What is Hedera Hashgraph?

Hedera Hashgraph is the name of the network that uses a technology called DAG. DAG is short for Directed Acyclic Graphs which is a type of distributed ledger technology (DLT). DAG was devised as a third generation public ledger to improve upon the shortcomings of Blockchain which is to achieve consensus at scale.

Hedera Hashgraph

The network using the DAG technology is called Hedera Hashgraph which supports hbar as its native cryptocurrency. Hedera’s development has taken a leaf from Ethereum in the sense that it does not simply support a cryptocurrency but also supports Dapps (decentralised apps) and smart contracts.

What are the benefits of DAG?

The benefits for this new DAG technology are several. It is faster than blockchain, has no scalability issue and uses less energy. It can even be run on a mobile phone as events that are created are smaller and contain less data.

Efficiency comparison

1st generation
2nd generation
3rd generation
Hedera Hbar
Transactions per second3+12+10,000+1
Average fee$2.99USD2$2.89USD3$0.0001USD
Transaction confirmation10-60 minutes10-20 minutes3-5 seconds (w/finality)

1 Cryptocurrency transactions. For Hedera, range shown for transactions not requiring a transaction record, but can receive a transaction receipt.
2 Avg. Bitcoin tx fee from 6/26/20 – 9/24/20 from Blockchair
3 Avg. Ethereum tx fee from 6/26/20 – 9/24/20 from Blockchair
As displayed on the Hedera Hashgraph website

Transactions per second notes

The network wallet to wallet transactions can support 10,000+ transactions per second (tps). It is worth noting that other types of transactions that are not wallet to wallet could bring that figure down, maybe even considerably. This may be partly due to the fact that it uses the Ethereum platform which supports 300 transactions per second.

How does it work?

For this explanation we will need to compare blockchain to DAG, in this case Hedera being the only network using this technology.

The Hedera network is different to the blockchain network in that it does not work with blocks. The blocks are what slow down the network as blocks are attached to the blockchain every 10minutes and they contain a number of transactions that have been confirmed.

Instead hedera works with events. Events are smaller bits of information like for example transactions, payments from one wallet to another. They are confirmed by the network within seconds and instantly attached to the hashgraph. This efficiency in the network is achieved by protocols that have been implemented.

Gossip protocol

Hedera is able to process events faster than blockchain not just because it processes smaller bits of information, but also because it uses the gossip protocol. Much like human gossip this is the computer equivalent of it.

What happens is one computer tells another of the events it has heard about. The other computer tells it of the events it has heard of and they both move on to notify other computers in the network of all the events.

An event might start out with one computer telling another of an event it has created, but then those 2 computers will tell another 2, the 4 will tell 8 more and so on. The information travels exponentially fast through the network until all the computers in the network are aware of the information.

The information that is passed on will always have a time stamp with the time it has heard it and which computer it has heard it from. This is called gossip about gossip, the information travels quickly enough to happen within seconds. 

Voting protocol

This is a way of achieving 100% consensus. Consensus means that computers agree on an event as a legitimate event. Legitimate events get added to the hashgraph. It could be done by voting, where the computers say ‘yay’ or ‘nay’ to an event, but there is a twist!

Because of the gossip protocol the computers already know how the other computers would vote. So there is virtual voting which consists of no voting whatsoever. This makes it super-fast. Events are added to the hashgraph the moment they are approved without the 10 minute lag that blockchain has.

Reaching 100% consensus

The network is Byzantine fault tolerant. This is really just a fancy way of saying that it reaches 100% consensus with 100% certainty. It is achieved by relying on the gossip and voting protocols explained above. It is considered a form of security in the network.

Blockchain came close to being byzantine fault tolerant, but it is not. Hedera Hashgraph is. With blockchain you don’t have 100% certainty, you are close to certain and you always get a little bit more certain every time a new block is added to the blockchain.

DAG vision

Apart from attempting to solving the issue of consensus at scale, its creator Dr Leemon Baird envisioned the network as a sphere where there would be shared collaboration. He wanted there to be multiple shared worlds that had different purposes but nevertheless connect to one another. The scope is to create the next and more advanced generation of internet.

Comparing blockchain and Hedera Hashgraph

The heading could technically have had DAG in it instead of Hedera Hashgraph. However, since hedera hashgraph is the only network working with DAG technology, the technology may have been configured differently where it have been developed by a different company.  

BlockchainHedera Hashgraph
CodeOpen source (ex: Bitcoin and Ethereum), but can be private or hybrid.Patented and only open review.
SecurityBased on cryptographic hashing. Is close to being byzantine fault tolerant, but not quite. There is no such thing as 100% certainty. With every block added it becomes more certain, but never truly certain.Fully byzantine fault tolerant since it uses virtual voting without voting as other computers already know how other computers will vote due to the gossip protocol.
ScalabilityHas a scalability issues. If a blockchain is faster than others it just means it compromises on other things like securityNo scalability issue
SpeedSlow. Otherwise the blockchain would be soft forking constantly and it would not reach consensusReaches consensus almost instantly due to gossip
Energy consumptionUses an immense amount of energy to power the networkIs incredibly energy efficient with the ability to use a mobile phone to power the network.
FairLess FairMore fair

Who owns and governs Hedera Hashgraph

Hedera Hashgraph is patented and privately owned by some formidable large corporate enterprises. They are:

  • Avery Dennison
  • Boeing
  • Dentons
  • Deutsche Telekom
  • DLA Piper
  • EDF
  • Eftpos
  • FIS
  • Google
  • IBM
  • LG
  • Magalu
  • Nomura
  • Standard Bank
  • Swirlds
  • Tata Communications
  • UCL
  • Wipro
  • Zain

These corporations form part of the Hedera Hashgraph governing council. They run the network and are the only ones that are able to vote for any changes in the network.

Even though Hedera is privately owned anyone is able to create a smart contract on the platform. Corporations or individuals can reach out to create Dapps and anyone can submit a hedera improvement proposal or HIP for review by the council.


DAG technology was invented by Dr. Leemon Baird who had started working on the project in 2012. In 2015 he finally came up with a solution to achieve consensus at scale. Sometime later he founded Swirlds Inc. together with Mans Harmon a friend and business partner who had been supporting Baird throughout his journey with the project.  

The Hashgraph whitepaper was published on the 31st May 2016 and in 2017 Swirlds moved on to raise millions to finance the project. At this time the Hedera governing body called the Hedera Hashgraph governing council is established with some notable leading organisations like Google, LG and TATA communications.

In 2018 Hedera Hashgraph was declared as the official brand name and the launch was held on 13th March 2018. The Hedera mainnet was launched online on 24th August 2018.


There has been some FUD going around about Hedera Hashgraph online, but all of it has been debunked. The developers of Hedera are top notch with excellent experience and have solved the issue of consensus at scale.

True the network is slower at processing smart contracts, but this is an issue faced by the cryptocurrency industry at large. It does not affect wallet to wallet transactions and other events on the network. In actuality the speed of the network can be increased to process more than 10k transaction per second in future when the developers are able to optimise it.

What can be said is that it is certainly looking promising as a new technology with catering for enterprises and its efficiency in speed, energy consumption and security.