🤔 What is Hedera Hashgraph ?
Hedera is a public distributed ledger for building and deploying applications and microservices.
It uses Hashgraph data structure instead of traditional blockchains to store transaction data.
💡 What role does HBAR token play ?
HBAR is the native token for Hedera Hashgraph ecosystem. Users have to pay transaction fee in HBAR to include their transactions on Hedera Hashgraph. The transaction fee is composed of:
- Node fee: A user or application seeking to complete a transaction on the network will send that transaction to a single node, which will then submit that transaction to the network. In doing so, that node will expend resources and energy (albeit a small amount). Node Fees compensate nodes for those resources and incentivize nodes to take on this critical role.
- Network fee: After a transaction is submitted to the network, it is communicated to nodes that validate digital signatures, further communicate the transaction to other nodes, and temporarily store it in their memory while the network reaches consensus. Users pay a Network Fee that compensates all participating nodes for reaching consensus on the user’s transaction.
- Service fee:
- Service Fees are paid by an end-user to compensate the network for the services associated with the transaction (e.g., a cryptocurrency transfer, smart contract processing, file storage, or message ordering).
- For example, for a file service transaction, the network will charge a Service Fee corresponding to the amount of energy and memory needed to store a file based on its size and the requested duration of time it will be stored on the network.
- For a smart contract transaction, the Service Fee will be based on the processing power required by network nodes to perform the computation required by the smart contract.
- Application fee:
- Developers can monetize applications built on Hedera to compensate themselves for the value they provide to the end-users.
- A wallet application, for example, may choose to charge a small percentage of each deposit or withdrawal. A ridesharing app that connects drivers to passengers with no intermediary may choose to take a fee calculated as a small
percentage of each ride completed and paid. - Like many existing applications, some Hedera-based applications may offer both free services and paid services.
📝 Origin of Hedera Hashgraph
- March 2018 – Hashgraph Consortium Formed: Hashgraph Consortium, LLC is created as a Delaware limited liability company. Hashgraph technology is shared publicly for the first time at TechCrunch Disrupt in San Francisco, CA. The first Letters of Intent are signed by potential Council members.
- August 2019 – Mainnet Launch:
- Hedera mainnet goes live on August 24, 2019. 50 billion HBAR are minted.
- The first meeting of potential Council members is convened to review the Hedera LLC Agreement and details of Council membership.
- February 2020 – Hedera Consensus Service (HCS) Launch: The Hedera Consensus Service (HCS) is launched. HCS acts as a trust layer for any application or permissioned network and allows for the creation of an immutable and verifiable log of messages. Application messages are submitted to the Hedera network for consensus, given a trusted timestamp, and ordered before flowing to the mirror network, from which applications can subscribe for notifications.
- February 2021 – Hedera Token Service (HTS) Launch: The Hedera Token Service (HTS) offers a native tokenization framework. for the configuration, minting, and management of tokens on Hedera, without needing to set up and deploy a smart contract.
👴🏻 Founders
Dr. Leemon Baird
- Education:
- 1985-1989: Studied Bachelor of Computer Science at United States Air Force Academy.
- 1996-1999: Did PhD. in Computer Science at Carnegie Mellon University
- Career:
- Aug 2000 – Jun 2004: Co-founder and CTO of Trio Security.
- Jun 2004 – Sep 2005: Director of Security Engineering at Symbol Technologies (Motorola).
- Jun 2003 – Aug 2009: Professor of Computer Science at US Air Force Academy.
- Sep 2005 – Jan 2012: Co-founder and CTO of BlueWave Security.
- Aug 2009 – Apr 2012: Senior Research Scientist at Academy Center for Cyberspace Research.
- Sep 2015 – Present: Founder / CTO of Swirlds Inc.
- Jan 2018 – Present: Founder / Chief Scientist at Hedera Hashgraph.
Mance Harmon
- Education:
- 1989-1993: Did Bachelor’s in Computer Science at Mississippi State University.
- 1997-1998: Did Masters in Computer Science at University of Massachusetts Amherst.
- Career:
- Jul 1993 – Aug 1997: Research Scientist for Machine Learning at Air Force Research Laboratory: Wright Laboratory.
- Dec 1998 – Jun 2000: Instructor, Dept. of Computer Science at United State Air Force Academy.
- Jul 2000 – Sep 2002: Program Manager, Missile Defense Wargame at Missile Defense Agency.
- Sep 2002 – Jun 2004: CEO and Founder of Trio Security, Inc. Graphic.
- Jun 2004 – Aug 2005: Sr. Director, Security Products at Symbol Technologies (Motorola).
- Sep 2005 – Dec 2011: Founder and CEO of BlueWave Security.
- Mar 2012 – May 2013: Ortsbo Graphic
Chief Technology Officer at Ortsbo. - May 2016 – Sep 2016: Head of Labs at Ping identity.
- Nov 2016 – Present: Board Member and Advisor at Swirlds Inc.
- Aug 2017 – Present: CEO and Co-founder at Hedera Hashgraph.
🤖How does it work ?
Architecture
- Internet layer: The Hedera network nodes are all computers on the internet, communicating by TCP/IP connections protected by TLS encryption with ephemeral keys. Nodes are addressed by IP address and port, rather than by symbolic names, so attacks on the DNS system will not affect the network.
- Consensus layer: The nodes take transactions from clients and share them throughout the network using gossip protocol. Then all nodes run the hashgraph consensus algorithm to reach agreement on a consensus timestamp for each transaction and its consensus order in history. Each node then applies the effects of the transactions in consensus order to modify its copy of the shared state. In this way, all nodes maintain an identical consensus state (within any given shard).
- Service layer:
- Cryptocurrency: Any user will be able to create an account by simply creating a key pair, without any name or address attached to it. Optionally, provisions are made to allow a user to attach hashes of identity certificates. These could come from any third-party certificate authority or identity authority that the user chooses. This is intended to allow regulatory compliance, for cryptocurrency accounts that will be used in a jurisdiction with Know Your Customer (KYC) or Anti-Money Laundering (AML) laws.
- File storage: The file system allows users to store information, with consensus on exactly what is stored and what is not stored. Every node in the shard stores the same files, so they will not be lost if one of the nodes crashes. Stored information can only be deleted by those that were given permission.
- Smart contracts: The Hedera ledger can run smart contracts written in Solidity.
- Consensus: The consensus service will give distributed applications direct access to the native speed, security, and fair ordering guarantees of the hashgraph consensus algorithm.
Mirror network
The Hedera mirror network is a set of nodes that will maintain all of the same requirements and most of the functionality of the main Hedera network.
The primary difference in functionality is that mirror nodes do not have the ability to submit transactions to be incorporated into the network’s ledger.
Mirror nodes will gossip, calculate consensus and verify signatures, but because they are unable to create events, mirror nodes have no effect on the hashgraph structure.
Therefore they have no ability to submit transactions for consensus and no voting power.
The mirror network will provide an efficient way to get the state of the ledger out to many more users and dApps in a short period of time without having a major impact on the performance of the main network.
As a result, dApps may choose to host their own mirror nodes to listen to transactions on the main network and respond accordingly.
Gossip about Gossip Protocol
Gossip about Gossip is one of the popular concepts in networking—gossiping means to spread a piece of information to another person who is not aware of it yet.
Gossip about Gossip also works on the same set of rules.
Suppose there are four persons namely Patrice (P), Quain (Q), Robert (R), and Scott (S). Quain decides to gossip with Scott randomly. It means that Quain is giving Scott all those events that Scott does not know yet. Scott acknowledges and creates a new event at the peak of his previous event
Suppose now Scott decides to gossip with Quain again.
Now, Quain has received three events out of which the first two events are of Quain and Scott while third event Scott has created the third event. By gossiping and interacting with each other, Hashgraph looks as follows:
⚙️ Applications built on Hedera Hashgraph
🏛️ Governance model
Hedera is owned and governed by the Hedera Governing Council, which consists of up to 39 term-limited organizations and enterprises.
Each council member runs consensus node and collectively govern future changes to Hedera Hashgraph protocol. Each member of the Hedera Governing Council has an equal vote when deciding whether to accept an improvement proposal.
The Council establishes policy for Council membership, sets the network rules, manages the platform’s treasury of coins, and approves changes to the platform codebase.
All members have a three-year maximum term, with up to two consecutive terms. Swirlds, the creator of the hashgraph algorithm, has a permanent seat. After initial members are selected by Swirlds, the council’s Membership Committee will source replacements.
Current Governing Council members include:
🤑 How much money does the project have for future development ?
- The project raised:
- $4.66M in Jan 2018.
- $14.51M in Mar 2018.
- $81.50M in Aug 2018.
- $22.33M in Aug 2018.
- Founders and project were allotted 80.14% of total HBAR supply.
😨 Risks and challenges
Permissioned governance
Hedera is a centralized project developed by a handful of founders. They are traditio0nal founders who have successfully founded several tech startups in the past.
They are approaching crypto industry with the same mindset, not embracing core crypto values like opensource, decentralized etc.
They have patented their algorithms:
They have taken measures to ensure no developer is able to fork their codebase, improve and launch a better project.
There are just a handful (39 at present) of corporations running consensus nodes. These corporations are in it to make money, not because of core crypto values.
Hedera team plans to decentralize the project in the future by adding more nodes.
However, it is very difficult for a centralized project to move towards decentralization. This is because centralization creates winners and powerhouses, which try to keep the system as it is in their best intrest.
Community
Competition
There are many layer 1 smart-contract blockchains that are much faster, cheaper, decentralized and have a huge ecosystem of dapps. Why would anyone choose Hedera Hashgraph, other than ignorance?
💰 Tokenomics
Hedera network has a total fixed supply of 50 billion HBAR, which were minted at the network launch on Aug. 24, 2018. These tokens have been distributed as follows:
These tokens will be released as follows:
🧐 Indicators to watch out for
- Transaction volume:
- Number of accounts being created:
- Twitter following is growing:
- Youtube channel is growing:
👋Final remarks
There are many layer 1 projects that have compromised decentralization for speed and scalability. There is a reason why projects like Etherium and Cardano are taking so long to develop scaling solutions.
It will be interesting to see what role projects like Hedera Hashgraph play once Etherium 2.0 is rolled out.
😊 Do further research
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