Helium

What is Helium (HNT)?

Helium is a unique blockchain-based network that builds wireless infrastructure in a decentralized, trustless manner.

Dubbed “The People’s Network,” Helium incentivizes people to connect simple, low-powered wireless devices to create widespread network coverage. These existing devices can be configured to run LongFi, which is a blend of LoRaWAN and blockchain technology.

The idea behind Helium is that devices connected to the network benefit from data coverage similar to traditional WiFi, with all of the wireless functionalities atop an encrypted connection.

Helium uses the term Hotspots that users can set up and run. These Hotspots provide network coverage, and Hotspot operators are rewarded with Helium’s native token, HNT.

This is intended to disrupt the existing mobile phone network system, where users often get locked into expensive contracts with limited terms. Helium provides an alternative that costs far less, and the payments made for network usage go directly to the Helium miners.

When Was Helium Launched?

The Helium mainnet was launched in late July 2019 and has seen considerable growth since then, especially in North America and Western Europe.

With well over 900,000 global Hotspots, the Helium network is the largest LoRaWAN network in the world.

At genesis, HNT was mined at a rate of 5 million HNT per month, but the first HNT halving took place in summer 2021, reducing the monthly mining target to 2.5 million HNT.

Although Helium was launched in 2019, the story of its conception and development goes all the way back to 2013.

Who are the Founders of Helium?

Amir Haleem, Shawn Fanning, and Sean Carey came together in 2013, with a vision of making it easier to build connected devices, and the idea for Helium was born.

Haleem, the only one of the trio to remain with Helium to date, serves as CEO. Formerly the CTO of a video game startup, Diversion, he was also part of the original programming team behind the hit game Battlefield 1942.

Fanning, meanwhile, is well-known for developing the groundbreaking peer-to-peer music-sharing service Napster. While he doesn’t play an active role in Helium anymore, Fanning does hold the role of advisor.

Finally, Carey is also an experienced developer, having been part of the firm Where, which was acquired by PayPal, among other projects.

How Does Helium Work?

Helium marries blockchain technology with LoRaWAN, a point-to-point networking protocol that uses Semtech’s LoRa modulation scheme.

LoRaWAN is a Low-Power Wide-Area networking protocol that connects battery-operated “things” to the internet on regional, national, or global networks. It targets the Internet-of-Things (IoT) requirements such as bi-directional communication, end-to-end security, mobility, and localization services.

Blockchain is then added to the mix in order to provide a consensus method that provides reliable service of this technology to users. Innovatively, Helium uses the same technology used by radio—radio frequencies—to provide proofs called proof-of-coverage.

These radio frequencies check the users’ distance from a Hotspot, and if the user is within the coverage area and has enough credits, a connection request is granted.

The Helium network’s proofs also provide a further benefit than simply ensuring the strength of coverage. They also encourage miners to set up Hotspots in areas found to suffer from weak coverage. This makes Helium an autonomous system.

What are Helium Hotspots?

A Helium Hotspot is a physical device set up by users to mine and broadcast on the Helium network. Hotspots use only 5W of energy and come in the form of a simple device installed on a window.

Hotspots are manufactured by third-party manufacturers and vendors and are subject to approval by the Helium community and the Manufacturing Oversight Committee responsible for vendor onboarding.

Once installed, Hotspots on the network are randomly and automatically assigned proof-of-coverage tests to complete. Passing and witnessing these tests earns users HNT tokens. The more device data is transferred by a Hotspot, the more HNT it generates.

What is IoT?

The Internet of Things describes objects or groups of objects with sensors, processing ability, software, and other technologies that connect to and exchange data with the Internet or other communications networks.

While IoT technology is synonymous with products pertaining to the concept of a “smart home,” IoT is applied in a variety of fields, including medical and healthcare, industry, transport, maritime, infrastructure, and even the military.

The term “Internet of Things” was coined by Kevin Ashton of Procter & Gamble in 1999, who viewed radio frequency identification (RFID) as essential to the IoT. Ashton’s vision involved the embedding of short-range mobile transceivers in various devices to enable new forms of communication between them.

What Makes Helium Unique?

Helium isn’t unique just because it disrupts the existing mobile telecommunications service industry. It also decentralizes it and incentivizes users to set up Hotspots and further increase and strengthen network coverage.

This incentivization is done in the network’s native token HNT, and the Hotspots set up by users are considered blockchain miners.

In addition to using HNT, however, the network also uses a token called Data Credits, which is not exchangeable and is tied to individual users. These Data Credits are required by devices using the network in order to send data to the Internet.

These Data Credits, or DC, are created by burning HNT. The more devices that use DC, the more HNT gets burned. This mechanism balances the supply of HNT via mining, creating a Burn and Mint Equilibrium.

How is the Helium Network Secured?

Helium is secured by proof-of-coverage (PoC), an algorithm created specifically for Helium. Its main function is to verify that the network’s Hotspots are physically located where they claim to be and that they honestly represent the wireless coverage created for that location.

Proof-of-coverage is based on three main technical characteristics of radio frequencies:

• Radio frequency has limitations in terms of how far it can travel
• The strength of an RF signal reduces as the distance from the transmitter increases
• RF travels at the speed of light with little to no latency

Because of these characteristics, the Helium blockchain constantly uses PoC to challenge Hotspots regarding their location and coverage. The Helium network can therefore use the generated data to verify its wireless coverage without interruption.

The PoC is designed to be permissionless, decentralized, and Byzantine Fault Tolerant. Helium uses a variant called HoneyBadger BFT (HBBFT) for the latter, which defines the ability of the network to reach consensus even if a certain threshold of participants don’t act honestly.

HoneyBadger was described in a 2016 paper by Andrew Miller and the University of Illinois Urbana-Champaign team. It describes an asynchronous BFT protocol, which guarantees liveness without making any timing assumptions.

The PoC algorithm defines units of work called PoC “challenges.” When these challenges are issued and processed, the Helium blockchain can receive and record more and more information about the network’s quality.

There are three roles in the network facilitating these challenges:

• Challenger. These Hotspots construct and issue the PoC challenge. Submitting valid PoC challenges is rewarded with a small percentage of HNT distribution.
• Challengee/Transmitter. These are Hotspots targeted by PoC challenges, which must transmit challenge packets of data to be witnessed by other nearby Hotspots.
• Witness. These Hotspots are in close geographical proximity to Transmitters and report the existence of challenge packets after they’ve been sent out. Witnesses are also rewarded with HNT depending on how much activity they’ve witnessed and on the reward scaling of the Challengee.

What is the Use of HNT?

Helium uses a dual-token, burn-and-mint economy featuring the HNT token and Data Credits.

HNT is earned when Hotspots provide and validate wireless coverage and transfer device data over the network. Data Credits, meanwhile, are used by devices to send data on the network and for blockchain transaction fees. Crucially, Data Credits are created by burning HNT.

Who Controls Helium?

Helium is controlled by Helium Inc., led by the co-founder of Helium, Amir Haleem. Alongside Haleem are CTO Marc Nijdam and COO Frank Mong.

Nijdam is an experienced tech professional who has served in high-profile roles at Qualcomm and Yahoo. Meanwhile, Mong spent 20 years in cybersecurity before joining Helium, including a stint as Vice President of Solutions within Hewlett-Packard’s Enterprise Security Products organization.

In a March 2022 blog post, CEO Amir Haleem announced that Helium Inc. would be renaming itself Nova Labs. This name change is intended to provide a “clearer distinction between the corporate entity and the open sourced Helium Network that is owned and operated by the people.”

Along with this move, the Helium Foundation, a non-profit run by the community responsible for governing and maintaining the network, has taken on stewardship of Helium Inc.’s brand assets. This means that the Helium name and brand can be used openly by the ecosystem.

In the same announcement, Haleem also confirmed that Nova Labs completed a $200 million Series D equity round led by Tiger Global and Andreessen Horowitz. One notable participant in this round was Deutsche Telekom’s strategic investment fund, Telekom Innovation Pool.

According to Crunchbase, Helium Inc. raised:

• $2.8 million in its seed round
• $16 million in a Series A round led by Khosla Ventures
• $20 million in a Series B round led by GV (formerly Google Ventures)
• $15 million in a Series C round led by Khosla Ventures, Multicoin Capital, and Union Square Ventures

Crunchbase also lists two Initial Coin Offerings dated December 1, 2020 and August 10, 2021, with the latter raising $111 million from five investors led by Andreessen Horowitz.

How Much HNT Is In Circulation?

HNT has a maximum supply of 223 million HNT. However, its amount in circulation changes at any given time thanks to how it is minted via mining but also burned to create Data Credits needed for network usage.

In Helium’s first year of existence, 30% of the HNT supply was distributed as rewards for network data transfer. Moreover, 35% was distributed for Hotspot infrastructure and participating in, witnessing, and creating PoC challenges.

The remaining 35% was assigned to founders, Helium Incorporated, early investors, and organizations managing blockchain governance.

As the network grows, the distribution is intended to shift, with Hotspots earning more for transferring device data on the network while Helium Inc. and investors earn less.

All HNT was mined from genesis, meaning no pre-mine, with a starting rate of 5 million HNT per month and a 2-year halving schedule. The first halving was completed in August 2021, meaning that until mid-2023, HNT will be mined at a rate of 2.5 million HNT per month.

The Helium Improvement Proposal 20 also introduced Net Emissions to Helium. Since the total supply is capped at 223 million HNT and burned to mint Data Credits, there was a theoretical danger of the network running out of HNT.

Net Emissions sees the network monitor how many HNT are burned for Data Credits in a given epoch and add them to the number of HNT to be minted for that epoch. The number of HNT added to the mint is capped.

What is Halving?

Halving is a mechanism that reduces the block rewards given to miners upon the successful creation of a block. This introduces a deflationary element to a token’s supply and is similar to Bitcoin.

However, while Bitcoin undergoes a halving approximately every four years, the HNT halving happens every two years.

How Do You Buy HNT?

HNT is tradeable on several major cryptocurrency exchanges, and it is often paired with fiat currencies like the U.S. dollar. However, the most common trading pairs tend to be stablecoins like USDT and BUSD, although trading with BTC is also common.

In order to buy HNT on an exchange, all you need to do is sign up and complete any verification or KYC (Know Your Customer) steps required to activate your account.

Is It Possible to Buy HNT Instantly?

Buying HNT on a cryptocurrency exchange is instant, although most exchanges are non-custodial and don’t actually transfer any HNT to you. This only happens when you withdraw your HNT into your own private wallet.

How fast this is will depend on the blockchain’s activity at the time, as well as how quickly the exchange releases your funds.

How Do You Store HNT?

Cryptocurrencies are stored in wallets, and Helium is no different. In fact, Helium announced the release of its own official wallet, the Helium Wallet App, in a blog post in June 2022.

The Helium Wallet App is used to manage tokens, supports multiple accounts, and allows users to take part in governance by voting on Helium Improvement Proposals. It can be downloaded on most major app stores, and it is also compatible with the Ledger hardware wallet.

Helium Energy Consumption

Helium is powered by many devices connected to a vast global network, all-consuming valuable electricity. However, the IoT-capable devices connected to Helium are providing a service to users that has significant, if not tangible, value.

Wireless data infrastructure is a valuable concept. As private sector corporations continue to take advantage of consumers, Helium offers ordinary people not just an alternative but a way to become part of the network and earn from it too.

As such, it’s hard to make the argument that Helium’s energy consumption is excessive, especially considering the 5W consumption of a Hotspot and the massive infrastructure and unsightly cell towers required by traditional competitors.

Is HNT a Good Investment?

Helium is an excellent example of blockchain technology’s innovation and the potential for disruption of the status quo. It sees a niche and solves a definite problem, although, like many projects of its type, its success is tied to its adoption.

However, that same adoption seems to be growing exponentially. According to the Helium block explorer, the number of Hotspots is trending higher every month.

With this increase and the improvement of coverage, users have ample reason to actually use the network. This network usage sees increased usage of Data Credits, which likewise results in greater burning of HNT.

Furthermore, HNT also provides the possibility for many to become Hotspot owners and earn a passive income. While the price of Hotspot devices may be out of reach for some, it is still far lower than specialized cryptocurrency mining machines and even some GPUs used for at-home crypto mining.

Ultimately, Helium is an ambitious project with millions of dollars of funding behind it and an entire world to cover with its decentralized network of user-run devices.