Hedera Hashgraph (HBAR): Complete guide
Learn more about how Hashgraph works, where to buy the Hashgraph coin and what to consider when exploring Hashgraph.
Hedera Hashgraph is a public distributed ledger system. Its native token, the “hashgraph coin”, 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.
This guide explains how Hedera Hashgraph works in simple terms, where and how to buy the HBAR token and what to consider before you do.
What is Hedera Hashgraph?
Hashgraph is the name of the technology itself. When you boil it all down to its simplest terms, a hashgraph is just a certain way for computers to talk to each other, while a blockchain is a different way.
Hashgraph was invented by a tech 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 can come in and have their computers talk to other computers, which allows for applications such as cryptocurrency.
The native token on this public hashgraph network is called HBAR.
Hedera is the name of the nonprofit governing council responsible for overseeing this public network. That’s why this public hashgraph network is called Hedera Hashgraph.
Hedera is made up of 40 governing organisations which represent a range of industries. Some of the more recognisable members include Google, IBM, LG and Boeing. The council decides on issues such as changes to the codebase, treasury management, network security, mutability and legal compliance.
This corporate hands-on approach by Hedera Hashgraph is in stark opposition to distributed ledgers such as Ethereum and Cardano which emphasise the importance of decentralisation and community management.
Where to buy Hedera Hashgraph (HBAR)
Compare a variety of exchanges that buy, sell and trade Hedera Hashgraph, including:
How does Hashgraph work?
The hashgraph distributed ledger is known for being very fast, and people are expecting it to perform 10,000 transactions per second initially and hundreds of thousands of transactions per second further down the line.
Its “trick” is that it gives all the computers in its network a very fast way of talking with each other. Hedera calls this the gossip protocol.
Traditional blockchains work by packaging transactions into blocks and then having miners compete to process each block. Blocks only emerge periodically, so transactions essentially need to hitch a ride on passing blocks if they want to get sent.
By contrast, Hashgraph packages transactions as “events” on the fly and then just lets them wash 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 in the network. These two computers will then communicate that transaction to two more and so on.
In other words, they’ll “gossip” about events until the whole network knows what happened. At this point, you will have blockchain-like levels of immutability and trustlessness.
This system is made faster by three additional factors:
- Hashgraph is largely optimised for fast HBAR transactions rather than high-speed smart contracts.
- Once you strip it down, the “size” of the data you need to communicate in each HBAR transaction is very small, which means Hashgraph nodes can gossip about it very quickly.
- Users can choose the level of confidence they want to have in the validity of each HBAR transaction, which lets people further optimise individual transactions for more speed or more certainty as suits their personal needs.
What a Hashgraph transaction looks like
A Hashgraph transaction can be bundled into several steps:
- You initiate a transaction by submitting it to a computer on the network.
- That computer does a quick pre-check on the transaction, bundles it into an event and then gossips that event out to the rest of the network.
- The hashgraph itself listens to all the gossip going on, watches as gossip gets repeated throughout the network by different computers and arranges it all in chronological order.
These three steps take several seconds, after which people can confirm that a transaction is all good and properly sorted out.
There are three different ways of confirming transactions, depending on the level of certainty you need and on whether you trust the computer you submitted it to.
- You get a receipt from the computer you submitted a transaction to. This is cursory, quick and free. You’ll need to trust that computer though because it can modify receipts if desired.
- You get a record from the computer. This is more detailed, but it’s not free and you’ll still have to trust the computer that sends it over.
- You get the deluxe confirmation package, known as “state proof”. This is when the hashgraph network itself confirms your transaction. It’s not free, but it’s also tamperproof, and doesn’t require you to trust any individual nodes.
How to sell HBAR
To sell HBAR, you can simply follow the steps above, except select “sell HBAR” instead of buy. This will let you sell your HBAR for BTC on Binance. Warning: Binance offers cryptocurrency derivatives which the regulator banned from sale to UK consumers in January 2021.
Hedera Hashgraph HBAR wallets
You can use the official Hedera Hashgraph wallet. Note that this requires you to pass KYC procedures and verify your identity with Hedera.
To set up your Hashgraph wallet, you will need to do the following:
- Create a Hedera account at https://portal.hedera.com/register
- Pass KYC
- Choose “mainnet” as the network you want to join
- Click “download and link Hedera wallet”
- Select “new wallet” and follow the steps provided
What to consider before you buy HBAR
Hashgraph is still a work in progress, and it’s now just one of many next-gen high speed blockchains. It doesn’t have the same track record as other projects yet, and people have raised concerns about whether Hashgraph will live up to the predictions made of its technology.
In particular, one of the things people are concerned about is the degree of trust they need to place in the Hedera organisation as well as in the businesses underpinning it and that Hedera Hashgraph may not be a completely open and free network.
For its part, Hedera has emphasised that it sees this as an advantage. It aims to be a distributed ledger for businesses, and it wants to bring a degree of more mundane legal structures and centralisation to the wild west of cryptocurrency.
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