What Is Hedera and How Does It Work? Who Created HBAR?

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Hedera Hashgraph is an innovative distributed ledger technology that stands apart from traditional blockchain networks like Bitcoin and Ethereum. While it serves similar functions—enabling secure, decentralized transactions and supporting smart contracts—its underlying architecture offers distinct advantages in speed, efficiency, and environmental sustainability. This article explores the core mechanics of Hedera, the role of its native token HBAR, and the vision behind its creation.

Understanding Hedera Hashgraph (HBAR)

Hedera Hashgraph is a decentralized public network built on a unique consensus algorithm known as Hashgraph, which differs fundamentally from blockchain structures. Instead of grouping transactions into blocks and chaining them together, Hedera uses a Directed Acyclic Graph (DAG)-based system to record and validate data.

This alternative approach enables faster transaction finality, lower fees, and significantly reduced energy consumption compared to proof-of-work blockchains. The network supports cryptocurrency transactions, smart contracts, file storage, and tokenization—making it a versatile platform for developers and enterprises alike.

At the heart of the ecosystem is HBAR, the native utility and governance token of the Hedera network. HBAR is used to pay for transaction fees, secure the network through staking, and participate in decentralized governance decisions.

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How Does Hedera Hashgraph Work?

The foundation of Hedera’s performance lies in its asynchronous Byzantine Fault Tolerant (aBFT) consensus mechanism. This mathematically proven algorithm ensures that the network remains secure, fair, and resilient even if some nodes behave maliciously or fail.

Unlike traditional blockchains that rely on mining or leader-based validation, Hedera uses a process called "gossip about gossip" to propagate information across the network. In this model:

As a result, Hedera achieves:

These metrics position Hedera as one of the most scalable and eco-friendly distributed ledgers available today.

Who Founded Hedera Hashgraph?

Hedera Hashgraph was co-founded in 2017 by Dr. Leemon Baird, an American computer scientist and former professor at the U.S. Air Force Academy. He invented the hashgraph consensus algorithm and co-founded Swirlds Inc. in 2015 to develop and license the technology.

Dr. Baird envisioned a more efficient alternative to blockchain—one that could support global-scale applications without sacrificing security or decentralization. His work culminated in the launch of Hedera Hashgraph in March 2018, backed by a diverse governing council of industry leaders.

The Hedera Governing Council

One of Hedera’s most distinctive features is its decentralized governance model, managed by a council composed of leading global organizations. Current members include:

This council oversees protocol upgrades, ensures long-term stability, and prevents any single entity from controlling the network—enhancing trust among enterprise users and developers.

What Makes Hedera Unique?

While many distributed ledger technologies claim scalability and sustainability, Hedera stands out due to several key factors:

1. Patented Consensus Technology

Although open-source, the hashgraph algorithm is patented by Swirlds, ensuring controlled use and preventing forks. This provides legal clarity for enterprises but has sparked debate around decentralization.

2. Enterprise-Grade Performance

With sub-second consensus and high throughput, Hedera supports real-world applications such as supply chain tracking, identity verification, micropayments, and decentralized finance (DeFi).

3. Environmental Sustainability

By eliminating mining and using minimal computational power, Hedera aligns with ESG (Environmental, Social, and Governance) goals—an increasing priority for institutional investors.

4. Support for Smart Contracts & dApps

Developers can build decentralized applications (dApps) on Hedera using familiar tools like Solidity (Ethereum-compatible). The network supports Hedera Token Service (HTS) and Hedera Smart Contract Service (HSCS), enabling rapid deployment of tokens and programmable logic.

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What Gives HBAR Its Value?

HBAR derives value from multiple utility functions within the ecosystem:

As adoption grows—driven by enterprise integrations and dApp development—demand for HBAR is expected to increase, potentially boosting its market value.

How Many HBAR Tokens Are in Circulation?

Hedera pre-mined all 50 billion HBAR tokens before mainnet launch in 2018. There is no mining or block rewards; instead, new tokens are gradually released according to a fixed schedule managed by the governing council.

Currently, tens of billions of HBAR are in circulation, with the remainder held in reserve for future distribution via grants, ecosystem incentives, and team allocations.

How Is the Hedera Network Secured?

Security on Hedera relies on its aBFT consensus, which guarantees:

Because every node participates in consensus and no leader selection is required, the network avoids vulnerabilities associated with centralized validators or mining pools.

How to Use Hedera Hashgraph

Developers can leverage Hedera for:

Enterprises benefit from predictable pricing, regulatory compliance tools, and interoperability with existing systems.

Choosing a Wallet for HBAR

Due to its non-blockchain architecture, standard blockchain wallets may not fully support HBAR. Compatible options include:

For enhanced security, hardware wallets are recommended for long-term storage.

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Frequently Asked Questions (FAQ)

What is the difference between blockchain and hashgraph?

Hashgraph uses a DAG-based "gossip about gossip" protocol instead of blocks and chains. It offers faster consensus, higher throughput, and lower energy use than traditional blockchains.

Is HBAR a good investment?

HBAR offers exposure to a scalable, enterprise-friendly DLT with strong institutional backing. As adoption expands, demand for staking and transaction fees may drive value appreciation—though market risks remain.

Can Hedera replace Ethereum?

While not a direct replacement, Hedera competes in similar domains like smart contracts and DeFi. Its performance advantages make it attractive for high-throughput applications where cost and speed matter.

Is Hedera truly decentralized?

Hedera employs a permissioned governance model via its council, which enhances stability but limits open participation compared to fully decentralized networks. However, node operation is open globally.

How fast are transactions on Hedera?

Transactions achieve finality in 3–5 seconds, with near-instant user experience due to predictable processing times.

Where can I buy HBAR?

HBAR is listed on major exchanges including OKX, Binance, and Coinbase. Always choose platforms with strong security and liquidity.

Hedera Hashgraph represents a compelling evolution in distributed ledger technology—offering speed, sustainability, and enterprise readiness. While still maturing, its growing ecosystem and institutional support suggest strong potential for long-term impact in both crypto and traditional industries.