Hashgraph is a fast, fair and secure consensus protocol. Hedera is an open public deployment of hashgraph. Hedera layers proof of stake, a fee & payment model, and a cryptocurrency, smart contracts, and a file service on top of hashgraph. Hashgraphs efficiency and consequently high throughput means that Hedera expects to support micropayments with 100k tps. Hedera supports smart contracts written in Solidity. Hedera intends to be compliant across jurisdictions and has native support for optional KYC & AML checks via a Verified Identity mechanism.
Hedera Hashgraph LLC is a for-profit entity that is governed by 39 term-limited global enterprises across multiple industries. Its licensing and governance protects the community by eliminating the risk of forking, guaranteeing the integrity of the codebase and providing open access to the core. Governing members are responsible for the policy for council membership, regulating network rules and tokens, and approving changes to the protocol. They also elect subcommittees that will operate traditional corporate functions such as Legal, Finance and Marketing departments. Governing members receive fees from operating nodes to compensate for the work done.
Hashgraph consensus is designed to serve as a layer between the public internet and a service layer that supports blockchain-based technology projects like cryptocurrency, data storage, and smart contract execution. Hedera will launch in a permissioned model with only the governing members running nodes. Over time, as the native hbar coins are released to the market , the node membership will transition from permissioned to fully permissionless where any anonymous node can participate.
Swirlds is a separate company that owns the intellectual property of the hashgraph consensus algorithm. Swirlds has licensed the technology to Hedera Hashgraph and the two entities will use the associated patent rights to legally prohibit the forking of the code to create a competing platform and currency. While the node software is not open source, it is open review, meaning anyone can verify there are no backdoors in the code. Additionally, Hedera is open – no license is required to build applications on Hedera.
Hedera hashgraph will initially include a small number of nodes within a single shard. As the network grows and more scalability is necessary, nodes will be randomly grouped into shards by a master shard. The master shard assigns new nodes and moves nodes between shards so that each one has a large total amount being staked and that no single member has a large proportion of the overall amount. Shards reduce the trustlessness of other consensus mechanisms (e.g. PoW) that require each node to process every transaction, which is a useful trade off for Hedera’s performance and security goals. Instead, hashgraph nodes process transactions within their shard via a gossip information spreading protocol, and individual shards use the hashgraph consensus algorithm to confirm spends.
Transaction confirmation consensus between shards runs in parallel fashion across the network. This feature prevents temporary chain splits due to miners simultaneously solving block hashes, for example, which Hedera considers to be an inefficient use of network security resources. The hashgraph network aims to remove the possibility of any mining resources being spent solving blocks that are later discarded.
Hedera’s ledger runs a traditional proof-of-stake protocol that also allows for proxy staking, a feature whereby investors who own tokens but don’t run a node can stake their coins via an existing node and still earn account credits for staking.