HBAR is not decentralized as they say; understand how Hedera Hashgraph works

Charlie Taylor

HBAR is not decentralized. Hedera Hashgraph is a fully centralized, “permissioned” blockchain enterprise conglomerate; understand how it works and why there is this confusion by the crypto community.

How does Hedera Hashgraph work?

Hedera Hashgraph (HBAR) is a – self-proclaimed – smart contract platform and blockchain infrastructure that requires central authorization (permissioned).Which is completely different from a structure of blockchain that does not need central authorization (permissionless), such as Bitcoin (BTC) or Ethereum (ETH). Hedera, controlled by Hedera Foundationit has 39 validators which are composed of companies from different segments handpicked by the foundation – after application for participation – and which can be rotating.Screenshot of the hedera website about the governance board, with the explanation and the button of "be a member"for the form.Screenshot of hedera.com website on 03/14/2022With selected nodes and control over the consensus participants, the network is able to offer superior performance to others blockchains permissionless (where anyone can configure a node and participate in the consensus, as long as they comply with some protocol rules, but without the need to “ask for permission” to enter the governance system). High performance is already expected from a selected and controlled group , unlike “permissionless” blockchain networks. In this way, comparing a network “with permission” (permissioned) of a “without permission” (permissionless) makes no sense, as each one aims solve different problems.It would be the same as comparing the performance of the payment network VISA with bitcoin, for example.

HBAR is not decentralized

Screenshot of hedera.com on 03/14/2022 talking about building a future based on trust, in a decentralized economy.Screenshot of hedera.com on 03/14/2022Despite making it clear that their network is a “permissioned” network, the team does not make much effort to eliminate the ambiguity and claims several times that it is a network decentralized, what is not correct.As I discussed in this article: Understand what is decentralization once and for all; decentralization is different from deconcentration. A network can be at the same time centralized and deconcentrated (as is the case with HBAR); as well as it can be decentralized and concentrated. In the article, we compare an absolutist monarchy, where there is centralization of power and decisions, but at the same time there may be devolution of governance tasksIn the Hedera Hashgraph network, all nodes are controlled by the Hedera Foundation, or by 39 large companies that filled out a form and were authorized by the foundation to run the node and participate in governance . And they can be removed from the function if the controller decides. It can be said that HBAR is, as a matter of fact, a business conglomerate centralized.

What is a business conglomerate?

The conglomerate concerns the union of companies working according to a corporate structure, with companies from different segments. The conglomerate is a form of oligopoly, and is also known as an industrial conglomerate or business group. The Hedera conglomerate is made up of big names. Between them IBM, Magalu, Googleamong others.List of companies that make up HBAR's centralized business conglomerate, in order: Avery Dennison, Boeing, Chainlink Labs, DBS, Dentons, Deutche Telekom, DLA Piper, EDF, Eftpos, Fis, Google, IBM, Lit Madras, LG, LSE, Magalu, Nomura, Servicenow, Shinhan Bank, Standard Bank, Swirlds, Tata Communicaations, Ubisoft, UCL, Wipro, ZainScreenshot of the website hedera.com on 03/14/2022

There is no problem with being centralized

There is no problem in a voluntary network to be formed centrally Through a business conglomerate with selected companies, focusing on performance and a controlled governance by an administrative board trusted by the project owners. The problem is really when there is misinformation and, due to the growth and relevance that the project has been gaining, these facts need to be explained, as many investors have carried out capital allocation without researching in depth, driven by the calls for decentralization and believing it to be a project similar to others in the cryptocurrency market; when in fact it is a project more similar to the traditional market, but built on a private blockchain.At the time of writing, HBAR ranks #32 in the market capitalization ranking, according to the Coingolive.This article was inspired by the thread built by the blockchain specialist Justin Goods and complemented after investigation and research by the analyst of the Thegarret, Vinícius Barbosa.

The information used is all public and available on the Hedera Hashgraph website. We can conclude that HBAR is not decentralized and if we use the Nakamoto’s Coefficient (NC – Nakamoto Coefficient) as a metric, hedera has NC = 1as there is already collusion between the participants on the decisions.Screenshot with the network stating no "with permission", but claiming to be decentralized.  HBAR is not decentralized.Screenshot of the website hedera.com on 03/14/2022Read more:Tiago Reis, from Suno, discovers that Binance is centralizedPL on cryptocurrencies forgets Bitcoin and quotes only altcoins NovaDAX is full of news! One of the largest cryptocurrency exchanges in Brazil has now ZERO withdrawal fees in real! NovaDAX also counts zero fees for Bitcoin transactions and more than 110 listed currencies, with cash withdrawal available and high liquidity. Cryptocurrencies with the best rates on the market! Simply activate the free Novawards program and enjoy reduced rates of up to 75%. Discover the NovaDAX Card and order yours now.

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