Hedera Hashgraph is a distributed public ledger infrastructure. The project relies on Hashgraph, an asynchronous Byzantine Fault Tolerant (aBFT) algorithm, invented by CTO Dr. Leemon Baird, to achieve network consensus.
Since Hashgraph has the potential to process transactions at a comparatively efficient rate, Hedera intends to be a platform that can support high-volume use cases, such as micropayments, data compliance, and tokenization. The network also supports a virtual machine that can compile smart contracts written in Solidity, similar to the EVM. Hedera intends to be compliant across jurisdictions by offering native support for optional KYC and AML checks via its "Verified Identity" mechanism.
The Hedera network will be governed by a council of leading global enterprises, across multiple industries and geographies. Its vision is a cyberspace that is trusted and secure, without the need for centralized parties with inordinate influence. Hedera's licensing and governance model protects users by eliminating the risk of forking, protecting the integrity of the codebase, and providing open access to review the underlying software code.
Hashgraph is a relatively new consensus protocol that aims to process transactions faster than existing networks, as they are often characterized by high latency and low transactions per second (TPS). Hedera layers Proof-of-Stake for consensus weighting, a fee & rewards model, a cryptocurrency, and the two key HCS and HTS services on top of hashgraph, Hedera's consensus algorithm.
Hedera Consensus Service (HCS) and Hedera Token Service (HTS)
- HCS allows clients to submit messages to the Hedera network for consensus timestamping and ordering, but it doesn't require the consensus nodes to store states related to that message. Instead, application state or data is persisted off-chain, where HCS users can define confidentiality and access control that cater to their use case.
- HTS supports native tokenization, whereby clients can create and manage various token types. Token controls include managing supply and KYC compliance, along with native atomic swaps and multi-sig capabilities.
Hedera will launch in a permissioned model with only the governing members running nodes. Over time, as the distribution of the network's native token, $HBAR, improves, the node membership will transition from permission to fully permissionless, where any network participant can operate a Hedera consensus node. These nodes will secure the Hedera ledger by reaching a consensus on the validity and order of transactions.
Entities Behind the Network, Hedera Hashgraph LLC is a US-based entity that is governed by 39 term-limited global enterprises across multiple industries. These entities manage Hedera's consensus nodes while collaborating to determine the protocol's future direction (i.e., Hedera's near-term governance model). Governing members are responsible for council membership, regulating network rules and tokens, and approving changes to the protocol. They also elect subcommittees that will operate traditional corporate functions such as Legal, Finance, and Marketing departments. Governing members receive fees from operating nodes to compensate for their security and governance contributions, but they do not take profits from the entity in their role as members.
Swirlds is a separate company that owns the intellectual property of the hashgraph consensus algorithm and is an equal-weight governing member. Swirlds has licensed the technology to Hedera Hashgraph. The two entities will use the associated patent rights to legally prohibit anyone from forking the code and creating a competing platform and currency. While the consensus algorithm is not open source, it is "open review," meaning anyone can verify there are no backdoors in the code. Additionally, Hedera's platform and services code, as well as developer tools, are all open source under the Apache 2.0 license. Using GitHub developers can make a "Hedera Improvement Proposal" (HIP) which members of the community can vote on.
Current known investors of Hedera include BlockTower Capital, Blockchange Ventures, Blockwall, Continue Capital, CypherMines, DHVC, DNA Fund, Digital Currency Group, Distributed Global, Eterna Capital, Fenbushi Capital, Kosmos Capital, Mind Fund Group, Multicoin Capital, Polybius Capital, Struck Capital, and Varys Capital.