What is Hedera Hashgraph?

Hedera is the only public distributed ledger that utilizes the fast, fair, and secure hashgraph consensus mechanism. Hedera’s governance is fully decentralized, consisting of up to 39 term-limited and highly diversified leading organizations and enterprises.


  • The basics of hashgraph consensus
  • Network services offered by Hedera
  • Decentralized governing council structure and members
  • Examples of third-party applications built on Hedera
  • Hedera's path to decentralization



  • The basics of hashgraph consensus
  • Network services offered by Hedera
  • Decentralized governing council structure and members
  • Examples of third-party applications built on Hedera
  • Hedera's path to decentralization


Hedera Hashgraph Explained

Hedera is a public distributed ledger and governing body built from the ground-up to support new and existing applications running at web scale. Developers use distributed ledger technologies to build computational trust directly into their applications. This allows individuals and businesses who might not know or trust each other to quickly and inexpensively collaborate. Public distributed ledgers allow for creating and exchanging value, proving identity, verifying and authenticating important data, and much more.

Hedera is unique in that it achieves the same result as the most ubiquitous public blockchains (such as Bitcoin or Ethereum), but in a way that is faster, fairer, and more energy efficient, stable, and secure — these advantages can be attributed to the underlying hashgraph consensus algorithm and the global enterprise governing body, which owns and operates Hedera today.

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Let’s unpack Hedera Hashgraph and take a look at each component individually:

  • Hashgraph consensus
  • Hedera network services
  • Hedera Governing Council
  • 3rd party applications
  • Path to decentralization

The Hedera public network is built on the hashgraph distributed consensus algorithm, invented by Dr. Leemon Baird, Hedera Co-founder and Chief Scientist. The hashgraph consensus algorithm provides near-perfect efficiency in bandwidth usage and consequently can process hundreds of thousands of transactions per second (throttled to ten thousand tps in beta) in a single shard (a fully connected, peer-to-peer mesh of nodes in a network).

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Unlike a traditional proof-of-work blockchain, which selects a single miner to choose the next block, the community of nodes running hashgraph come to an agreement on which transactions to add to the ledger as a collective. Through gossip-about-gossip and virtual voting, the hashgraph network comes to consensus on both the validity and the consensus timestamp of every transaction. If the transaction is valid and within the appropriate time, the ledger’s state will be updated to include the transaction with 100% certainty (finality).

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In blockchain, consensus rules require that blocks eventually settle in a single, longest chain, agreed upon by the community. If two blocks are created at the same time, the network nodes will eventually choose one chain to continue and discard the other one, lest the blockchain “fork” into two different chains. It is like a growing tree that is constantly having all but one of its branches chopped off.

In hashgraph, every container of transactions is incorporated into the ledger — none are discarded — so it is more efficient than blockchains. All the branches continue to exist forever, and are woven together into a single whole. Furthermore, blockchain fails if the new containers arrive too quickly, because new branches sprout faster than they can be pruned. That is why blockchain needs proof-of-work or some other mechanism to artificially slow down the growth. In hashgraph, nothing is thrown away.

The hashgraph consensus algorithm has been validated as asynchronous Byzantine Fault Tolerant (ABFT) by a math proof checked by computer using the Coq system. This proves the claims stated in the hashgraph tech report that hashgraph is ABFT — mathematically the highest possible level of security for distributed systems. Both the algorithm and Hedera's implementation will enter a state of “open review” in 2020; the source code will be made available for anyone to read, recompile, and verify that it is correct.

Consensus and Token Services

Hedera enables developers to build their decentralized applications on the network utilizing two main services: the Consensus and Token Services, through the easy-to-use API and officially supported / community-supported SDKs.

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Hedera Consensus Service

The Hedera Consensus Service offers applications direct access to the native speed, security, and fair ordering guarantees of the hashgraph consensus algorithm. Using this service, clients can submit messages to the Hedera public ledger for time-stamping and ordering. Clients can also encrypt the message contents, ensuring an application's ability to preserve their user's privacy and prevent the publishing of PII.

Messages can include important actionable information in them, events such as for a money transfer settlement, user engagements in an advertising platform, tracking of provenance in a supply chain, and more. These ordered messages will flow out to mirror nodes or clients of mirror nodes for processing in the consensus order. By using Hedera Hashgraph for tamper-proof and verifiable logging of transactions, disparate participants and systems have a real-time view into application events.

A more thorough explanation of the Hedera consensus can be found in these resources:

You can check out the full tutorial on submitting your first message using Hedera Consensus Service in the official Hedera documentation. For now, here are two code examples of the Java SDK to create a topic and submit your first message:

//Create a new topic

final TransactionId transactionId = new ConsensusTopicCreateTransaction()


//Grab the newly generated topic ID

final ConsensusTopicId topicId = transactionId.getReceipt(client).getConsensusTopicId();

System.out.println("Your topic ID is: " +topicId);

//Submit a message to a topic

new ConsensusMessageSubmitTransaction()


.setMessage("hello, HCS! ")



Hedera Token Service

The Hedera Token Service offers applications the ability to perform configuration, minting, and management of unique tokens on Hedera, without needing to set up and deploy a smart contract. Tokens are as fast, fair, and secure as hbar and cost a fraction of 1¢ USD to transfer. Clients have fine-grained control over tokens and accounts, with key and token configurations that deliver flexibility for account KYC verification and freeze, token supply management, transfer, and more.

You can check out the full tutorial on getting started with the Hedera Token Service in the official Hedera documentation. With HTS, it’s incredibly easy to create a new token that can represent anything from a stablecoin pegged to the USD value, or an in-game reward system. Here’s a JavaScript example:

//Create a token

//Create the transaction and freeze for manual signing

const transaction = await new TokenCreateTransaction().

.setTokenName("Your Token Name")






//Sign the transaction with the token adminKey and the token treasury account private key

const signTx = await (await transaction.sign(adminKey)).sign(treasuryKey);

//Sign the transaction with the client operator private key and submit to a Hedera network

const txResponse = await signTx.execute(client);

//Get the receipt of the the transaction

const receipt = await txResponse.getReceipt(client);

//Get the token ID from the receipt

const tokenId = receipt.tokenId;

console.log("The new token ID is " + tokenId);

Fully Decentralized Governance

Hedera is governed by the Hedera Governing Council: An expert council consisting of 39 leading global enterprises and organizations, distributed across up to 11 different industries and spanning a wide range of geographies. The Governing Council makes key decisions over software upgrades, network pricing, treasury management, and more. Governing Council members are term-limited and do not receive any profits from Hedera.

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The Hedera Governing Council is structured to best fulfill the desire for a decentralized, wise, stable governance in the long-term interests of the platform. All governing council members have all taken partial ownership of Hedera Hashgraph LLC, by signing the agreement. This LLC agreement has been made available, in its entirety, at https://www.hedera.com/council/. Minutes from every Governing Council meeting will be provided to the public no later than thirty days after they're accepted by a majority of the members.

The first fourteen Hedera Governing Council Members include: Boeing, Deutsche Telekom, DLA Piper, FIS (WorldPay), Google, IBM, LG, Magalu, Nomura, Swirlds, Tata Communications, University College London (UCL), and Wipro.

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Hedera won’t be governed by unknown groups of miners and developers, and this enterprise-led structure greatly reduces the risk of ideological or personal disputes that have affected the governance of other public DLT platforms. In the spirit of fostering a strong community and developer-driven roadmap, developers can submit input and feedback through Hedera improvement proposals (HIPs), which are reviewed by Hedera core engineering and product teams. Hedera’s technology and governance make it scalable and well-suited to become the first public DLT platform to achieve mainstream adoption.

3rd Party Applications

For the Hedera network to be secure it must provide utility to the world. So, how does having a useful ledger make you more secure? As the number of applications, assets, and transactions grows, it becomes an integral piece of digital infrastructure, on which the world relies. Providing network utility ensures the network's protection by making it even more difficult and expensive to centralize ownership of the native cryptocurrency, preventing the consolidation of voting power for network transactions.

Applications which utilize Hedera’s network services is a critical aspect of Hedera’s utility. Anyone from a single developer, to a startup, to an Enterprise Fortune 500 company can build and run Hedera-powered applications on the mainnet.

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Applications deployed on the Hedera mainnet and application development on the testnet are primary health indicators for network utility. At open access, Hedera has thousands of developers building applications on the testnet and over 60 applications live on the Hedera mainnet, pushing millions of transactions per day. There are thousands of active developers in discord, all supporting a decentralized future on Hedera.

Hedera's Path to Decentralization

Hedera is a proof-of-stake public distributed ledger which aims to use a combination of a “path to permissionless” (network nodes) and a “path to widespread coin distribution” (HBAR cryptocurrency) to keep the network secure, while working to achieve full decentralization. Let's focus on permissionless nodes and coin distribution, and the role they play in securely achieving and maintaining decentralization.

Public vs Private & Permissioned vs Permissionless

Distributed ledgers are categorized as private or public and permissioned or permissionless — they can be any combination of the two. At open access of the Hedera mainnet, the Hedera network is public permissioned. But to achieve full decentralization, Hedera believes it must transition to becoming a public permissionless network.

Private / Permissioned: This type of network offers no decentralization. The applications deployed in production, and the network nodes running those application, must be invited to join the network and meet certain criteria or provide a form of identification. Any party can also be removed without warning at any time.

Private / Permissionless: Requires that applications deployed in production be invited to join the network and can be removed without warning at any time. The nodes which constitute the network and run said applications can freely and anonymously join and contribute, typically in exchange for a network’s native cryptocurrency.

Public / Permissioned: Allows applications to be deployed in production or removed, without having to notify anyone, reveal their identity, or meet any application criteria requirements. The nodes which constitute the network and run said applications must be invited to join the network.

Public / Permissionless: This type of network is the most decentralized. Applications can be deployed in production or removed, without having to notify anyone, reveal their identity, or meet any application criteria requirements. Additionally, the nodes which constitute the network can freely and anonymously join and contribute, typically in exchange for a network’s native cryptocurrency.

Path To Decentralization Token Webcast V34 1 011

Hedera is starting off at open access in the upper left quadrant, as a public permissioned network — the nodes which constitute the network will be operated by Hedera Governing Council members, which have been invited to join as network operators. As performance, security, stability, and incentives of the Hedera network mature, Hedera will open node operation to more entities and individuals, relaxing permissions.

The Hedera network will become public and fully permissionless — any individual or organization can run a node anonymously and earn HBAR cryptocurrency for assisting with network operation. This is the path Hedera will take, ensuring security at every point along the path, to fully realize its mission of becoming the most decentralized public permissionless ledger in the market.