What is Hedera Hashgraph? HBAR Explained with Animations

Hedera is a public network that operates on hashgraph technology, which utilizes a proof-of-stake consensus mechanism for data management. This innovative approach distinguishes it from traditional blockchains and aims to enhance efficiency and scalability in the cryptocurrency space. The video will clarify how Hedera functions, detailing its native token HBAR, the development team behind it, and insights into its economic model.

The internet is a public network enabling anyone to create and share content. While most users grasp the concept of shared information, few understand its underlying mechanics, which is acceptable as one doesn't need in-depth knowledge to utilize it effectively. Historically, creating and sharing online was more complex; however, advancements in technology have simplified this process significantly. Hedera aims to enhance these capabilities further by providing tools designed for easier development on new platforms.

Hashgraph is an innovative information-sharing technology that addresses the blockchain trilemma of decentralization, security, and scalability. Unlike traditional blockchains, Hashgraph employs a Directed Acyclic Graph (DAG) structure to efficiently order transactions on its network. This allows for enhanced performance as it can potentially solve all three challenges simultaneously. Nodes play a crucial role in this system; they are software instances hosted by users that maintain the ledger by storing and updating transaction data.

Hashgraph operates like a phone call, tracking the time of calls and messages exchanged between nodes. Each participant retains knowledge about who spoke to whom and when, ensuring transparency in communication. If misinformation occurs—like lying about who was contacted first—the truth can still be verified through timestamps shared among all participants. Unlike traditional blockchains, hashgraph encrypts message content while maintaining event integrity across nodes. The gossip protocol facilitates this information sharing efficiently but raises concerns regarding centralization similar to Iota's approach with its coordinator.

Hedera's hashgraph technology utilizes a unique method where messages are hashed in a network structure resembling a graph. For transactions to be validated, two-thirds of nodes must agree on the information, contrasting with blockchain’s 51% consensus requirement. This difference raises concerns about potential manipulation or fraudulent activities within Hedera's current node hosting setup, which consists of only 39 companies. As Hedera develops and expands its network security and performance, it plans to allow more participants in node operations.

Hedera Hashgraph, founded by Lehman Baird and Mance Harmond in Dallas, Texas, is a unique company that owns the proprietary hashgraph technology. It operates under the governance of 39 entities including major corporations like Google and IBM. Hedera aims to simplify blockchain adoption through its three main services: Consensus Service for message ordering, Smart Contract Service for Solidity programming support, and Token Service for transaction facilitation. With hundreds of applications already utilizing these services—including DeFi platforms and NFT marketplaces—Hedera provides an accessible ecosystem without requiring users to host nodes.

Understanding H-Bar's Role in Hedera Network Security H-bar serves as the native token for Hedera, functioning both as transaction fuel and a means to secure the network through staking. Unlike traditional proof of stake systems, H-bar employs delegated proof of stake without slashing penalties for bad actors. This unique approach allows users to delegate their voting power while benefiting from network security.

Transaction Efficiency and Market Positioning With an impressive capacity of 10,000 transactions per second at a fixed cost of $0.0001 each, H-bar offers significant advantages over Ethereum’s limited throughput and variable fees. Launched in 2018 with a capped supply of 50 billion tokens—23 billion currently circulating—H-bar is still growing its user base but remains smaller compared to competitors like Polygon. Despite claims about decentralization, only 39 corporations operate nodes on the network which raises concerns about potential vulnerabilities.