Hedera Hashgraph

Hedera Hashgraph is a decentralised public network designed to support the development of scalable and secure decentralised applications (DApps). It addresses key limitations found in earlier blockchain systems, including performance bottlenecks and high operational costs.

At the foundation of the network is the Hashgraph consensus algorithm, created by Dr. Leemon Baird. Unlike blockchain, which organises transactions in sequential blocks, Hedera utilises a directed acyclic graph (DAG) data structure. This enables faster consensus, fair transaction ordering, and reduced energy consumption.

How Hedera works

Hedera operates through a mechanism known as "gossip about gossip," where nodes rapidly exchange information about transactions and their history. Consensus is achieved via virtual voting and asynchronous Byzantine Fault Tolerance (ABFT), ensuring high security and resilience in the presence of faulty or malicious nodes.

Gossip about gossip: Nodes exchange details about transactions and when and from whom they are received. This layered information sharing allows transaction data to propagate quickly and efficiently across the network.

Virtual voting: Instead of sending messages to vote on each transaction, nodes determine consensus by referencing previously shared data. This removes the need for additional communication, increasing speed and reducing overhead. The process supports ABFT, which ensures security even if some nodes are unreliable.

Strengths

Hedera is purpose-built for enterprise-grade use, offering high throughput, robust security, low transaction fees, and energy efficiency.

Throughput

Hedera supports over 10,000 transactions per second (TPS), surpassing earlier-generation blockchain platforms. This capacity enables real-time processing for applications such as digital payments, data management, and asset exchange. Its DAG-based architecture ensures consistent performance under high demand.

Security

Hedera uses a consensus mechanism that combines virtual voting with asynchronous Byzantine Fault Tolerance (ABFT) to ensure robust security and operational integrity. This approach allows the network to continue functioning reliably even if some nodes act maliciously or fail, all without relying on central control or energy-intensive mining.

Finality

Transaction confirmation is achieved within 3–7 seconds, enabling timely execution for services in financial, commercial, and enterprise contexts. With an average transaction cost of $0.001, Hedera supports economically viable use in both low-value and high-frequency scenarios.

Efficiency

Hedera consumes only 0.003 watt-hours (Wh) per transaction. This positions it as one of the most energy-efficient public ledgers available, aligning with sustainability requirements across industries.

Function

HBAR, Hedera’s native cryptocurrency, underpins the network’s utility, security, and governance framework.

Operations

HBAR facilitates token transfers, smart contract execution, and data logging. Transaction fees compensate consensus nodes for computation, bandwidth, and storage.

Security

Hedera operates as a public, open-source proof-of-stake network. HBAR holders can stake tokens to consensus nodes, influencing transaction validation weight. To compromise consensus, an actor must control over one-third of the total HBAR supply—an economically prohibitive scenario.

Governance

HBAR holders influence protocol governance by voting on upgrades, policy changes, and technical improvements. This participatory model enhances transparency and accountability.

Tokenomics

HBAR has a fixed maximum supply of 50 billion tokens. The Hedera Governing Council manages distribution to support long-term network stability and mitigate volatility risks.

Performance

The Hedera public network combines speed, low cost, energy efficiency, and enterprise-grade security. Powered by the Hashgraph consensus algorithm and supported by a proof-of-stake model, the platform provides one of the most efficient infrastructures for decentralised applications.

Applications

Hedera’s architecture supports diverse applications across finance, healthcare, supply chains, and digital identity. Its high throughput and low transaction costs make it suitable for complex, real-time operations.

Financial

Hedera provides a scalable foundation for financial services, combining fast transaction finality (3–7 seconds) with low average fees ($0.001). This makes it suitable for both retail transactions and institutional financial workflows.

Micropayments
Hedera supports low-cost, real-time micropayments, enabling monetisation models that are impractical on conventional networks due to high transaction fees. Streaming platforms can charge users per view or per second of content consumption, while IoT devices—such as smart meters and connected vehicles—can execute automated, usage-based payments. This cost efficiency makes Hedera suitable for high-frequency, low-value transactions across digital content and machine-to-machine ecosystems.

Cross-border payments
Hedera significantly improves the efficiency of international payments by removing the need for multiple intermediaries. Unlike SWIFT-based systems, which often involve delays and high fees, Hedera enables direct peer-to-peer transactions, improving cash flow visibility and reducing operational overhead for multinational organisations.

Supply chain

Hedera strengthens supply chain operations with tamper-proof, real-time data logging and verification.

Authenticity
Industries dealing in high-value goods, such as pharmaceuticals and luxury retail, use Hedera to verify authenticity. For instance, pharmaceutical companies can track drugs from manufacturing to distribution, helping ensure compliance and preventing counterfeit products. Similarly, luxury brands can provide consumers with timestamped proof of authenticity.

Transparency
Compared to alternatives like VeChain or IBM Blockchain, Hedera delivers higher throughput and lower operational costs. This allows for more extensive deployment without sacrificing performance, making it viable for large-scale operations such as global logistics or bulk commodity tracking.

Healthcare

Hedera enhances healthcare data integrity and enables secure identity management through decentralised systems.

Patient data
Hedera can support applications meeting GDPR and HIPAA compliance requirements, allowing healthcare providers to securely share and access electronic health records (EHRS). Its rapid settlement ensures consistency and reliability across hospitals, clinics, and emergency response systems.

Self-Sovereign Identity (SSI)
Self-sovereign identity (SSI) allows individuals to manage their credentials without dependence on central authorities. Hedera enables this model with cryptographically secure identity verification. Sectors such as finance, government, and education can reduce the risk of data breaches while giving users more control over their personal information.

Tokenisation

Hedera provides the infrastructure to launch token-based financial models, supporting fungible and non-fungible tokens (NFTS).

Token issuance
Businesses can use Hedera to issue tokenised assets, including stablecoins and regulated financial instruments. Its governance mechanisms and low operating costs make it a viable platform for managing digital assets within enterprise frameworks.

DeFi integrations
Hedera supports decentralised finance (DeFi) protocols, including lending, staking, and yield services. It provides a high-performance alternative to Ethereum, offering better cost efficiency and faster transaction settlement, which improves overall user experience and risk management.

Integration

Hedera Hashgraph is being adopted in live enterprise environments across sustainability, finance, and asset management.

Carbon emissions

Organisations such as DOVU and ServiceNow use Hedera to log carbon offsets and emissions data on-chain. This supports transparent, auditable, and verifiable sustainability reporting aligned with ESG goals.

Enterprise finance

Shinhan Bank has trialled Hedera for cross-border remittances, demonstrating reduced settlement time and cost when compared to traditional SWIFT-based systems.

Digital asset

Global investment firm ABRDN is exploring Hedera for secure issuance and administration of tokenised funds, supporting compliant digital asset management within regulated markets.

Challenges

Despite its advantages, Hedera faces adoption and governance-related challenges that may affect perception and growth.

Centralisation

Hedera’s governance model involves a council of global enterprises, each holding equal voting rights. While this promotes accountability, some critics argue it introduces centralisation concerns not typically associated with decentralised networks.

However, Hedera maintains that its structure is essential for enterprise adoption and security, balancing decentralisation with stability.

Adoption

Hedera is still expanding its developer ecosystem and user base. Competing with more established blockchain networks remains a challenge, and growth will rely on continuous innovation and increased adoption across industries.

Development

Hedera continues to invest in innovation, ecosystem expansion, and strategic collaboration to strengthen its platform and utility.

Advancements

Ongoing research and development aim to increase performance and support complex enterprise use cases. Future upgrades will further optimise the Hashgraph algorithm and its infrastructure capabilities.

Expansion

As awareness of Hedera’s technical advantages grows, adoption among developers and enterprises is expected to rise. The evolution of new decentralised tools and integrations will contribute to a more active ecosystem.

Collaborations

Hedera is actively building partnerships with other DLT platforms, enterprises, and public institutions. These collaborations will expand interoperability, broaden use cases, and support network participation.

Hedera Hashgraph offers a high-performance, energy-efficient, and secure foundation for decentralised applications. Supported by the HBAR token and governed by a council model, it provides a viable alternative to traditional blockchain platforms. While concerns about centralisation and adoption remain, Hedera’s enterprise-grade infrastructure and operational efficiency position it for sustained relevance in the evolution of decentralised technologies.