Hedera is a cryptocurrency I am not impressed with at all. I'm going to show you some of the absolute critical flaws and why I think Hedera is going to trend more towards zero than towards outperforming the majority of the market. The main thing that is weak with Hedera, in my opinion, is the technology. It's not nearly capable of doing what Internet Computer Protocol is doing, and it has a ton of competition. Hedera, in the simplest sense, is basically an Ethereum copy. Yes, there are some significant differences, but technologically the blockchain is largely built the same, and that means it's got intense competition.
So we're going to look at the price. We're going to look at the website. I'm going to point out some huge, obvious problems as I see them. I'm going to walk through the things Hedera is hyping up, where I think there are far more advanced solutions technologically, and why I believe the people who really understand this are already in on better options. This is all my opinion and my own experience holding and using it, not financial advice.
The price and market cap
Let's talk about the Hedera price first. Hedera has doubled in price in the last year and currently has a market cap of almost $4 billion, or over $4 billion fully diluted. Now, there's a bunch more token unlocks still coming for Hedera, and Hedera's market cap is about where Internet Computer Protocol's is at. So when you compare the two of these protocols, Internet Computer looks to me like a vastly superior investment in so many ways, and I'll point those out in detail.
But first, if you look at what Hedera is, Hedera says it's the most used, sustainable, enterprise grade public network for the decentralized economy. That to me just sounds like a blatant lie up front. It says it's the most used? No way. Most used in what context? Internet Computer is doing way more computation. Solana has way more transactions and NFT creations. Bitcoin and Ethereum are way more popular and have way more brand and tokens and dollars on them. In what sense is Hedera the most used, sustainable, enterprise grade public network?
DFINITY, the foundation that launched Internet Computer, is about to launch a private version of ICP's tech too, which will be, in my view, the best enterprise grade cryptographic technology available anywhere. So if you're thinking Hedera is going to succeed on enterprise, it looks to me like DFINITY already has that tech absolutely locked down.
To be fair to Hedera, the HBAR token powers Hedera services. It does have smart contracts, unlike many of these other cryptos. It is at least a network by itself, and I tend to like networks themselves much better than things that are just tokens. It is distributed ledger technology, which isn't a whole lot different than Ethereum in terms of how the blockchain actually works. Yes, it is somewhat different, but let's keep things simple. I review a lot of these coins and put my opinions in my Money playlist, and Hedera consistently lands in the column I'd avoid.
The real world asset narrative doesn't hold up
So if we go to the Hedera website, let's look at what they're hyping up. Let's look at an obvious critical flaw and how I think they're greatly exaggerating in a lot of areas. They're hyping up real world asset tokenization. This obviously is the main narrative they're pushing on Hedera. It says it enables seamless tokenization of real world and digital assets at scale, offering unmatched performance, security, and compliance. In my opinion, this is not true. It's literally not true, because I think the Internet Computer is far superior. I'm going to show you the example of a company and a protocol that built elsewhere precisely because the Internet Computer was vastly superior.
Now, Hedera says there are millions of mainnet accounts that have been created, and it says there are 150 million transactions in the last 24 hours. They are, in my view, greatly inflating this transaction number with what are called consensus transactions. Yes, the transactions are cheap per transaction, but what are these consensus transactions actually doing? If you look at the Explorer, you'll notice almost all the transactions are these HCS (Hedera Consensus Service) transaction types. In some cases, this could be like a device reporting that it's online, sending a transaction saying "I'm online," and then one second later, "I'm online," and one second later, "I'm online." Almost all the transactions on Hedera are these HCS transaction types. Including those as a transaction is, to me, just artificially inflating the numbers. There's almost nothing else happening on the network besides these HCS transactions.
If you look at the token mints, for example, you've got a few hundred token mint transactions. If you look at the accounts created, you have a few hundred thousand accounts created in some months. In June, there haven't been very many so far. But what kind of accounts are these? Are these being spun up in a way that is just generating a whole bunch more addresses? It looks quite probable. If you look at the NFTs being minted, there are a few hundred thousand total NFTs being minted in some months, which is decent. But again, how many of these are just being created where there's not that much real activity? If you look at the token transfers, there are a couple hundred thousand total token transfers in the entire month. So the transactions they're representing are very questionable as to what real activity they're actually doing on the blockchain.
If you look at the transactions excluding those HCS ones, in the last day there have been about 15,000 crypto transactions, which is all right. But that's a whole lot less. That is way less than they're making it look like.
Why a real builder chose Internet Computer instead
When you look at how they're hyping Hedera up, go look at Origin. Origin is a protocol for real world assets that was built on Internet Computer Protocol. If you research this protocol, the team behind it was researching for years — years — looking for the absolute best solution for real world assets on chain. Keep in mind, this is the number one thing Hedera is hyping on their website. This protocol was made to make the absolute best real world asset protocol in the world. And where did they build it? They built it on Internet Computer. Why? Because of the infrastructure and the advanced, unmatched technology.
They obviously were aware of Hedera, because Hedera launched before Internet Computer Protocol did. Internet Computer just came on in 2021. Hedera goes back to 2019. So the people behind Origin had found DFINITY back before it even launched, and they were planning on building. I can't prove this, but you'd imagine they were also aware of Hedera, because they were researching the absolute best options. They tried building on other chains, but the key problem they kept finding is that if you are trying to do real world assets and you can't put every single thing on chain, then it's not going to be trustworthy.
And with Hedera, you cannot put everything on chain. You cannot put entire websites on Hedera. You can do these little tiny transactions, but you cannot track real world assets and put every single thing on Hedera. You would have to bring in stuff from off chain in order to do that, because Hedera is not set up to build everything completely on chain. That's why I say it's very similar to Ethereum. It's essentially an Ethereum or Solana copy in the sense that the blockchain itself does very little real computation, and then all the real computation has to be done off chain. If you're trying to tokenize real world assets, you need a very high level of trust, and you can only do that by putting everything on chain. That's why Origin chose to wait. They were founded in 2020, after Hedera, and you can imagine they were aware Hedera existed. They chose to wait for Internet Computer to launch because they could see it was the best technology in the game.
So if you look at Hedera and the number one narrative they're hyping up, they're clearly not technically the best at the main thing they're hyping up, which to me is a really bad sign. This is the same pattern I keep finding when I dig into coins one by one — the story sounds great until the technology has to back it up. If you want to talk through this kind of research with me directly, you can join me in the Jerry Banfield Family, where I go deeper on what I'm actually holding and why.
The transparency problem
Let's look at another bad sign. If you go over to the about page on the HBAR Foundation, who exactly is working on HBAR? They've allocated hundreds of millions of dollars of funds, but they've only given 225 grants. So they've given out huge amounts of money to get people to use Hedera. But how sustainable is this, and where is the transparency? They've allocated hundreds of millions of dollars, but who's giving that money out? Who are the engineers?
The HBAR Foundation says its team includes experts in technology, business, legal, marketing, and ecosystem development, all focused on the success of your project. But where is the team behind it? Where is the team behind HBAR? I don't trust anything with this kind of lack of transparency. There's no transparency at all about who's given out these hundreds of millions of dollars, and who's received these grants. That probably is out there somewhere, but why isn't it front and center? It also looks like this is hosted in the Cayman Islands, but then it was saying it was a Swiss foundation, which is interesting.
If you look at DFINITY by comparison, which is the main contributor to Internet Computer, they have the largest research and development team in blockchain, which is why I think they've made the most superior technology in blockchain. And you can see the whole team of people listed, many of whom you can watch videos of talking about the technology and the Internet Computer. Why does Hedera have no transparency? My logical guess is that a lack of transparency indicates a lack of trust — that there's something not right going on here. Otherwise you would put forward the people who are handing out these hundreds of millions of dollars to build on Hedera.
The governance council throws out decentralization
And then, how exactly is Hedera even governed? Hedera has what's called a governance council. So if your whole idea in crypto is to have something decentralized, Hedera totally throws this out the window. On hedera.com/council it says up to 39 collusion-resistant organizations lead the Hedera network. That means holding the Hedera token doesn't give you any voting rights, which seriously crushes any utility for holding the token. There are 39 organizations on there: Boeing, Google, Chainlink, Dell, LG, Hitachi, IBM, Deutsche Telekom.
Now, the Hedera hype people will point out how great this is, because it's governed by these world-leading organizations. But that means you have no say at all. You have no say in what happens with Hedera. And isn't the world already governed by these organizations? Don't the people at these organizations already control governments, control inflation, decide which currencies get handed to them, and start wars? Isn't this already exactly what we've got? Do you really want to invest in a cryptocurrency that is governed the same way the rest of the world is already governed? Seeing Chainlink sitting on that council is its own story — I went through why I'm bearish on it in my Chainlink (LINK) review.
By comparison, on Internet Computer, when you buy the ICP token you can actually vote yourself on the code that updates the network. Now, you might not understand what this code does, and you might end up following DFINITY to make things simple. But you do have the ability to directly turn your ICP into voting power, and then to have a real say in what actually happens with how the network gets upgraded. On Hedera, you have none of that. You're just going to trust this governance council. They're going to take care of everything for you. Why would I invest in a cryptocurrency to get the exact same business model and governance model that is everywhere else?
And if you want to see how the nodes work, only the governing council can run nodes on Hedera. The Hedera mainnet is completely comprised of permissioned consensus nodes operated by the governing council. So there's absolutely no outside inclusion in this. To be fair, at least Hedera doesn't pretend to be decentralized. They make it exactly clear about who they are and how it works. And these nodes have some decent requirements — they're higher than a lot of other node requirements. But these nodes are not capable of running the quantity of computation that Internet Computer can do. Which makes me ask: what value is this network going to have in the long term?
Everything it's competing for already has a better option
If you read through what Hedera is going after, it's talking about decentralized identity — Internet Computer already has that running. It's talking about DeFi — there are other networks that already have way more meme coins and way more DeFi, and Internet Computer has, in my opinion, the best technology. It's talking about NFTs — but these things aren't going to be fully on chain. It's talking about payments — there are already far superior payment options that have much more adoption.
If you look at what Hedera is doing, it's competing on every front, and it's kind of violating a lot of what you'd actually want a cryptocurrency to do. Now, the transaction costs are low, which is fantastic. But ICP's transaction costs are low too, and most of the transaction costs on Hedera aren't even anything related to crypto. This whole thing, to me, doesn't look like it's going to work out very well.
The price action and the CBDC hype
The Hedera price action has been pretty bad. Even in the last Hedera bull market, the price went from about one cent to like 40 cents at the high. But all those gains from the last bull market have been lost, and it's hovering not that far from where it was in 2019. Often the first bull market is the best one. So to me, Hedera has extremely limited potential as a cryptocurrency.
A lot of the hype about it is on central bank digital currencies. But if you're into that hype, XRP would probably be in a better position for that with all the money it's had. I reviewed XRP recently — you can read my full XRP (Ripple) review — and even then, I don't see why I would hold Hedera over the alternatives. I think Hedera is drastically overvalued compared to the technology and the team behind Internet Computer. It lacks the transparency I would want to see when making a crypto investment.
I held it, I used it, and the tech didn't impress me
And I bought this last year. I staked it and I used it. There was extremely limited functionality and extremely limited amounts of applications. The wallet was very annoying compared to using the Internet Computer's Internet Identity, which signs you into all kinds of applications you actually use. I held Hedera last year, and I held Internet Computer at the same time. I compared both of them to each other and I used both of them. And I came to the conclusion, using both of them, that Hedera is just hyped up. The tech here is not impressive at all to me. I used Internet Computer and the tech blew me away. Just signing into the wallet and into applications, I'm like, wow, this is unlike anything else. I wrote about why I went all in over in why I invested my life savings into ICP.
So with your research, don't just watch videos. You need to use things. Take stuff off exchanges. Use things for yourself. See how they work. See what you can do with it. See what's possible. That hands-on testing is the whole reason I share my opinions the way I do, and if you want to follow along with what I'm actually using, you can come hang out with me in the Family.
My verdict: trending to zero
I think Hedera easily gets lost in this next bull market. At this point, it's all narrative and hype and speculation. No one who really knows what they're doing, building a real world asset protocol, would build on Hedera unless they got paid to do so. And that's not sustainable, because as soon as the money runs out, they'll probably be looking to move to a better solution, or to move to wherever somebody pays them next.
So I think Hedera is going to trend towards zero. And I'm accountable for this opinion. I've got my spreadsheet, and every day, for every crypto I review, I'm logging the price it's at. In the short term, it may fluctuate 10% or 20% one way or another. But where you really want to be thinking is long term. Where are things going to go long term? Which of these cryptos that I can buy today is going to go to infinity? To me, that's ICP. It's definitely not Hedera. If you want more of these honest, hands-on coin reviews, you can find all of them in my Money playlist.