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 gossip about gossip. They jointly build a hashgraph reflecting all of the gossip events. This allows Byzantine agreement to be achieved through 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.

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 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.

The Hedera hashgraph platform is the most decentralized solution in the market, both in terms of organizational decision making, and in consensus on transaction ordering. 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.

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. 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 a proof-of-stake system, it is 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.

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 plaform 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.

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, which is a utility token that grants token holders access to distributed applications on the platform. The token may also be “staked” and used to run a node (that is, adding CPU to the Hedera public network), thereby providing the network security. We expect the token to act as a unit of value to motivate responsible use and governance of the platform.

In the Hedera hashgraph platform with proxy staking, every node that is running has a vote that influences the consensus. Every node simultaneously acts as a producer of "events" (similar to blockchain "blocks"). The nodes do not take turns. No events are discarded. None of the nodes are ignored. There is never a special leader node, not even for a few seconds. Every node is incentivized by receiving cryptocurrency for serving as a node.

In systems without proxy staking, users will not receive the incentive if they do not run a node. In Hedera's proxy staking system, even those users who do not run a node can still receive the incentive. If they choose to proxy stake their cryptocurrency to a running node, then they and the node split the incentive. This encourages owners of cryptocurrency to let it participate in the system, rather than sitting idle.

Token holders will pay transaction fees to access distributed applications on the Hedera hashgraph platform. These transaction fees are paid to Hedera and the nodes in the network that contribute to the consensus mechanism.

Hedera sets the fee to store a given file in the ledger. The alternative would be to let one of the nodes decide on its own what fees should be charged to store a file. However, every node must use its resources to store that file. So the price can't be set arbitrarily by one node. It must be set uniformly for the system by those who are governing the system.

If a user stores a file in the ledger, then the user will pay the fees to Hedera, rather than to the single node. Because every node then must store the file. So every node is using its resources. If only a single node were paid, and could then force all other nodes to expend resources, that would allow Denial of Service attacks, where a malicious node decides to store large numbers of files and all other nodes are forced to store them. But if the fees are sent to Hedera to be redistributed to all the nodes, then they are incentivized to expend the resources needed to store the file.

A user pays a Node Fee to a single node for submitting a transaction on behalf of the user, to compensate the node for the effort of doing so. The Transaction Fee is used to compensate all of the nodes for the effort of gossiping and reaching consensus on that transaction. If there were only Transaction Fees, then nodes would not have an incentive to help users. If there were only Node Fees, then a malicious node could waste the resources of all other nodes.

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.