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Hedera is a public, distributed ledger technology (DLT) platform that supports new and existing applications to run at web scale. Similar to a blockchain, the hashgraph DLT platform allows for creating and exchanging value, proving identity, verifying and authenticating data, as well as other tasks. Hedera's network is built on the hashgraph distributed consensus algorithm, invented by Leemon Baird, Hedera's chief scientist and one of its cofounders. The company was founded in 2018 by Baird and Mance Harmon, who serves as Hedera's CEO. Baird and Harmon are also the cofounders of Swirlds, a developer platform for hashgraph applications.
The hashgraph consensus algorithm that the Hedera network is built upon is able to provide near-perfect efficiency in bandwidth usage, as well as process hundreds of thousands of transactions per second within a single shard (a fully connected, peer-to-peer mesh of nodes in a network). As a result, the Hedera network is much faster and energy-efficient than a traditional work of proof blockchain. In a traditional work-of-proof blockchain, a single miner is chosen to select the next block. Additionally, consensus rules dictate that these blocks eventually settle into a single longest chain agreed upon by the community. Two blocks cannot be mined simultaneously, as it will cause the blockchain to fork; if this happens, one block will be selected and the other block will be discarded and lost.
In hashgraph, a community of nodes, not just a single miner, come together to select which transactions will be added to the ledger. This is done through gossip-about-gossip and virtual voting, which confirm the validity and the consensus timestamp of every transaction. Any transaction that has been deemed valid and that occurs within the appropriate time will be added to the ledger. Additionally, all transactions in hashgraph are added to the ledger once they have been verified. Unlike blockchain, where blocks are sometimes discarded to avoid conflict and uphold the chain, hashgraph incorporates every container into the ledger, and nothing is ever discarded. Blockchain is also prone to failing if new blocks are formed too quickly, which is why it needs work of proof or another mechanism to artificially slow down growth. Proof of work mechanisms are not necessary in hashgraph because nothing is ever thrown away and everything is added to the ledger.
Hashgraph has been validated as asynchronous Byzantine Fault Tolerant (ABFT), the highest possible level of security for distributed systems. Additionally, hashgraph has been found to use less energy and make more transactions in a shorter period of time than other popular blockchains, such as Bitcoin and Ethereum.
Hedera enables developers to build decentralized applications on its platform. This is done by using two main services, called the Consesus Service and the Token Service. With the Consensus Service, users are able to submit messages to the Hedera public ledger, where they are validated and timestamped. Users are also able to encrypt messages for privacy and security purposes. Messages can contain information pertaining to money transfer settlements, user engagements on an advertising platform, tracking of provenance for a supply chain, and many more different events.
Hedera's Token Service offers applications the ability to perform configuration, minting, and management of unique tokens on the network, without the need to set up or deploy a smart contract. Tokens are fair and secure and can be transferred for a fraction of $0.01. Hedera allows for the creation of a variety of different tokens, such as USD-based stablecoins or an in-game token reward system.