There are an ever growing number of smart contract focused blockchains that aim to outperform each other. Hedera is one of the newest contenders in the ring boasting powerful TPS and low finality time while running solidity. Can this new contender dethrone the high performing smart contract chains, or is it going to fall with the rest?
Background
Hedera was created by two computer scientists by the name of Leemon Baird and Mance Harmon, they formerly were working for the US air force. Hedera was built as a DLT using a new algorithm that would allow the network to have high speed with low finality and allowing the LEDGER network to be Byzantine fault tolerant. The first iteration of Hedera Hashgraph was released to a small group for testing in late 2018 its main-net was later released in 2019.
The "blockchain" has been backed by several large corporations and has its nodes run mainly by representatives from 39 (currently 23) different industry leading companies. Some of the noteworthy council members are: Google, LG, IBM & Chainlink labs. The remaining 19 companies managing the network can be found here. Currently these companies hold 60% of all coins and use these to govern and manage the network. Each company sits on the council for three years at a time, for a maximum of 2 years consecutively. Any new company that is to be added to the council is voted for by sitting council members. The technology is patented by Swirlds (which is on the council) and is given 10% of all profits from the chain, this patent also prevents the code from being forked.
Currently, the network is managed by a council of companies that run various nodes, this is planned to be increased to allow smaller nodes ran by individuals known as mirror nodes which would help with decentralisation. Hedera uses a aBFT Hashgraph consensus method that allows for high security and being tamperproof, this along with their gossip about gossip model allows the network to maintain high speeds. Transactions and messages that are sent on the network contain information on transactions of its neighbouring nodes. This makes any transactions that take place spread quickly on the network and reach finality under 10 seconds.
Hedera supports smart contracts using solidity, making it very easy to switch development on Dapps from Ethereum over to Hedera. In order to access the ledger network & its smart contracts you need to use the networks utility token HBAR. This powers any action on the chain, transactions, staking & smart contracts are all powered by HBAR.
Any new development or changes to the code or network needs to be approved by Hedera Foundation. That is the central body where the development for the chain takes place as well how token distribution is decided. The closest resemblance it has is to the Tendermint consensus, where validator nodes are chosen and delegated tasks, this also means that the chain is permissioned and not fully decentralised.
Hedera shines with its high transaction speeds and low finality time. It allows Dapps that are built using solidity to run on it natively with incredible speed. As the DLT requires HBAR to operate, any adoption or use also means an increase in price for the coin. Thanks to the network being managed by large corporations, adoption from other companies is easier. They're not exposed to projects built and managed by the general public and have figures that can be held accountable.
Hedera today
HBAR is both praised and criticized heavily depending on who you ask. The chain has high performance and allows for powerful apps to be built and run on chain. Transaction costs won't be an issue and there won't be any barred entry due to the increasing adoption (looking at you Ethereum). While this is true, it is true due to the fact that the network is permissioned and managed by a small group of companies, achieving a highly performing network in that environment is not hard. That causes people to doubt as the network isn't decentralized and that brings along some risks. Lastly, the coin distribution is very low as Hedera is relatively young, currently only 30% of all coins are in circulation which means that price can dip over time as tokens are released Hedera Foundation.
But as it stands, despite its shortcomings Hedera can be a strong force to be reckoned with if it sees its adoption increase further. It's the perfect tool for large corporations to integrate themselves into crypto without exposing themselves to too much risk.
- High TPS, speed & security
- Really strong partnerships/backing
- Solidity based smart contracts
- Semi-centralized & permissioned
- Technology patented by outside party
- Only 30% of coins in circulation
