What Is Hedera and How It Is Changing the NFT Space
As we know, Ethereum and other systems have numerous disadvantages as they are unscalable, unreliable, and difficult to handle. Reliability, privacy, management, scalability, and regulatory compliance are all concerns that Hedera Hashgraph set out to solve.
The Hedera network executes more than 10,000 transactions per second (TPS), compared to 5 and 13 TPS for Bitcoin and Ethereum, respectively. Instead of mining on the network, this speed is the consequence of ‘gossiping.’ This implies that the nodes are just comparing notes on the network instead of doing difficult mathematical computations.
What Is Hedera?
Hedera (HBAR) is a specialized technology that is supposed to be quicker, more effective, and safer than blockchain. Hedera is a novel platform that has the potential to be a viable alternative to traditional blockchain technology. Every blockchain uses a ‘consensus method’ to validate transactions.
Older blockchains like Bitcoin and Ethereum usually use the Proof-of-Work (PoW) mechanism. Each node (or miner) uses its processing capacity to solve complicated mathematical problems to access and verify transactional data.
The more power-efficient Proof-of-Stake (PoS) mechanism is used in newer blockchains. Ethereum is also planning to switch to a Proof-of-Stake consensus mechanism. To register as transaction approvers in PoS, miners must promise the blockchain’s native coin to the network. As the quantity of Bitcoin committed to the blockchain rises, the chances of becoming a miner increase. For example, a person who invests ten Hedera in the blockchain is more likely to become a miner than somebody who invests just seven.
Hedera (HBAR) is the local cryptocurrency of the Hedera Hashgraph system. Hedera has the following three specifications that make it different from other blockchain technologies:
Gossip Protocol
Hedera uses a ‘Gossip’ protocol. To record and authenticate transactions, each node on the network connects with every other node. This results in a rapid rate of communication. The backbone of the Hashgraph Consensus Mechanism is a Directed Acyclic Graph (DAG), which comprises a network of individual transaction data, each related to all other data.
The Hashgraph consensus process generates a graph that maps each node’s communication with each other. The communication history grows over time, and this data is recorded in a graph on each node in the network. The sender and time of reception are recorded each time a node receives a transmission.
When this graph is viewed, the transaction history, the names of the persons involved, and the precise moment of the transaction are revealed. The two hashes are recordings of when one node sent out the communication and when it got the last message — a record of the transaction authenticated on all computers in the network.
In each ‘round,’ a specific number of messages are collected. A ‘renowned witness’ confirms the transaction history recorded in each round. The witness is the node that gets the communication before the other nodes in that particular round. The chosen nodes then interact or “gossip” to verify the data obtained.
Unlike the PoW consensus system, which selects one miner for every block to start the block creation process, the Hashgraph consensus mechanism is a network of nodes that mutually agree to add collectively verified data to the block. Once the data has gone through this verification procedure, it is added to the decentralized ledger with 100 percent ‘finality,’ which cannot be tampered with, amended, or reversed.
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Public Distributed Ledger
Furthermore, unlike blockchains, which keep data in the form of blocks and link them together, the Hedera network, a distributed ledger, saves data on all linked computers on its network.
According to blockchain regulations, if two blocks are generated simultaneously, one of them will be removed from the ledger. The system’s nodes will make the decision on which block to add. This is done to prevent the blockchain from forking, which is when one chain splits into two chains, and each time forking occurs, the blockchain grows eternally like a tree.
Blockchains can become defunct if new blocks arise more quickly than they can be removed. This is because the tree’s branches must develop before being trimmed. This is also why certain blockchains utilize the PoW consensus process to limit growth artificially.
On the other hand, Hedera Hashgraph excludes nothing while using everything. After consensus, all transaction data is put to the ledger, and nodes can communicate with one another to get it. As a result, it’s ‘un-forkable.’
Fully Decentralized Governance
The Hedera Hashgraph contains a governance structure that is unique in its own right. The Governing Council comprises 39 industry executives from 11 various industries and locations. The Governing Council makes all decisions regarding critical software upgrades, network pricing, wealth management, etc.
Members of the Governing Council do not earn any money from the network and services for three years. Except for Swirlds, the originator of hashgraph, who has a perpetual seat and equal vote on the Governing Council, the maximum tenure permitted is two consecutive terms.
How Is Hedera Changing the NFT Space?
Hedera has brought a revolution in all industries with its arrival. Here’s how the media and retail industries are taking advantage:
Media Industry
GoMint is a media company that is currently using Hedera. GoMint needed a public distributed ledger with native non-fungible tokenization for digital and physical assets, fast transaction times, minimal fees, and a low carbon footprint.
Ethereum and other public blockchains have unpredictably high fees, sluggish transactions, unsustainable energy use, and complicated smart contract design.
GoMint decided to use the Hedera Token Service to cut NFT minting and settlement times from minutes to seconds, lower transaction costs by over 99 percent compared to Ethereum, and improve the end-user experience to increase platform adoption and retention.
Retail Industry
SUKU is a blockchain-based platform that connects open finance, traceability, and transparency. It bridges the gap between enterprises and conscientious customers, enabling supply chain financing through its trio of product offerings, SUKU OMNI, INFINITE, and DeFi.
SUKU required a cost-effective, safe, and scalable approach to establish digital and physical product authenticity and ownership by companies and customers. It plans to use the Hedera Token Service (HTS) to increase trust between brands, customers, and marketplace players, resulting in financial and opportunistic benefits for retail ecosystems on a larger scale.
