashgraph?

Hedera Hashgraph is a distributed ledger technology (DLT) that offers a new approach to distributed consensus. DLT offers a way to record digital transactions in a ledger on multiple computers (decentralized) rather than just one central location(centralized). The most well-known example of DLT is blockchain, which creates and maintains a secure, decentralized digital ledger of all transactions across a network of computers.

One of the key features of Hedera Hashgraph is its lightning-fast throughput, which is made possible by its asynchronous Byzantine Fault Tolerance algorithm (aBFT) backed by mathematical proofs. This algorithm does not require the compute-intensive proof-of-work used by some blockchain-based platforms, making Hedera’s network faster and more energy-efficient.

Hedera public network is governed by the Hedera Council. The council members are responsible for maintaining the public network and its integrity. Council members are elected by hedera token holders on the Hedera network. The council makes decisions about the network’s technical direction, approving new use cases and applications that run on the network and acting as a court of last resort for disputes that arise on the network.

If you want to choose a Green Blockchain for your project, you may consider Hedera. Hedera claims that its DLT is energy efficient compared to other blockchain platforms like Bitcoin and Ethereum. Hedera network uses asynchronous Byzantine Fault Tolerance, which is considered more energy-efficient than the proof-of-work (PoW) mechanism used by Bitcoin and Ethereum.

In aBFT, rather than having all nodes perform the same computations to validate new transactions, the network is divided into “virtual voting nodes,” which are responsible for reaching a consensus on the state of the network. This mechanism reduces the computational power required to validate transactions, thus consuming less energy.

What makes Hedera different from blockchains?

All blockchains are DLTs. However, all DLTs are not blockchain. Hedera Hashgraph is a DLT, not exactly a blockchain, but most of its properties are similar to blockchain technology. As previously said, Hedera uses a consensus algorithm called “asynchronous Byzantine Fault Tolerance,” which allows for faster transaction speeds and lower energy consumption. This consensus model differs from traditional consensus models such as proof-of-work (PoW) or proof-of-stake (PoS).

PoW and PoS are truly public. However, to meet the requirements for higher performance, the architecture of the Hedera hashgraph only allows a selected number of nodes to be validators of the network. This is slightly deviating from the principle of blockchain that networks should be public and anyone should be able to be a validator. Because of this, some people do not consider Hedera a blockchain but a new type of DLT.

Related Resource : How we helped businesses with our Hedera hashgraph development services

How does Hedera Hashgraph work?

Hedera’s unique data structure is based on two techniques: Virtual Voting and Gossip about Gossip. These allow the network to achieve consensus in a decentralized and secure manner, making it faster than PoW and PoS blockchains. It uses a special data structure called a “hashgraph” to track these transactions and verify them correctly.

1. Hedera Hashgraph’s consensus mechanism, asynchronous Byzantine Fault Tolerance, is based on a data structure called a “directed acyclic graph” (DAG), a type of graph that allows for the efficient tracking of transactions.
2. Consensus is achieved using a “gossip protocol” to propagate the transactions and votes among the nodes and by using a “virtual voting” process to determine the final order of the transactions. In this mechanism, each node maintains a copy of the DAG, representing all the transactions that have occurred on the network. When a new transaction is initiated, it is broadcast to all the nodes in the network. Each node then “votes” on the transaction.
3. Each node does this virtual voting by sending a message to a randomly chosen set of nodes in the network. The message contains the node’s “vote” on the order of the transactions and the votes it has received from other nodes. This process continues in rounds until a consensus is reached on the order of the transactions.
4. The key benefit of aBFT is that it allows for the efficient and secure determination of consensus among all the nodes in the network, even in the presence of malicious actors. aBFT allows for fast, secure, and fair decision-making, even in a network without trust.

Due to its consensus mechanism, Hedera outperforms many blockchains in speed, cost, and scalability, among other crucial factors. It is also resistant to tampering, meaning that transactions recorded on the Hedera network can be trusted to be accurate.

The benefits offered by Hedera Hashgraph

Hedera Hashgraph’s distributed ledger technology offers a number of benefits over traditional blockchain systems.

More performance: Hedera Hashgraph offers high throughput TPS and low latency. Hedera Hashgraph is architected to handle millions of transactions per second with minimal delay. This capability makes hedera well-suited for use cases such as micropayments and real-time financial transactions.

More security: One of the key benefits offered by Hedera Hashgraph is its high level of security. Traditional blockchain systems, especially PoW-based blockchains, are vulnerable to 51% attack. Hedera’s unique consensus algorithm ensures high security and integrity for all transactions.

Community: Hedera hashgraph is built on an open-source platform, so developers worldwide can easily build and deploy decentralized applications on the network. Hedera’s governance model allows the community to vote on changes to the protocol, ensuring that it remains decentralized and community-driven.

Is Hedera Hashgraph better that Ethereum and other Blockchains?

Comparing Hedera to Ethereum and other blockchains is like comparing Apples and Oranges. Both have its own merits, it doesn’t make sense to compare those based on feature sets and performance. However, depending on use cases and applications, we can evaluate which one is a better fit for that particular scenario.

For example, Hedera can be a better choice than Ethereum and other blockchain systems for building dapps that need high TPS or transactions per second. Micropayments, IoT applications etc. Consortium networks, private networks can benefit more from Hedera than choosing public blockchain networks. Since Hedera offers high-throughput, its a better choice. However, for applications use cases that require true decentralization, Ethereum or other blockchains can be a better choice compared to Hedera.

Property	Hedera Hashgraph	Blockchain
Performance	Up to 500,000 transactions per second	100 to 10,000 transactions per second
Latency	Less than 3 seconds	Ranges from 10 to 120+ seconds
Consensus	Virtual Voting within nodes	A third party is needed to validate the transactions between parties.
Decentralisation	Governed by a council of members	Truly decentralised
Mining	Yes	No
Dapp scalability	Less scalable compared to hashgraph	Highly scalable due to its high TPS
Security	Asynchronous Byzantine Fault Tolerance	Cryptographic Hashing
Energy consumption	Less	Less to High depending on consensus model
Community	Moderate, growing	Ethereum, bitcoin has the biggest support and tech communities
Open source	Moderate developments and expansions	Ethereum ecosystem have a wider pool of opensource contributions, tech developments
Adoption	Less, growing	More adopted
Dapp production cost	Comparatively high	Comparatively less
Dapp maintenance cost	Cryptographic less	Comparatively high

The merits of using Hedera for building dApps

Hedera Hashgraph’s network services allows anyone – from individual developers to large companies- to sign up and build applications on the network for various purposes. These applications can range from simple NFTs to complex systems like supply chain traceability. Some of the merits offered by Hedera Hashgraph are;

• Efficiency in Payment Settlement : The Hedera Token Service offers organizations a compliant and secure way to harness the power of distributed ledgers for payments. With tokenized assets and hbars, transactions can be settled in seconds, making them an ideal option for finance and commerce. The cost to transfer any tokenized asset on Hedera is less than $1.
• Simplifying Tokenized Assets: The Hedera Token Service makes it easy to configure, mint, and manage NFTs and fungible tokens on the Hedera network without needing smart contract deployment. Tokenized assets can range from regulated securities to decentralized governance tokens.
• Ensuring Data Compliance: Regulations require companies to take data compliance seriously, but it can take time to prove actions to customers and build trust. The Hedera network offers an auditable log of actions taken, standardizing compliance data and the auditing process with data integrity and trust.
• Reducing Fraud and Building Trust: The Hedera Hashgraph platform offers tools to handle credentials securely throughout their lifecycle. The Hedera network ensures all participants are trusted and provides real-time views of transactions to detect fraudulent activities and predictive analysis, reducing costs and building trust among stakeholders.

Who owns Hedera?

Hedera Hashgraph is owned by Hedera Hashgraph, LLC, a company founded by Dr. Leemon Baird, Dr. Allen Wang, and Mance Harmon. The company is based in Dallas, Texas, United States. Hedera public network is governed by the members of the Hedera Council. The governing council members are diverse and include companies from various industries distributed evenly across the world. Some of the members of the Governing Council include:

• Google, Deutsche Telekom, IBM, FIS (Worldpay), LG Electronics, Tata Communications, Magalu, Nomura, Swirlds, Wipro and many more

The council members are responsible for the overall direction and management of the Hedera network, including making decisions on protocol upgrades and other strategic matters.

Hedera Developer Community

Developer communities are very important for the growth of any technology. The dev communities provide a channel for sharing knowledge and resources, project collaborations, and discussing new and emerging ideas. It helps developers to learn from one another, share best practices, and build on each other’s work to create new and improved technologies. Moreover, developer communities can promote new technologies and attract new developers to the field, which can further fuel innovation and growth.

Developer communities can also promote open-source projects and attract new contributors. For example, through community events, meetups, and hackathons, developers can learn about new open-source projects and get involved in contributing to them.

Hedera’s developer community is active and growing. Several resources are available, such as the Hedera developer portal, the Hedera developer forum, and the Hedera developer Discord channel, which provide support and guidance to developers building on the Hedera network. Hedera also has several partnerships and collaborations with organizations and companies in the blockchain space, which helps to strengthen and expand the developer community. Here are some useful resources for Hedera developers and aspiring developers;

• How to integrate Hedera and HashConnect with WordPress
• Why and how we created a Web IDE for Hedera Hashgraph
• Hedera developer guidelines

Bottom Line

Hedera Hashgraph is a promising technology that can bring trust, security, and decentralization to the digital world. From financial transactions to data management, it can be used in various ways; it is an open-source technology that is constantly being improved by a dedicated community of developers and users. Hedera Hashgraph provides a fresh approach to the issues that have prevented the widespread use of digital assets based on blockchains. Nonetheless, the potential benefits of Hedera’s innovative approach make it worth keeping an eye on as it continues to evolve and grow.