Frequently Asked Questions

Dr. Leemon Baird is the inventor of the hashgraph distributed consensus algorithm, and is the Co-Founder, CTO, and Chief Scientist of Hedera hashgraph. He had been thinking about the problem of distributed consensus for many years. This was driven from a desire to be able to carve out your own piece of cyberspace, to share with those who you want to share with, and not have to be dependent on the whims of a big technology company to host your data or collaborations. As a mathematician and computer science PhD, Leemon looked at the problem and thought it was unsolvable for a long time, but kept coming back to it until he found the answer.

In proof-of-work blockchain, some blocks are mined and are later discarded. The efficiency is the fraction of the blocks that are not discarded. In hashgraph, every event that is gossiped to the community is kept, so the efficiency is 100%. No resources are ever wasted on discarded blocks, because there are no discarded blocks. 

The Hedera hashgraph platform provides a new form of distributed consensus; a way for people who don't know or trust each other to securely collaborate and transact online without the need for a trusted intermediary. The platform is lightning fast, provides the best level of security possible in a distributed consensus algorithm, is fair, and, unlike some blockchain-based platforms, doesn’t require compute-heavy proof-of-work. Hedera enables and empowers developers to build an entirely new class of distributed applications never before possible.

The Hedera hashgraph platform uses a new kind of consensus mechanism, based on gossip about gossip and virtual voting. Previous generations of voting systems go back decades and achieve definitive consensus, but are very slow. Hashgraph’s innovation is in virtual voting, which gives you all the guarantees that voting has (which proof-of-work doesn't), but is incredibly efficient because we don’t actually send any votes over the internet. 

The Hedera hashgraph platform is based on a gossip protocol, in which the participants don’t just gossip about transactions - they also gossip about gossip. By adding information about their previous gossip to every current gossip message, participants are able to jointly build a hashgraph reflecting the history of all of the gossip events. Participants then analyze that shared history in order to determine a consensus timestamp for all transactions. The Byzantine agreement mechanism participants use is called virtual voting. Alice's computer does not send Bob's computer a vote over the internet, about what order the transactions were received. Instead, Bob calculates what vote Alice would have sent, based on his knowledge of what Alice knows, and when she learned it, according to the history in the hashgraph. This yields fair Byzantine agreement on a total order for all transactions, with very little communication overhead beyond the transactions themselves.

Hashgraph is aBFT, meaning that consensus will be reached with probability 1 if attackers control less than 1/3 of the participants, and control the communication network. Specifically, the attacker must control less than 1/3 of the stake in a proof-of-stake system, or less than 1/3 of the nodes in a system without proof-of-stake. The attacker can control the entire communication network in the sense that the attacker can delete messages, or delay messages for arbitrary amounts of time, with the only limitation being that if honest node Alice repeatedly tries to send messages to honest node Bob, eventually one will get through. The term network is sometimes used to refer to the set of network nodes (computers), and is sometimes used to refer to the communication network connecting the nodes (cables and routers). The system is resilient to attacks on both network nodes and the communication network itself, as long as both types of attacks are within the limits above.

The hashgraph algorithm is highly decentralized - there are no leaders, miners, coordinators or block producers with special influence towards consensus. Separately, the Hedera governance model is also decentralized. All Governing Members of the Hedera Hashgraph Council will have equal voting rights and all except Swirlds, Inc. will be limited to a three year term with a limit of two consecutive terms. Swirlds, Inc., the owners and licensor of the hashgraph technology, will retain a permanent seat on the council. The council membership will be decentralized across sector and region - with no one vertical or country having undue representation. The highly distributed network will eventually expand to millions of nodes voting on the order of transactions across at least five continents. This separation of governance from consensus is designed to ensure continued decentralization over time.

The Hedera Hashgraph Council will be the governing body of the Hedera hashgraph network, and provides distributed governance of the organization. The council will consist of up to 39 leading organizations and enterprises in their respective fields, with membership designed to reflect a range of industries and geographies, to have highly respected brands and trusted market positions, and to encourage a wide variety of perspectives. This is far more decentralized than a single foundation with a few people making all the decisions.

Hedera’s governance terms ensure no single member will have control, and no small group of members will have undue influence over the body as a whole. When it comes to consensus, the network will expand to millions of nodes, all of which will vote on consensus.

The Hedera hashgraph codebase will be governed by the Hedera Hashgraph Council, and will be released for public review with Version 1.0. The codebase will be open review, meaning that anyone will be able to read the source code, recompile it, and verify that it is correct. So the council cannot change the codebase without everyone seeing those changes. This ensures transparency.

The nodes that the Hedera hashgraph council members run will have no special role in consensus - their influence, like all others, will be weighted only by stake.

In addition, Hedera hashgraph is fair because there is no leader or miner given special permissions for determining the consensus timestamp assigned to a transaction. Instead, the consensus timestamps for transactions are calculated via a voting process in which the nodes collectively and democratically establish the consensus. Hedera is fundamentally fair because no individual can stop a transaction from entering the system, or even delay it very much. If one (or a few) malicious nodes attempt to prevent a given transaction from being delivered to the rest of the community, and so be added into consensus, then the random nature of the gossip protocol will ensure that the transaction flows around that blockage.

When a transaction is given a consensus timestamp, the community as a whole generates the timestamp. No single node is allowed to generate it by itself. The hashgraph shows the time at which each node first received the transaction. The consensus timestamp is defined to be the median of those different times. Virtual voting is the Byzantine agreement mechanism that determines which nodes contribute a time to the median calculation.  If more than 2/3 of participating nodes are honest and have reliable clocks on their computers, then the timestamp itself will be honest and reliable, because it is generated by an honest and reliable node, or falls between two times that were generated by honest and reliable nodes. In Hedera hashgraph's proxy staking system, the criteria is that there be nodes with more than 2/3 of the stake rather than more than 2/3 of the nodes.

No the source code will be open review, which provides trust and transparency, while also bringing stability to the network by preventing forking. Forking, or splitting, is a prevalent issue with some public ledger platforms as it artificially inflates supply.

The hashgraph algorithm is protected by patents. Part of the reason there are no enterprise-grade applications running on the public networks today is because those platforms will split into competing platforms and cryptocurrencies. This represents risk to anyone considering building mainstream applications. We have to provide both open innovation with stability to move the industry forward. By using the patent, we can work to prevent our platform from splitting into competing platforms. And we will never intentionally allow it to fork. That is a guarantee we can make.

No license will be required to use the Hedera hashgraph platform. No license will be required to write software that uses the services of the Hedera hashgraph platform. No license will be required to build smart contracts on top of the Hedera hashgraph platform. Applications built upon the Hedera hashgraph platform can be open source or proprietary. They do not require any license or any approval from Hedera. Swirlds and Hedera will simultaneously embrace open review, while bringing stability through use of the patents. In this way, Hedera will provide a transparent codebase that will provide the stability that markets demand for mainstream adoption of a public ledger.

Swirlds is the licensor of the underlying hashgraph technology that enables the Hedera hashgraph platform, and will continue to develop the technology. Swirlds is a member of the Hedera Hashgraph Council and will have the same voting rights as every other Governing Member. Prior to formal launch of the platform and the council, Swirlds may retain control of governance and network development. After launch, the operation of the network and all changes to the codebase will be controlled by the votes of the council, not by Swirlds.

DApps thst have announced their intent to build on Hedera hashgraph include:

Satori, a smart city application involving real-time computation and consumption of the world’s live data, including audio and video.

Machine Zone, a multi-billion dollar application and game developer has announced plans to build distributed applications on top of Hedera.

Intiva Health, a medical credentialing platform, will use Hedera to build their ReadyDoc platform for doctor credential management.

CULedger, a credit union consortium, will be using Hedera to enable cross border payments for credit unions around the world.

Artbit, a new distributed ledger platform will also use Hedera to revolutionise the ways artists are discovered and compensated.

The Hedera hashgraph network will have a native cryptocurrency - utility token used for the fees that grants token holders access to distributed applications on the platform. Nodes will be compensated for their costs in contributing towards consensus through the same tokens. Additionally, the token will also be used in the proxy staking model in order to provide the network security. A nodes votes in the virtual voting mechanism will be weighted by the amount of coins they have staked - thereby inhibiting Sybil attacks. We expect the token to act as a unit of value to motivate responsible use and governance of the platform.

Both DPoS and Hedera's proxy staking model are designed to allow those network participants not running node software to nevertheless use the coins they have to influence consensus.

In DPOS, such stakeholders are able to elect witnesses or delegates from a pool of candidates - only the successful candidates in this election are entrusted with acting as a consensus node. Stakeholders thus influence consensus indirectly in DPoS through their stake-weighted votes towards the election of the actual consensus nodes.  

In Hedera's proxy weighting model, stakeholders can directly influence consensus by proxying their stake towards a consensus node. The relative weight of that node towards the virtual voting algorithm will reflect the sum of the stake the node controls and that proxied to them by various stakeholders. This is logically similar to how individuals lend their money to a bank when they create a savings account - the expectation is those funds will be "put to work" (as loans to others, etc.) and the depositor compensated accordingly

The Hedera hashgraph platform will initially support smart contracts written in the Solidity™ language.  Over time, it may support additional smart contract languages. There can also be programs running on user computers and mobile devices, that call the Hedera API to use the services. Those programs can be written in any programming language.

The Hedera hashgraph platform will start with a small number of nodes during the testing phase. Then it will expand to have nodes run by all the council members. It will later expand to include other participants. Later, we anticipate this will become available to anyone who wants to host a node (and meets basic requirements for bandwidth, CPU, and storage). We expect to eventually have millions of nodes around the world, run by ordinary people, many of whom might choose to remain anonymous.

There is a test network currently running for Hedera Hashgraph Council members.

We expect the beta will go live in 2018.

You can learn more about the platform in the whitepaper. Alternatively, if you want to discuss council membership, system partnerships, building distributed apps, or anything else, send us a message via our register interest form below.