You may have heard that Hedera is faster than many blockchains, uses almost no energy, and can process thousands of transactions per second. You may have also heard that it isn’t technically a blockchain, its consensus nodes are permissioned, and its governance doesn’t work through token voting.
So, what is Hedera, really? And which claims about it hold up once you look beyond the headlines?
What Is Hedera Hashgraph?
Hedera is an open-source public ledger that performs many of the same functions as a Layer 1 blockchain. However, it doesn’t arrange transactions into a linear chain of blocks. Instead, Hedera Hashgraph uses the hashgraph consensus algorithm to order transactions and reach final agreement.
“Hashgraph” describes both the graph-like history created as nodes exchange information and the consensus procedure that analyzes that history. Consensus nodes share transactions and metadata about earlier communications through a process called gossip-about-gossip. Because each node can reconstruct the same event history, it can calculate how other nodes would vote without sending separate voting messages.
Hedera combines this system with proof-of-stake. A node’s consensus influence depends on the HBAR assigned to it, while HBAR also pays network fees. The result is a distributed ledger designed to provide deterministic finality, fair transaction ordering, and high throughput without proof-of-work mining.
Is Hedera a Blockchain?
Hedera provides accounts, tokens, smart contracts, transaction settlement, and public network access, so it often gets grouped with blockchain platforms. Technically, though, Hedera is a distributed ledger that uses a hashgraph rather than a blockchain.
Distributed Ledgers and Blockchains
A distributed ledger is a database replicated across multiple independent computers. A blockchain is one type of distributed ledger that places transactions into sequential blocks linked by cryptographic hashes.
Hedera uses a different structure. Its nodes create interconnected events that record transactions and references to previous communications. The network derives consensus from this shared graph rather than waiting for miners or validators to add another block.
Hashgraph Instead of a Chain of Blocks
In a traditional blockchain, transactions enter blocks, and those blocks form a chronological chain. Hedera’s consensus nodes continually exchange events, allowing the graph to grow in parallel.
This blockchain vs. hashgraph distinction affects how consensus is reached. Hedera doesn’t rely on a block producer to choose the next batch and ordering of transactions. The network calculates an agreed order from when transactions spread across the node set.
Directed Acyclic Graph Structure
The hashgraph is a type of directed acyclic graph, or DAG. “Directed” means its connections point forward through the communication history. “Acyclic” means the graph doesn’t loop back to an earlier event.
Each new event references two earlier events—one created by the same node and one received from another node. These links let every participant reconstruct how information traveled through the network.
Why Was Hedera Created?
Computer scientist Leemon Baird invented the hashgraph consensus algorithm while working with Mance Harmon at Swirlds, a company they co-founded. They later created Hedera to make the technology available through a public network built for high throughput, predictable fees, and fair transaction ordering.
Hedera’s mainnet became publicly accessible on September 16, 2019. The founders also adopted a council-based governance system rather than placing all network policy under a single company or giving direct control to token holders.
Hashgraph was originally patented and licensed through Swirlds. In 2022, the Council acquired the intellectual-property rights and open-sourced the code under Apache 2.0. In 2024, Hedera contributed its codebase to the Linux Foundation Decentralized Trust as the Hiero project.
How Does Gossip-About-Gossip Work?
Gossip-about-gossip is the communication system behind Hedera consensus. A consensus node randomly shares a newly created event with another node. That event contains transactions, a timestamp, and hashes referencing the latest events known to its creator.
The process works roughly like this:
- A node receives transactions and creates an event.
- It links the event to its own previous event and one received from another node.
- It sends the event to a randomly selected peer.
- The process repeats until nodes can reconstruct the same communication history.
Because that history is built into the graph, nodes can calculate consensus locally without a separate voting channel.
How Does Virtual Voting Work?
Virtual voting is the process each node uses to calculate how other nodes would vote based on the shared hashgraph. No extra vote messages need to travel across the network.
Locally Calculated Votes
Every node sees the same graph once gossip has spread the relevant events. It can therefore analyze the graph and determine how other nodes would vote on whether an event has been sufficiently observed.
This reduces voting-message overhead. Nodes still exchange events through gossip, but they don’t need to broadcast a second set of explicit consensus votes.
Consensus Rounds
The algorithm assigns events to logical consensus rounds. These aren’t blocks and don’t contain fixed batches of transactions. They help the network measure how far information has propagated and identify the events used to determine consensus.
Witness Events
A witness is the first event created by a node in a new round. Witnesses act as reference points for analyzing whether events have reached enough of the network.
Famous Witnesses
A famous witness is a witness that the algorithm determines has been seen by a supermajority of consensus weight. Famous witnesses help calculate the consensus timestamp and final order of transactions.
Strong Seeing
An event strongly sees another event when the graph contains paths through nodes representing more than two-thirds of the network’s staked consensus weight. This graph-reachability test shows that information has spread enough to support agreement.
Two-Thirds Supermajority Threshold
Hedera’s proof-of-stake model requires more than two-thirds of consensus weight for key agreement decisions. Its aBFT security assumption holds as long as an attacker controls less than one-third of the relevant stake—not less than two-thirds.
Reduced Voting-Message Overhead
Virtual voting doesn’t eliminate communication. Nodes still gossip events throughout the network. It eliminates a separate round of voting messages because each node can infer the votes from the graph it already holds.
How Does Hedera Reach Consensus?
Hedera combines the hashgraph algorithm with proof-of-stake weighting. Gossip spreads transactions and event history, virtual voting derives agreement, and staked HBAR determines each node’s consensus weight.
Hashgraph Consensus Algorithm
The hashgraph consensus algorithm orders valid transactions using the shared event graph. It doesn’t merely decide whether a transaction is valid. It also assigns an agreed timestamp and places the transaction into a deterministic consensus order.
Proof-of-Stake Weighting
Consensus influence depends on how much HBAR is staked to each node. A node with more assigned stake carries more weight in the algorithm’s supermajority calculations.
This doesn’t mean the node owns the delegated HBAR. Native staking assigns consensus weight while balances remain in their holders’ accounts.
Consensus Timestamps and Order
Each accepted transaction receives a consensus timestamp derived from when the network observed it. Hedera uses these timestamps to establish a consistent order that applications can verify.
The same capability supports the Hedera Consensus Service, which orders and timestamps application messages without executing them as smart-contract instructions.
Deterministic Finality
Once Hedera reaches consensus, the transaction is final. Users don’t need to wait for additional blocks to reduce the probability of a reorganization, as they may on networks with probabilistic finality.
Fair-Ordering Design
Hedera bases ordering on network-wide observations rather than allowing one block producer to choose transaction sequence alone. This design aims to limit a single node’s ability to reorder transactions for its own advantage, although no network architecture eliminates every form of application-level manipulation.
How Secure Is Hedera?
The hashgraph algorithm is designed to provide asynchronous Byzantine fault tolerance, or aBFT. It can reach agreement even when messages are delayed or arrive in an unpredictable order, provided malicious participants control less than one-third of consensus weight.
Proof-of-stake weighting, deterministic finality, and cryptographic signatures add further protection. Known organizations currently operate mainnet consensus nodes, improving accountability but creating a decentralization trade-off because the Council controls node admission.
Who Runs the Hedera Network?
Hedera separates consensus participation from historical-data access. Consensus nodes process transactions and vote through the hashgraph algorithm, while mirror nodes store and serve network records.
Consensus Nodes
Consensus nodes receive transactions, create hashgraph events, participate in consensus, maintain network state, and produce record files. Mainnet consensus nodes are currently operated by Hedera Council members and aren’t open for anyone to run without approval.
Mirror Nodes
Mirror nodes consume record files produced by consensus nodes and make historical data available to explorers, applications, and analytics services. They don’t participate in consensus or maintain the authoritative network state.
Anyone can run a mirror node. This lets developers independently index transactions, balances, token activity, and Hedera Consensus Service messages.
Is Hedera Permissioned or Permissionless?
Both descriptions require context:
| Network Function | Access Model |
|---|---|
| Submit transactions | Public |
| Create accounts, tokens, and applications | Public |
| Query mirror-node data | Public |
| Run a mirror node | Permissionless |
| Run a mainnet consensus node | Currently permissioned |
| Approve new consensus-node operators | Hedera Council |
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How Is Hedera Governed?
The Hedera Council governs network policy, software changes, fee schedules, treasury decisions, and current mainnet node admission. It is designed to include up to 39 organizations across industries and regions.
Council members have equal voting rights and term limits, preventing voting power from scaling with company size or HBAR holdings. Governance votes are organizational and separate from proof-of-stake consensus weighting.
Key features include:
- Equal votes: Each council member gets one vote on matters submitted to the Council.
- Limited terms: Members generally serve up to two consecutive three-year terms.
- Shared oversight: The Council reviews network upgrades, pricing, treasury policy, and operating rules.
- No token governance: Holding or staking HBAR doesn’t give you a direct vote in Council decisions.
This model offers legal accountability and policy stability, but it also concentrates formal governance within a limited group of invited organizations.
Is Hedera Open Source?
Yes. Hedera’s network code is open source, although that wasn’t always the case. The underlying hashgraph technology was originally patented and licensed through Swirlds.
The Hedera Council acquired the intellectual-property rights and released the code under the Apache 2.0 license in 2022. Since 2024, the core codebase has been developed as Hiero under the Linux Foundation Decentralized Trust. Hiero provides a vendor-neutral home for the software used to run Hedera, while the Hedera Council continues to govern the live network.
What Is HBAR?
HBAR is Hedera’s native utility asset. It has two foundational network roles:
- Paying transaction and service fees
- Contributing stake to consensus security
HBAR can also be transferred as value, but it doesn’t grant direct governance rights over the Hedera Council.
The total supply is fixed at 50 billion HBAR. That figure isn’t the same as circulating supply. Hedera’s treasury reporting distinguishes released, allocated, and unreleased amounts, while market-data providers may use different circulation definitions.
Hedera sets transaction fees in USD and converts them into HBAR using the network exchange rate. This keeps the quoted dollar cost predictable, although the amount of HBAR charged changes as its market price moves.
Native staking lets you assign your account’s HBAR balance to a consensus node. The balance remains liquid, ownership doesn’t transfer, and Hedera’s native staking system has no lock-up, unbonding period, or protocol slashing.
How Fast Is Hedera?
Hedera commonly cites a throttle of 10,000 transactions per second for native cryptocurrency and token operations. You shouldn’t treat that number as universal performance for every workload.
The Hedera Smart Contract Service runs on the Ethereum Virtual Machine, or EVM. Smart-contract execution uses gas and has different capacity constraints from native HBAR or token transfers. Contract complexity, state access, and network throttles all affect real-world throughput.
Hedera’s strongest performance characteristic is fast deterministic finality. Once consensus is reached, the transaction doesn’t need additional confirmations to become more secure.
What Services Does Hedera Provide?
Hedera provides four core native services, plus account, scheduling, and data-query features.
| Service | Primary Function |
|---|---|
| Hedera Consensus Service | Orders and timestamps application messages |
| Hedera Token Service | Creates and manages fungible tokens and NFTs |
| Hedera Smart Contract Service | Executes Solidity contracts through the EVM |
| Hedera File Service | Stores files such as contract bytecode and configuration data |
The Hedera Consensus Service orders and timestamps application messages without executing their logic. The Hedera Token Service creates fungible tokens and NFTs natively, including configurable supply controls and custom fees. The Hedera Smart Contract Service executes Solidity smart contracts through the Ethereum Virtual Machine. The Hedera File Service stores immutable files such as contract bytecode and configuration data.
Hedera accounts can hold HBAR, fungible tokens, and NFTs. Scheduled transactions support multi-party approvals, while mirror-node APIs provide REST and gRPC access to historical data.
What Is the Hedera Consensus Service?
HCS applies Hedera’s ordering and timestamping capabilities to arbitrary application messages. Developers submit messages to a topic, and the network assigns each message a consensus timestamp and position.
Applications can use HCS for audit logs, supply-chain events, identity records, and cross-system coordination. HCS doesn’t interpret messages or execute business logic—the application decides what each message means.
What Is the Hedera Token Service?
HTS lets developers create and manage tokens at the protocol level. Supported assets include fungible tokens and NFTs with unique serial numbers.
Token creators can configure administrative keys, supply controls, pause and freeze options, KYC settings, and custom fees. HTS can support stablecoins, loyalty points, in-game items, and tokenized assets. More complex applications can connect HTS to EVM contracts through Hedera’s system contract interfaces.
How Do Smart Contracts Work on Hedera?
Hedera supports Solidity contracts through its EVM-compatible Smart Contract Service. You can connect with MetaMask, deploy through common Ethereum development frameworks, and interact through JSON-RPC endpoints.
Compatibility doesn’t make Hedera identical to Ethereum. Its account model, fee schedules, throttling, native tokens, address handling, and some RPC semantics differ. System contracts also connect EVM applications to Hedera-native services, so developers should test against Hedera rather than assuming every Ethereum behavior carries over unchanged.
What Can Hedera Be Used For?
Hedera supports applications that need payments, tokenization, programmable contracts, or verifiable event ordering.
Payments and Micropayments
HBAR transfers have low, predictable fees quoted in USD terms. This can support frequent low-value payments, although the total user cost may also include wallet, exchange, or application charges.
Stablecoins and Tokenized Assets
HTS can issue stablecoins, loyalty assets, tokenized funds, and representations of real-world assets. Issuers can use token-level controls and custom fees without implementing every function through a standalone contract.
Supply-Chain and Audit Records
HCS can timestamp shipping updates, inspections, approvals, and other business events. Participants can verify their sequence through mirror-node records without relying on one company’s private database.
Digital Identity and Credentials
Applications can anchor credential issuance, revocation, and verification events to Hedera. Sensitive personal data shouldn’t be placed directly on a public ledger. Systems typically store proofs or hashes while keeping private information off-chain.
NFT and Gaming Applications
HTS issues NFTs with native serial numbers and royalty-fee support. Projects can use these assets for collectibles, memberships, tickets, and in-game items.
Decentralized Finance
Hedera’s EVM environment can run decentralized exchanges, lending protocols, and other DeFi applications. EVM compatibility makes porting easier, but liquidity, tooling, and protocol risk remain separate considerations from network performance.
Sustainability and Carbon-Market Records
Projects can record carbon-credit issuance, transfer, and retirement events through HCS or tokenized assets. A public timestamped record may improve traceability, but the ledger can’t independently verify whether an underlying environmental claim is accurate.
Internet-of-Things and AI Data Provenance
Connected devices can submit sensor events to HCS, while AI systems can record hashes of datasets, model outputs, or approval steps. Hedera can prove ordering and existence, but it can’t guarantee that submitted data was truthful before it reached the network.
How Can Hedera Adoption Claims Be Evaluated?
Partnership announcements and transaction counts don’t always show how deeply a network is being used. When evaluating a Hedera project, check:
- Whether it is a pilot, testnet deployment, or live mainnet product
- Whether transaction activity is publicly visible through mirror-node data
- Whether quoted TPS figures refer to native services or EVM execution
- Whether a Council member is governing the network, building a product, or both
- Whether usage comes from many users or one high-volume application
HBAR price movements also aren’t reliable proof of network adoption. Market conditions, listings, speculation, and broader crypto sentiment can affect price independently of real application demand.
How Does Hedera Compare with Ethereum?
Hedera and Ethereum both use proof-of-stake and support Solidity smart contracts, but their consensus structures and governance models differ.
| Feature | Hedera | Ethereum |
|---|---|---|
| Ledger structure | Hashgraph DAG | Sequential blockchain |
| Consensus | Hashgraph with stake-weighted voting | Proof-of-stake blockchain consensus |
| Finality | Deterministic after consensus | Finality through Ethereum’s checkpoint process |
| Smart contracts | EVM-compatible | Native EVM environment |
| Native token system | Hedera Token Service | Usually smart-contract token standards |
| Governance | Hedera Council and open-source development | Off-chain community and client-development process |
| Fee model | Scheduled in USD and paid in HBAR | Market-driven gas paid in ETH |
Hedera may offer lower and more predictable fees for many native operations. Ethereum has a much larger application, liquidity, infrastructure, and developer ecosystem. The better fit depends on your application’s requirements.
How Does Hedera Compare with Traditional Blockchains?
Traditional blockchains append transactions in sequential blocks. Hedera builds a graph of interconnected events and derives consensus from the communication history shared between nodes.
| Feature | Hedera Hashgraph | Traditional Blockchains |
|---|---|---|
| Data structure | Graph of interconnected events | Sequential chain of blocks |
| Consensus process | Gossip-about-gossip and virtual voting | Varies by network, often block proposals and validator voting |
| Transaction ordering | Deterministic consensus order | Usually based on block inclusion |
| Finality | Deterministic finality | Often probabilistic or checkpoint-based |
| Block producers | No miners or single block proposer | Miners, validators, or designated block proposers |
| Native fees | Scheduled in USD and paid in HBAR | Usually determined by network demand |
| Node access | Mainnet consensus nodes remain permissioned | Varies from permissionless to permissioned |
Hedera doesn’t use miners or a single block proposer, provides deterministic ordering and finality, and schedules native fees in USD terms. However, participation as a mainnet consensus node remains permissioned.
Also keep in mind that any claims that Hedera is simply “faster than blockchain” are too broad to be useful, because networks differ in their workloads, architectures, execution environments, and scaling layers.
Who Created Hedera Hashgraph?
Leemon Baird invented the hashgraph consensus algorithm. He and Mance Harmon co-founded Swirlds before launching Hedera as a public network.
Hedera opened its mainnet to public access in September 2019. The network later moved from proprietary hashgraph licensing to open-source development and contributed its core codebase to Hiero under the Linux Foundation Decentralized Trust.
Is Hedera Environmentally Friendly?
Hedera uses proof-of-stake and doesn’t require competitive proof-of-work mining. That materially reduces its computational and electricity requirements compared with mining-based networks.
Hedera has also described the network as carbon negative by purchasing offsets for estimated operational emissions. You should treat that as an environmental accounting claim based on measurement, certification, and offset methodology—not an automatic property of hashgraph consensus.
Low network energy use also doesn’t make every application environmentally beneficial. A project’s overall footprint depends on its infrastructure, data storage, devices, and off-chain operations.
Is Hedera Hashgraph a Good Investment?
HBAR remains a volatile crypto asset. Before buying, consider its fixed 50 billion supply, treasury releases, application activity, governance, competition, regulation, and demand for fees and staking. Staking rewards don’t remove price risk, and partnerships or technical performance don’t guarantee appreciation. Most importantly, remember to only invest what you can afford to lose.
Learn more in our Hedera Hashgraph (HBAR) price prediction.
How to Buy HBAR
You can buy HBAR on Changelly with supported fiat payment methods or exchange another cryptocurrency for it. The process is simple and straightforward:
- Open Changelly and select HBAR as the cryptocurrency you want to receive.
- Choose the fiat currency or cryptocurrency you want to spend.
- Enter the amount and review the estimated exchange rate, provider fees, and expected HBAR amount.
- Enter a Hedera-compatible wallet address.
- Select an available payment provider or confirm the crypto swap.
- Complete any required payment and identity-verification steps.
- Wait for the transaction to process and the HBAR to arrive in your wallet.
Before confirming the purchase, make sure the receiving wallet supports Hedera and carefully check the address.
After buying HBAR, you can keep it in a compatible software or hardware wallet. You can also assign the balance to a consensus node through native staking without transferring ownership or locking the funds.
Final Thoughts
Hedera isn’t a conventional blockchain. It uses hashgraph consensus, proof-of-stake weighting, and HBAR to provide ordered, final transactions across a public distributed ledger. Its native services support tokens, EVM contracts, files, and timestamped messages, while its Council governs network policy and node admission.
The design offers speed and predictable fees, but its permissioned consensus layer and council-based governance remain important trade-offs to consider.
Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
