Friday, September 24, 2021

KnowYourCrypto #24 - September 24, 2021: Hedera Hashgraph (HBAR)

First of all, I wanna thank you all for sending my last post to the "hot section". It's just... amazing! For everyone who wonder how my dog feels now, the vet said he probably has gastritis...if one day I skip the daily post, it will mean I had an emergency.

If you are interested to the previous posts of this series, check it out here:

What is it?

Hedera Hashgraph is a distributed public ledger and its native token is called HBAR. Hashgraph doesn't use a blockchain like most other cryptocurrencies. Instead, it uses a "gossip protocol" designed to facilitate high-speed transactions and fast finality. Hashgraph is the name of the technology itself. Putting it all down to simpler terms, a hashgraph is a way that computers communicate with each other, which has nothing to do with the blockchain. Hashgraph was invented by a Swiss technology company called Swirlds, which then decided to create an entirely public version of this technology. In other words, they wanted to create a completely open hashgraph where anyone could enter and have their computers communicate with other computers, thus also allowing development for applications such as cryptocurrencies. The native token of this public hashgraph network is called HBAR. Hedera is the name of the non-profit board responsible for overseeing this public network. That's why this public network is called Hedera Hashgraph. Hedera is made up of 40 government organizations representing a range of industries. Among the most recognizable members are Google, IBM, LG and Boeing. The council decides on issues such as basic code changes, treasury management, network security, mutability and legal compliance. This practical business approach applied by Hedera Hashgraph is in contrast to distributed ledgers such as Ethereum and Cardano, which emphasize the importance of decentralization and community management.

How does it work?

The hashgraph distributed ledger is known to be very fast and is expected to perform 10,000 transactions per second initially and hundreds of transactions per second later on. Its secret is that it provides all the computers on its network with a much faster way to communicate with each other. Hedera calls it the "gossip" protocol. Traditional blockchains work by packing transactions into blocks and then with miners who have to complete the processing of each block. Blocks only emerge periodically, so transactions basically need to increase block passing if they want to be sent. Instead, Hashgraph packages transactions as "events" on the fly and then simply lets them pass through the network. When you make a transaction on Hashgraph, your computer will pack it into an event and communicate that event to two other randomly chosen computers on the network. These two computers will communicate that transaction to two others, and so on. In other words, they will "gossip" about events until the entire network is aware of what happened. At this point, you will have levels of trust and immutability similar to those of a blockchain. This system is made faster by three additional factors:

  • Hashgraph is optimized for fast HBAR transactions rather than high-speed smart contracts.
  • The size of the data you need to communicate in each HBAR transaction is very small, which means that Hashgraph nodes can gossip to each other very quickly.
  • Users can choose the level of confidence they want to have in the validity of each HBAR transaction, which allows people to further optimize individual transactions for faster speed or greater certainty based on their personal needs.

Where to store it?

The best hot wallets for HBAR are HEX, MyHbarWallet, TrustWallet and Atomic Wallet. If you want more security, a cold storage like Ledger or Trezor is the right choice.

Pros&Cons

*DISCLAIMER* These lists are subjective, it depends from person to person

Pros

  1. Fast and cheap transactions
  2. Great security
  3. Environmentally friendly
  4. A lot of partnerships

Cons

  1. Centralized
  2. Even if wallet to wallet transactions reach 10k TPS, the average speed is 36 TPS
  3. No mining or staking

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