Hedera is a public distributed ledger designed to overcome some of the most significant limitations of traditional blockchain networks. Unlike conventional blockchains, Hedera operates on a structure known as a hashgraph, which enables higher transaction speeds, lower costs, and strong security. Its native cryptocurrency, HBAR, powers the network and supports its proof-of-stake consensus mechanism.
Understanding Hedera’s Foundation
Hedera serves as a foundational layer‑1 network supporting a growing ecosystem of decentralized applications (dApps), including NFTs, DeFi platforms, privacy tools, and sustainability projects. It enables the deployment of Ethereum Virtual Machine (EVM)-compatible smart contracts, allowing developers to build using popular programming languages like Solidity and Vyper.
A key differentiator is that Hedera is not a blockchain. Instead, it relies on a directed acyclic graph (DAG) structure and a consensus algorithm called hashgraph, which offers a novel approach to achieving agreement across a decentralized network.
Challenges with Traditional Blockchains
Blockchain technology introduced decentralized trust but also brought certain inefficiencies. Two major pain points include scalability issues and inequitable access.
Speed and Cost Constraints
Most blockchain networks process transactions by grouping them into blocks, which must be validated and added sequentially to the chain. This design often results in slower confirmation times and rising transaction fees, especially during periods of high demand.
Centralization of Influence
In many proof-of-work and even some proof-of-stake systems, users who contribute more resources—whether computational power or financial stake—can receive preferential treatment. This can lead to increased centralization and higher barriers to entry for everyday users.
How Hashgraph Works
Hedera’s hashgraph consensus introduces a more efficient method for transaction validation and ledger synchronization. It uses two core techniques: gossip-about-gossip and virtual voting.
Gossip Protocol
When a node receives a transaction, it shares (“gossips”) that information with another randomly chosen node. That node, in turn, shares it with others. This rapid, viral-style propagation ensures that transaction data spreads efficiently across the network.
Virtual Voting
Instead of sending explicit validation messages, nodes use their local copy of the hashgraph to simulate voting internally. This minimizes communication overhead and allows the network to achieve asynchronous Byzantine fault tolerance—a strong security guarantee—without the latency typical of block-based systems.
This approach allows Hedera to support high throughput and fast finality without compromising decentralization or security.
Advantages of the Hedera Network
Hedera offers several benefits that address common blockchain shortcomings:
- High Throughput: The network is capable of processing over 10,000 transactions per second (TPS) under controlled conditions.
- Near-Instant Finality: Transactions are typically confirmed within 3–5 seconds.
- Low and Predictable Fees: Transaction costs are fixed in U.S. dollars but paid in HBAR, providing cost certainty.
- Energy Efficiency: As a proof-of-stake network, Hedera consumes significantly less energy than proof-of-work blockchains.
These features make Hedera suitable for applications requiring real-time transaction finality, such as payment systems, gaming, and supply chain tracking.
The HBAR Cryptocurrency
HBAR is the native token of the Hedera network. It serves three primary functions:
- Network Fuel: Users pay transaction fees in HBAR.
- Security Incentive: Token holders can stake their HBAR to nodes to help secure the network and earn rewards.
- Governance: Although Hedera is governed by a council of organizations, staking also plays a role in network consensus.
HBAR is used across the ecosystem—from paying for NFT minting to interacting with smart contracts.
Hedera’s Native Services
Beyond supporting dApps, Hedera provides built-in services that enhance developer flexibility:
- Token Service: Allows users to create both fungible and non-fungible tokens (NFTs) compliant with common standards like ERC-20 and ERC-721.
- Consensus Service: Provides a verifiable log of events with native timestamping, ideal for auditing, IoT data, and real-time data streams.
These services reduce development complexity and improve interoperability within the Hedera environment.
Governance Model
Hedera is overseen by the Hedera Governing Council, a group of up to 39 organizations from various industries—including technology, finance, and academia. Members include companies like Google, LG, and Chainlink Labs, as well as institutions like University College London.
This governance structure is designed to ensure decentralization, promote fair decision-making, and align with the long-term interests of the network.
Frequently Asked Questions
What makes Hedera different from blockchain?
Hedera uses a hashgraph data structure and consensus model, which allows for higher transaction speed, lower fees, and faster finality compared to most blockchains. It does not use blocks or chains for organizing transactions.
How do I store HBAR securely?
You can store HBAR using a hardware wallet for enhanced security. Managing your assets through a trusted interface helps you maintain control over your private keys. 👉 Explore secure storage methods
Can I stake HBAR?
Yes, HBAR uses a proof-of-stake model. You can delegate your tokens to a node operator to contribute to network security and earn staking rewards.
Is Hedera open source?
Yes, Hedera is open source. Development is community-driven through Hedera Improvement Proposals (HIPs), similar to other major decentralized networks.
What kind of applications run on Hedera?
The network supports a wide range of dApps, including decentralized exchanges, NFT marketplaces, supply chain solutions, and sustainable energy platforms.
How is Hedera governed?
The Hedera Governing Council—composed of well-known enterprises and institutions—manages network upgrades, policy decisions, and technical direction to ensure stability and decentralization.
Hedera represents a significant evolution in distributed ledger technology, offering a compelling alternative to traditional blockchains. With its high performance, sustainable design, and robust governance, it is well-positioned to support the next generation of decentralized applications.
For those interested in engaging with the Hedera ecosystem, acquiring and staking HBAR is a straightforward process. 👉 Learn more about staking and rewards