Hedera: Everything to Know

By  Beluga Research August 14, 2023

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  • Hedera is a cryptocurrency platform that offers fast, secure and decentralized transactions, making it a promising choice for businesses and developers
  • Hedera Hashgraph was founded in 2017 and gained attention for a unique consensus algorithm and successful ICO
  • Hedera employs the Hashgraph consensus algorithm, has a council governance model and uses the HBAR token
  • The platform supports smart contracts, offers high performance and scalability and prioritizes security and stability


Hedera is a cryptocurrency platform that offers fast, secure and decentralized transactions, making it a promising choice for businesses and developers. Hedera Hashgraph is a decentralized public ledger technology that aims to provide a secure, fast and fair platform for building decentralized applications (dapps) and conducting transactions. Unlike traditional blockchain systems, Hedera utilizes a directed acyclic graph (DAG) consensus algorithm called "Hashgraph" to achieve consensus and validate transactions. This unique approach offers several advantages, including high throughput, low fees and robust security.

A Brief History

Hedera Hashgraph was founded in 2017 by Dr. Leemon Baird and Mance Harmon. The project gained significant attention due to the novel consensus algorithm and potential to address some of the limitations faced by existing blockchain platforms. In 2018, Hedera conducted an initial coin offering (ICO) and raised around $124 million, making it one of the largest ICOs at the time.

Hedera: Everything to Know

  • Consensus Algorithm - Hedera employs the Hashgraph consensus algorithm, which combines gossip about gossip and virtual voting to achieve consensus. This algorithm enables fast and fair ordering of transactions, ensuring the integrity of the network while maintaining high throughput.
  • Governance Model - Hedera operates under a unique governance model that involves a council of renowned organizations from various industries. These council members, including Google, IBM and Boeing, contribute to the decision-making process and oversee the platform's development. This governance structure aims to ensure decentralization while promoting stability and security.
  • HBAR Token - The native cryptocurrency of the Hedera platform is called "HBAR." HBAR tokens are used to pay for transactions, participate in network governance and incentivize node operators. With a fixed supply of fifty billion tokens, HBAR plays a vital role in the ecosystem, facilitating transactions and securing the network.
  • Smart Contracts - Similar to other blockchain platforms, Hedera supports the execution of smart contracts. Developers can utilize the Solidity programming language, popularized by Ethereum, to create and deploy smart contracts on the Hedera network. This functionality opens up a wide range of possibilities for building dapps and automated agreements.
  • Performance and Scalability - Hedera Hashgraph boasts impressive performance metrics, capable of processing thousands of transactions per second. The platform's high throughput combined with low latency makes it suitable for various real-world use cases, including financial applications, supply chain management and decentralized gaming.
  • Security and Stability - Hedera places a strong emphasis on security and stability. The Hashgraph consensus algorithm provides robust Byzantine fault tolerance, ensuring the network's resilience against malicious attacks and maintaining consensus integrity. Additionally, the council governance model, with reputable members, further enhances the platform's security and stability.

Getting Started

To begin exploring Hedera, it is important to understand the underlying technology. Hashgraph, the consensus algorithm employed by Hedera, is designed to offer high throughput, low latency and fairness. It achieves consensus by leveraging what is known as a "gossip protocol," wherein nodes communicate with each other to exchange information about transactions and the associated order. This approach enables Hedera to process a large number of transactions per second, making it suitable for various real-world applications.

Hedera introduces the native cryptocurrency, HBAR, which serves as the fuel for the network. HBAR tokens are utilized to pay for transaction fees, participate in the platform's governance and incentivize network participants. Users can acquire HBAR through exchanges or participate in the network as a node and earn tokens as rewards.

Unique Aspects

One of Hedera's notable features is the governance model. Unlike many other blockchain platforms, Hedera employs a council of renowned organizations from diverse industries to oversee the network's development and decision-making processes. This council ensures decentralization while providing expertise and stability to the platform. Council members have equal voting rights and collectively determine important parameters such as fees, software upgrades and strategic decisions.

Hedera also emphasizes security and fairness. By utilizing Hashgraph, the platform achieves consensus through virtual voting, where each node influences the order of transactions based on the information it receives from other nodes. This approach eliminates the need for energy-intensive mining and prevents the formation of mining pools that could potentially control the network. As a result, Hedera offers a more equitable and environmentally-friendly alternative to traditional proof-of-work (PoW) or proof-of-stake (PoS) systems.

Furthermore, Hedera provides robust support for smart contracts and dapps. Developers can leverage Hedera's Solidity-compatible programming language to create and deploy smart contracts on the platform. The combination of high throughput and low latency enables efficient execution of complex applications, making Hedera suitable for use cases such as supply chain management, decentralized finance (DeFi), gaming and more.


  • Scalability - Hedera offers high transaction throughput, capable of handling thousands of transactions per second. This scalability is achieved through the DAG structure, which allows for parallel processing of transactions, enabling faster confirmation times and increased network capacity.
  • Security - Hedera employs a robust consensus algorithm called Hashgraph, which provides strong security guarantees. The algorithm ensures Byzantine fault tolerance, preventing malicious actors from compromising the network's integrity. Additionally, Hedera utilizes a unique approach called "Asynchronous Byzantine Fault Tolerance," which enhances security further.
  • Fairness - Hedera promotes fairness in the consensus mechanism by using a gossip protocol. This protocol ensures that all nodes in the network have an equal opportunity to contribute to the consensus process. By avoiding a centralized decision-making authority, Hedera aims to create a more inclusive and equitable ecosystem.
  • Governance - Hedera implements a governance model that involves a council composed of leading organizations from various industries. This council oversees the platform's development, sets policies and makes important decisions regarding upgrades and improvements. This decentralized governance structure aims to ensure that no single entity has excessive control over the platform.
  • Energy Efficiency - Unlike many other blockchain networks, Hedera consumes significantly less energy due to its DAG-based consensus algorithm. This energy efficiency is beneficial from both an environmental and cost perspective, as it reduces the carbon footprint associated with cryptocurrency mining and lowers operational expenses.


  • Centralization Concerns - While Hedera's governance model involves multiple organizations, some critics argue that the council's composition could lead to centralization concerns. They believe that having a limited number of entities overseeing the platform may undermine the decentralization principles that cryptocurrencies strive to achieve.
  • Permissioned Network - Hedera operates as a permissioned network, meaning that participants must gain approval to join the network and become network validators. This approach, while enabling higher performance and scalability, raises concerns about censorship resistance and access to the network for individuals or organizations outside the council.
  • Early Stage - As of the knowledge cutoff in September 2021, Hedera is still relatively young compared to some other well-established blockchain platforms. It takes time for a technology to mature, gain widespread adoption and address any potential vulnerabilities that may arise. Therefore, potential users and developers should carefully evaluate the platform's progress and future developments.
  • Limited Smart Contract Language Support - Hedera currently supports Solidity, the most widely-used programming language for Ethereum smart contracts. However, the platform does not yet offer support for other popular languages, such as Rust or JavaScript. This limited language support may pose challenges for developers who prefer or are more experienced with alternative programming languages.
  • Regulatory Uncertainty - Like many cryptocurrency projects, Hedera operates in a rapidly-evolving regulatory landscape. Compliance with existing regulations and adaptation to potential future changes can present challenges for both the platform and users. It is essential for participants to stay informed about legal developments and ensure compliance with relevant laws and regulations.