Summary
Hedera is a public, permissioned, open-source network widely regarded as one of the most regulatory-compliant public DLTs, enabled by its unique combination of advanced technology and institutional governance.
Hedera leverages the ground-breaking hashgraph consensus algorithm to power decentralized applications–all without compromising speed, efficiency or security.
Developed by Dr. Leemon Baird, the hashgraph consensus algorithm underpins the Hedera network, offering a unique alternative to blockchain consensus mechanisms that provides fast, fair, and secure consensus.
How transaction processing works
Creating and signing transactions
On Hedera, transaction processing starts when a client creates and signs a transaction. At a minimum, the account paying the transaction fee must sign it, though more signatures might be needed depending on settings for the account, topic, or token. The client can also set the maximum fee they’re willing to pay, and for smart contracts, a maximum gas limit.
Sending the transaction
Once signed, the client sends the transaction to any node on the Hedera network.
Receiving the transaction
The receiving node checks if the payer has enough balance to cover the fee. If valid, the transaction is added to an event and shared with other nodes using Hedera’s “gossip about gossip” protocol.
This allows the transaction to spread across the network rapidly. Each node independently calculates a consensus timestamp by taking the median time it received the transaction from others—ensuring fast, fair, and final ordering.
Key components
Hashgraph is a Directed Acyclic Graph (DAG)-based consensus algorithm that differs fundamentally from blockchain. Instead of bundling transactions into blocks and chaining them linearly, hashgraph uniquely uses an asynchronous gossip protocol combined with virtual voting to achieve consensus.
Gossip about gossip
Each node spreads signed information (events) to other randomly chosen nodes. An “event” is a data structure containing a set of transactions and two hashes referencing the last two events a node knows. Over time, this creates a graph of events that show the entire communication history across the network.
Virtual voting
Unlike blockchain protocols that require actual voting and message exchanges, hashgraph uses virtual voting based on the history in the gossip graph. Every node can calculate the votes of others using only the graph structure—no additional messages are needed. This mechanism ensures that consensus is reached quickly and efficiently.
Security
Hashgraph is asynchronous BFT, meaning it can tolerate up to 1/3 of malicious nodes and is the highest level of security available in DLT. It guarantees consensus finality—once consensus is reached, it’s permanent and cannot be changed.
Fair ordering of transactions
Transaction order is determined based on when the transaction was received by a supermajority of nodes. This reduces the potential for front-running or manipulation, which is more common in some blockchain systems.
Performance highlights
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High throughput: Handles thousands of transactions per second.
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Low latency: Finality achieved in seconds, not minutes or hours.
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Energy efficient: No mining or proof-of-work—nodes communicate and compute only.
Open source, public network
Hedera is an open source, public network, meaning anyone can read and write data to the network and can build on the platform. The source code for the Hedera network services and the hashgraph consensus algorithm is available at LF Decentralized Trust as Hiero.
Network transparency is maintained through publicly visible transaction records on the mainnet, a network consisting of consensus and mirror nodes.
Network governance
Composable services and toolkits to accelerate building
Hedera offers a suite of native network services and open source toolkits designed to abstract the complexities of blockchain development, and accelerate the building of decentralized applications–especially in regulated markets.
Explore developer tooling on Hedera
HBAR: the fuel of the Hedera network
HBAR is the native cryptocurrency of the public Hedera network. As a utility token, it is used to pay for various network services, including transferring HBAR between accounts, minting and managing fungible and non-fungible tokens (NFTs), executing smart contracts, and logging data to the network.
HBAR access and utility
Developers and everyday users can buy HBAR from third-party platforms like cryptocurrency exchanges that support the Hedera ecosystem. Once they have HBAR, they can use it to:
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Pay for application transaction fees
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Purchase goods and services
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Stake to help secure the network
Developers & retail users
Developers and retail users can acquire HBARs through integrated third-party exchanges and platforms. Once held, HBARs can be used to pay for network transactions, access services, or stake to a Hedera node—earning up to 2.5% APY while supporting the security and stability of the network.
Applications
Applications built on the Hedera network use HBAR to pay for transaction fees on every API call. This ensures developers and users contribute to the cost of securing and operating the decentralized network while powering fast, fair, and efficient dApps.
Exchanges
Exchanges enable developers, users, and node operators to buy or sell HBAR across various markets. These independent platforms choose whether to list and support HBAR, and operate separately from the Hedera network.
Hedera network
When the Hedera network processes a transaction, it validates, orders, and timestamps it through its hashgraph consensus. Each transaction fee paid in HBAR is distributed among network nodes, the Hedera Treasury, and staking accounts that help secure the network.
Network nodes
Every Hedera mainnet node helps maintain consensus and store the network’s shared state. In return for providing bandwidth, compute, and storage to process transactions and run network services, node operators earn HBAR as compensation, which can be exchanged for other digital assets or fiat currencies.
Staking
Staking HBAR to a Hedera network node supports the network’s security and operations. In return, users can earn up to 2.5% APY as a share of transaction fees.
Every node on Hedera’s proof-of-stake network has a weighted influence on consensus — that weight is proportional to the number of HBARs staked to a node. Transactions are placed into consensus after they’re processed by nodes representing an aggregate stake of over two-thirds of the network’s total supply of HBARs. Rewards are split between the node operator and accounts staked to a node, earning the staker a small share of transaction fees.
This weighted voting model significantly raises the cost and complexity of potential attacks. A malicious actor would need to control and stake more than one-third of the total HBAR supply to compromise network consensus—making such an attack economically unfeasible and highly impractical.
Hedera-powered decentralized applications
With its unique combination of high performance, built-in compliance, institutional network governance, and predictable, low fees—Hedera is ideally suited to power high-volume, decentralized applications in finance, AI, supply chain, identity, payments, sustainability, and more.
Discover the many use cases building on Hedera today
The Hedera difference
| Feature | Hedera | Blockchain |
| Structure | Directed Acyclic Graph | Linear Chain |
| Consensus | Virtual voting + gossip + aBFT | Proof of Work, Proof of Stake, Practical Byzantine Fault Tolerance |
| Finality | Immediate | Probabilistic or delayed |
| Energy Use | Low | High (Proof of Work especially) |
| Throughput | Thousands TPS | Tens to hundreds TPS |
Consensus is achieved via the hashgraph algorithm, which uses gossip-about-gossip and virtual voting to share transaction data, independently calculate consensus timestamps, and deterministically order transactions—delivering fast finality, fairness, and aBFT security without proof-of-work.
The network is governed by a rotating Council of global enterprises, providing decentralized, secure, and transparent oversight.