How Does HBAR Work?


Last Updated on February 14, 2024 by Nasir Hanif

What to Know About Hedera Hashgraph (HBAR) and How It Operates

Proof-of-work (PoW) blockchains like Bitcoin and Ethereum consume hefty amounts of energy and have low throughput due to slow encryption. An average transaction on these blockchains will cost you around $2-3.

The Hedera proof-of-stake (PoS) public network is an alternative to blockchains. The network is powered by the Hashgraph consensus and has the highest-grade security. With its low fees and high throughput, Hedera paves the way for the future of public ledgers.

With Ethereum 2.0 still under development, next-gen public ledgers offer more efficient and sustainable financial solutions. This article will share more about Hedera — a digital platform of choice for most reputable organizations.

Hedera Network and HBAR 101

Hedera is a limited liability company from Delaware. The company was founded by Mance Harmon and Dr. Leemon Baird. Its governing body consists of 26 corporations. Those corporations include the world’s leading companies like Ubisoft, LG, IBM, and Google. 

What makes the Hedera network stand out from other projects is its consensus mechanism. The network uses Hashgraph. It’s a novel technology for distributed ledgers. 

The Hedera whitepaper was released in May 2016, signifying the inception of the Hedera network. However, the first user was able to access its mainnet only three years later in September 2019. 

The network’s native token is HBAR. It was introduced through an initial coin offering (ICO) in August 2018. HBAR coins are used to:

  • make payments;
  • secure the Hedera network;
  • power decentralized applications (dApps) and smart contracts.

HBAR’s price is $0.10 per coin. Its supply stands at 20.7 billion tokens. HBAR’s price and supply depend on the amount of money people invest in the project. Always make sure to compare HBAR vs AVAX or other cryptocurrencies before investing.

What Is the Principal of Hedera Hashgraph Work?

Hedera Hashgraph uses an entirely different network architecture called directed acyclic graph (DAG). This ledger technology allows all nodes within the network to share information and timestamps all these messages. 

The sending information between the nodes is called gossiping. It’s the basis of the Hashgraph operation. The network also uses the Asynchronous Byzantine Fault Tolerance (ABFT) algorithm. It is responsible for the timing and fairness of transactions.

One interesting fact about the ABFT algorithm is that there is no block time. In the Hashgraph network, nodes gossip messages to each other about transactions at random. Without block time, these messages have a travel time of 3-5 seconds, which ensures a throughput of 10,000 TPS.

Hedera introduced an update that includes Smart Contracts 2.0. Now users can tokenize and transfer assets to the network 10x faster. Furthermore, the platform is carbon negative and it takes only $1 to mint NFTs or fungible tokens.

Pros and Cons of Dealing With HBAR

There are no perfect cryptocurrencies on the market. Every crypto comes with its strong and not so strong side. Let’s talk about the main benefits and drawbacks of investing in HBAR. 

Advantages of HBAR

Here are some of the strong points of the Hedera network: 

  • fast throughput (10,000 TPS);  
  • low fees ($0.0001 on average);
  • fast transaction time (3-5 seconds);
  • environmentally friendly (0.00017 kWh per transaction);
  • high security (ABFT algorithm).

You can look at the ONE vs HBAR comparison to find out more advantages of HBAR.

Disadvantages of HBAR

Consider the project’s disadvantages, before investing in HBAR:

  • a centralized network that has a no-fork policy;
  • only council members can run nodes;
  • low throughput for smart contracts (10 TPS)
  • relatively small project (not even in the top 30 by market cap).

What Hedera Network Promises for the Future

Right now, HBAR is in the bear market. According to Coingape’s analysis, HBAR can reach a price of $0.27 per token by the end of 2022.

Hedera Hashgraph is a notable alternative to blockchain networks. It’s a fast, sustainable solution used by organizations and people worldwide. Even if you aren’t planning to trade HBAR daily, it’s a unique token that can make your crypto portfolio more versatile.

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