What Exactly Is HBAR?

In the last 48 hours, the cryptocurrency market has experienced significant pullbacks and retracements. Unfortunately, one of the assets that has been hit the hardest is HBAR. Its recent price increase has been completely wiped out, and there is a significant reason behind this.
It should be noted that the tokenization of the Blackrock fund, which caused a price surge in HBAR, was not actually initiated by Blackrock themselves. Rather, some people spread rumors in an attempt to increase demand, and this had the exact effect and caused the price to increase by almost 100% in a short period of time.
Unfortunately, these types of pumps are unsustainable as they are simply a manipulation of capital. The capital moves in a circular manner from one coin to another, causing pumps before moving on to the next one. This is not a result of a large influx of users, as we saw at the beginning of March. Those who profited from the HBAR pump have already moved on to the next one. In fact, the coin that experienced a pump the very next day was Algorand, with a 20-30% increase in a short amount of time.
But what really is HBAR? HBAR serves as both a general-purpose cryptocurrency and a utility token for the Hedera network. It is used to pay fees for transactions made on the network. Additionally, HBAR tokens can be staked to network nodes to provide a weighted voting system for validating transactions. Although it's not the same as PoS systems implemented by Ethereum and other blockchains, this Proof of Stake mechanism serves a similar purpose.
Hedera is creating a suite of tools that will supposedly make it easier to build on a new type of decentralized network that they call hashgraphs.

What is Hashgraph?

This is the data-sharing technology used by Hedera. In blockchain technology, there's Blockchain Trilemma which is trade-off between decentralization, scalability and security. In simple terms, it means that one blockchain cannot solve all three of these problems. Usually it can only solve 2 very well and the third one is lacking.
Hashgarph technology, however, can solve all these three. This is because Hedera is not a blockchain, but rather uses the Directed Acyclic Graph or DAG. (Read my article differentiating the two).
Hashgraph is a decentralized network that allows anyone to host a node to help maintain the network. These nodes store and update transactions and the ledger on a computer. Hashgraphs ensure that every event on the network shows up in the ledger, which can be a transaction, message, smart-contract, or any other form of information-sharing. Each event includes a timestamp, transaction, hash of the last message created by the node, and hash of the last message created by the node that sent the last message.
Every node gets a copy of these events, but unlike blockchain technology, all the contents of these messages are hashed to keep them private and encrypted. It further uses the "gossip protocol" where nodes are always sharing transaction data. Since the messages are hashed and the form of the network is technically a graph, you can see why it's called "Hashgraph".

Hashgraph Vs Gossip

In a Hashgraph network, two-thirds of all nodes must agree on the same information for a transaction to proceed. On the other hand, in a blockchain network, only 51% of nodes need to agree on information. Currently, Hedera's Hashgraph network is still in development, and only 39 companies host nodes on it. However, as the network grows and becomes more secure and efficient, more companies and even individuals will be able to operate nodes. It is worth noting that Hashgraphs are patented technology, which means that only Hedera can use it.

Who is Hedera?

Hedera Hashgraph is a company based Dallas, Texas and founded by the inventor of the hashgraph technology Leemon Baird and his business partner Mance Harmon. As mentioned earlier, it is technically owned by 39 entities including Google, Boeing, IBM, LG, Ubisoft among others. The board of directors and management team of Hedera are not anonymous. Despite other companies' efforts to protect their patents, Hedera has voted to make the hashgraph algorithm open source eventually. Hedera believes that blockchain technology is too slow, complicated, and insecure for widespread adoption, and that hashgraphs can address these issues.
Hedera offers three main services: consensus service, smart contracts, and token services. You don't need to run a node to use these services. Dapps, stablecoins, decentralized exchanges, and NFT marketplaces are among the applications running on Hedera. Since they use Ethereum Virtual Machines (EVM), almost any application built on Ethereum can easily be moved to the hashgraph network.

HBAR Token

Hbar was initially released through a private funding round in 2018, with a maximum of 50 billion tokens to be minted, and currently 35.7 billion tokens in circulation.
HBAR serves two purposes; it acts as gas for transactions and secures the network by staking to nodes. Developers and users of apps and services on Hedera use Hbar token. Although users cannot host their own node on Hedera, anyone can earn rewards by staking. The consensus mechanism used is Proof of Stake. Hedera's transactions and tokens have a capacity of up to 10K transactions per second and cost only $0.0001/tr. Even if HBAR triples in price or the network gets congested, the transaction cost remains constant. Although paid in HBAR, the cost of the transaction stays at $0.0001.

Conclusion

Currently, only 39 major corporations host nodes for Hbar, which is not very decentralized. It would also be easier for a malicious actor to take over compared to networks with unlimited nodes.