What is helium (HNT)? Your ultimate guide

The plug in and go crypto miner is building a decentralised internet network

Phone displaying the Helium cryptocurrency logo                                 
Users are rewarded with helium for plugging in a Hotspot – Photo: Alamy
                                

Contents

Mining and investing in cryptocurrencies can be a complicated process. What if there was a piece of hardware that automatically earns cryptocurrency for you?

Helium is building a blockchain-based network where users are rewarded in HNT, Helium's native cryptocurrency, for plugging in a Hotspot. The network was originally designed for battery-powered devices that need to send small amounts of data over long distances, like a smart pet collar.

Helium recently announced a new venture into providing a 5G network with Dish, its first major carrier partnership.

With the new partnership and more than 300,000 Hotspots worldwide, Helium is starting to attract a lot of attention.

Helium network explained

Helium was founded in 2013 in California by Shawn Fanning, Amir Haleem and Sean Carey, with a goal to change Internet of Things (IoT) communication. Helium’s mission is to prepare IoT communication for the future, decentralising the infrastructure.

The Helium Hotspot is a piece of hardware that users can plug in, which provides network coverage over a certain radius and rewards participants in the native token HNT. Once the Hotspot is active, any sensor using the Helium LongFi wireless protocol can connect to the network.

The Helium network launched in 2019 and it already has more than 300,000 global Hotspots, making it the largest LoRaWAN network in the world. 

LoRaWAN is a combination of two technologies: LoRa, a way of manipulating radio waves to encode information; and low-power wide-area networks (WAN). The Helium network is intended to be used by battery-powered devices that send small amounts of data over long distances. These include smart pet collars, environmental sensors, and bike trackers. The Helium website says there are now thousands of compatible LoRaWAN devices.

A Helium hotspot next to a plant
A Helium Hotspot produced by third party devices – Photo: Alamy

How does helium coin work?

Most blockchains allow users to mine cryptocurrency through proof of work or proof of stake protocols. Helium has its own system, proof of coverage. The network depends on reliable coverage for users and needed its own method of rewarding users. Proof of coverage verifies whether a hotspot is providing network coverage for its location. Proof takes into consideration the distance, speed and strength of the radio frequency.

Proof of coverages takes place via challenges, where hotspots test each other’s radio frequencies. There have been millions of challenges issued through the Helium blockchain and each new challenge records more data about the quality of the network.

A challenge is like a phone call to check up on your friend after an argument. A challenger Hotspot will call the challengee Hotspot by sending it a packet of information. But the challangee doesn’t respond to its challenger friend. Instead, it responds by decrypting the information and sending out a beacon of the updated information that verifies its radio frequency. This information is picked up by any nearby witnessing hotspots. Almost like gossip, the witnesses send this verification information to the blockchain.

Every Hotspot that takes part in the challenge, whether it is a challenger, challengee, or a witness, earns rewards in the form of the blockchain's native cryptocurrency Helium (HNT).

What is Helium (HNT)?

The helium coin has two main purposes. Users who take part in challenges are rewarded with Helium (HNT), the native cryptocurrency in the blockchain.

None of the HNT was mined in advance. The first HNT was produced in July 2019. After the genesis block was mined, the Helium Network targeted 5 million HNT mined per month, adding up to 60 million HNT a year. Since gaining community approval in November 2020, the amount of helium produced halves every two years. This starts from the first HNT block mined, meaning that in 50 years, only 3.6 HNT will be mined annually.

There is a maximum supply limit of 223 million HNT and the blockchain is almost half-way there, with the current circulating supply at 102.6 million HNT. As of 24 November, one helium coin is priced at $43.38.

As well as a reward for miners, the helium cryptocurrency has another use. Users can burn helium to create data credits (DC), a token that is used for transaction and network fees. Data credits are pegged to the US dollar with 1 DC worth $0.00001.

Data credits are like paid phone minutes: they allow consumers to use and transfer bytes of data on the Helium network. The tokens are non-transferrable and can only be used by the original owner. As data credits have a clear purpose and make HNT rarer, the dual token system ensures that helium inflation is associated with utility.

Partnership with Dish

In October, the blockchain revealed it has a partnership with the internet service giant Dish to bring Helium’s decentralised network to the masses. This partnership will offer users of Dish Network the opportunity to run Helium nodes and earn rewards for sharing their 5G network with those in the area.  
Frank Mong, chief operating officer at Helium, told Decrypt: “Dish understands the potential blockchain can have on the wireless industry, and as the first major carrier to join The People's Network, this partnership is real validation that the HNT incentive model is a powerful tool for deploying infrastructure at scale.”

The Dish partnership comes after a Helium community vote in April that approved a 5G capable network through a partnership with FreedomFi. This allows Helium to provide a network to devices including smartphones, tablets and laptops.

Helium crypto review

Helium reviews are relatively positive but there are definitely hurdles for the blockchain-based network. Coinbureau said the technology works and forecasts it to be profitable long into the future. It does note that the approximately cost of $400 for a Hotspot is off putting to some but is still within reach of enough to see network growth.

However, CoinBureau does raise concerns on how the halving of the helium cryptocurrency will affect miners. It said: “One question mark for Hotspot owners is how the halving will impact them. While they will lose half their earnings it is also possible the halving will create enough upside in the value of HNT to offset that loss of token income.”

Trusted Reviews praises the ease of setting up a Helium Hotspot. But it also notes the steep initial investment price especially as earnings vary depending on location and number of Hotspots in the area. This means it is hard to judge if and when the user will earn back the hardware costs.

There is another major concern facing users, which is security. Normal wifi hotspots have its fair share of malicious attacks, with hackers able to access personal devices connected to the network. As Helium is still relatively new, there have not been many, if any, recorded cases of malicious attacks. 

Helium’s website says “the security of the network and Hotspot owners is of the utmost importance to us” and does warn that “security concerns are ever present.” There are number of methods that Helium uses to keep its network secure. All of the ports on a Hotspot are protected by a firewall, except for one. The hardware also complies with the US Federal Communications Commission regulations and the cost of using the network can act as a deterrent.

But some of the methods only apply to its current LoRaWAN network. It remains to be seen how Helium’s procedures will adapt to secure its 5G network.

Helium price history

For the first six months, helium coin’s price stayed below $2. It started a bullish trend at the beginning of this year, which saw a peak of $19.51 on 28 May before falling back down to the $10 mark in July.

Helium saw another upward trend at the beginning of this month, rising from $28.26 on 1 November to its all-time high of $55.22 on 12 November. The HNT coin has fallen since then and as of mid-morning 25 November the price is now at $47.27.

FAQs

Currently, there is a circulating supply of 102.6m HNT, which is almost halfway to the maximum supply limit of 223m HNT.

Helium is mined through proof of coverage, where Hotspots challenge each other to prove that they are providing a strong wifi frequency in the area. After a challenge, the challenger, transmitter, and witness all gain a portion of HNT.

According to Coinranking, helium can be purchased on 11 exchanges, these include Binance, Crypto.com and WazirX. Remember, you should always do your own research and never invest more than you can afford to lose.  

Further reading:

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