HBAR is a unique cryptocurrency that some people think is the blockchain killer. Not everything is rainbows and sunshine with this project. You may be wondering what are the advantages of this project and does it have any skeletons in the closet?
The largest advantages HBAR has is it’s very fast, transactions are very cheap and it doesn’t use lots of energy. The negatives are it’s not decentralized, has confusing names, the project doesn’t belong to the public, only council members can run nodes, and staking may come in the future.
Keep reading and I’ll share how HBAR works, how it’s different than other cryptos, another skeleton that HBAR has in its closet, and the largest challenge it has to overcome.
What is HBAR?
HBAR is a token that runs on the Hedera Hashtag decentralized ledger. Notice how I didn’t say blockchain?
Hedera isn’t a blockchain, but it’s similar and uses the hashgraph algorithm. It’s a decentralized ledger and the nerdy name is it uses “asynchronous Byzantine fault tolerance” (ABFT).
It travels through something similar to gossip. It does use nodes just like Bitcoin, and all the nodes have to agree on something.
The “fault tolerance” means that all the nodes can agree even if 1/3 of the nodes are trying to negatively affect the network. The system will ignore these shitty nodes.
The asynchronous meaning of the nerdy name is related to timing. The network allows for some messages to be lost or delayed and ALL the nodes can still agree.
Oh, and the Byzantine word comes from a scenario that 4 different Byzantine generals have to attack a city in different areas, but they can’t communicate and the challenge is how they do it.
Byzantine means (Eastern Roman Empire) when Rome was split into 2 and the capital was Constantinople (Instanbul now).
Blockchain needs consensus to work (all the nodes agree on something). To reach consensus blockchain uses either proof of stake or proof of work.
Hashgraph does something different and it’s the gossip system and virtual voting. All the nodes gossip and if they are gossiping about the same thing – it’s consensus.
Virtual voting uses the history based on what someone learned, the history and knowledge of what someone knows. You can read more about how this virtual voting works by clicking on the link HERE.
What Does the HBAR Token Do?
The native token on the Hedera Hashgraph blockchain is is HBAR token. The max supply of HBAR tokens is 50 billion units. In January 2021 there were 7 billion in circulation.
The nodes are really used to pay for 3 fees.
- Node Fees
- Transaction Fees
- Service Fees
HBAR is used to power decentralized applications, NFT’s, make payments, pay the node operators and there could be a staking model in the future. In case you don’t know staking is when you lock up some tokens to support the network and you earn interest.
Staking is similar to earning a dividend in stock.
Pros and Cons to HBAR?
The largest advantage this project has is it’s fast and cheap. It may do 10,000 transactions per second, compared to Bitcoin that can do 7 transactions per second.
The fee is $0.0001, which is SO low it’s hard to wrap your mind around. The fee also doesn’t change on how clogged the network is (unlike Ethereum). Bitcoin’s average transaction fee is $2 to $10 dollars.
The third advantage is the energy use and the project claims it’s 0.00017 kw an hour compared to Bitcoin’s 885 kw an hour.
Let’s get into the good stuff of skeletons in the closet!
One of the largest cons to the Hedera Hashtag is it’s NOT decentralized. Nodes are ONLY operated by powerful corporate companies such as Google, LG, IBM, and others. (Nodes are computers that connect to the network).
What about the little guy?
There is a plan to make the network more decentralized, but this can only take place when the network is larger. They don’t want someone to buy 1/3 of the total supply and controlling everything.
The second negative is the name. HBAR, Hedera Hashgraph, and asynchronous Byzantine fault tolerance. My brain is exploding just reading the names!
You may think a name doesn’t mean much, but it does. Just look at why Ray Kroc purchased McDonald’s it was because of the name.
A good brandable name just helps.
The third negative is the project will never truly belong to the public as a blockchain does. The technology behind Hashgraph has a patent on it. Leemon Baird the creator owns the patent.
Bitcoin and blockchain are open source and anyone can contribute to them and it created this movement.
- Bitcoin – Is the people’s money.
- HBAR – Corporations money.
The fourth negative is ONLY council members can run nodes. It’s almost like a secret society. If you look at the council members I’m not sure I fit in, do you?
The last negative is there is no staking or mining to earn money with this system. They do plan on intruducing staking in the future.
Oh, and even though they claim the can do 10,000 transactions a second, at the time of this blog post the number is 36 transactions a second on average.
The highest ever recording according to the website HERE is 5,812 a second.
The 10,000 transactions a second only applies to wallet to wallet transactions, all other transactions the average is 10.
There is some concerns on if the 10,000 transactions a second is true. HERE is a link to an article that has some insights into the true speed.
Cryptocurrency is only as powerful as the community behind it. Hedera Hashgraph and the HBAR token does have many benefits. Who can ignore the fast speed, low energy use and “very” low transaction fees?
Still, there are some question marks about the project.
The real question is will the community forgive its faults or choose another coin? Considering how much power BIG tech already has, I’m skeptical about this project.
If the project allowed “little people” to have more of a voice, I think it would have more potential. What do you think?
Even if Hedera has superior technology another question is adoption. If nobody adopts the project then it will NOT have much of a future.
As of this blog post, the coin is ranked at #55 on Coinmarketcap.
I hope this blog post on does HBAR have a future was helpful to you. Bye for now.