What are the main risks of using Hedera?
Hedera risks include council control, permissioned nodes, contract bugs, and legal questions. A lost key or wrong address can lose HBAR for good.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
On this page
- Transactions cannot be reversed once confirmed.
- A lost key or wrong address can lose HBAR permanently.
- Staking through a platform that holds your keys adds custody risk.
Hedera says it is a public decentralized network for applications that need fast agreement on data. Its coin, HBAR, pays network fees. Developers use its consensus service to timestamp messages and track assets. Using Hedera carries risks from its governance, network structure, code, legal questions, and custody.
What are the main risks?
Hedera's main risks are centralized council control, permissioned nodes, smart-contract bugs, and regulatory scrutiny. The network also faces the dangers of holding a digital asset yourself.
How centralized is Hedera?
Hedera is not fully decentralized. A council and approved operators hold the main powers. This structure differs from open networks.
What smart-contract risks exist?
Hedera can run smart contracts, which are programs on a blockchain. A bug or exploit in a contract can drain funds. A confirmed transaction cannot be reversed.
- Approving a malicious contract can let it spend your tokens.
- A flawed contract can lock funds.
- A contract can contain a hidden backdoor.
What legal risks does HBAR face?
HBAR faces legal uncertainty in the United States.
What are self-custody risks?
Self-custody means you hold the private key or recovery phrase for your HBAR. A lost key or a wrong address can lose HBAR permanently.
- Losing your recovery phrase can lock you out.
- A phishing site can trick you into sharing your keys.
- Storing keys on an exchange adds platform risk.
Frequently asked questions
Leemon Baird and Mance Harmon created Hedera. A governing council of global organizations now runs it and makes its decisions.
You can stake HBAR. If you stake through a platform that holds your keys, you add custody risk. Staking rewards are not guaranteed.
Report it to the FTC at ReportFraud.ftc.gov and the FBI's ic3.gov. You can also tell the exchange or wallet provider.
