While some blockchain projects have received mainstream media coverage and support, many others remain mostly unknown to the public. One such example of a little-known blockchain project is Helium, which promises to change how we use cellular data and wireless internet.
Often referred to as "the people's network," Helium has the potential to unite blockchain technology, wireless infrastructure, and the Internet of Things (IoT) into one comprehensive project. At the same time, many crypto investors have managed to make passive income from mining Helium.
Here's what you need to know about helium blockchain, how it's changing the world of wireless coverage, and how you can get started with it.
What Is The Helium Network?
The Helium Network is a blockchain-based cryptocurrency aimed at creating a decentralised wireless network, one that isn't reliant on satellites or cellular tower infrastructure. Helium lets anyone own and operate a wireless IoT network using a special, small-router radio device called a hotspot.
Users who provide IoT coverage with Hotspots are known as "miners." Unlike other blockchain systems, like Bitcoin, where miners use computing power, Helium miners use RF radio signals to provide coverage in return for Helium tokens (HNT). The more people that participate in Helium mining, the stronger the wireless network becomes.
In principle, this would allow people to have wireless access without relying on centralised infrastructure. Traditionally, network infrastructure is a very monopolised industry. With enough miners providing coverage, this would make the Helium network an inexpensive option for internet access, especially in low data areas where WiFi is inaccessible and cellular data would be extremely expensive.
What Is A Helium Hotspot?
A Helium hotspot is a plug-and-play, router-like wireless device that miners buy in order to earn mining rewards. In order to incentivise users to help build this decentralised wireless network, individuals use hotspot devices that act as nodes. These then provide connectivity to nearby IoT devices, while also earning HNT tokens.
Helium claims that the Helium hotspot is able to provide connectivity 200 times farther than traditional WiFi. That's because of Helium's new wireless technology, known as LongFi. Helium's LongFi is a combination of the existing LoRaWAN wireless protocol and Helium's own blockchain.
Unlike regular WiFi routers, Helium comes with none of the restrictions associated with a centralised cellular provider, like data caps or overage charges. Additionally, Helium hotspots don't require any other purchases, like SIM cards. They are also fully encrypted by default.
User can buy hotspots from third-party manufacturers approved by Helium. Popular manufacturers include RAK, Nebra HNT, and Bobcat Helium miners. Prices for Helium Hotspots typically hover around US$400.
Unlike other blockchain projects, Helium uses a different consensus mechanism called Proof-of-Coverage (PoC). Under a PoC system, an algorithm periodically checks and rewards users that verify they have been providing consistent coverage.
Hotspots occasionally receive tests under a PoC consensus system to prove they are indeed providing coverage. These tests are random and done automatically. Passing this test earns a hotspot operator a certain quantity of HNT tokens.
Within this system, there are three types of participants in the PoC challenge mechanism: challengers, transmitters, and witnesses.
- A challenger is a hotspot that issues a challenge to another hotspot.
- The transmittee, or the challengee, is the target of the challenge.
- Hotspots that are geographically close to the transmittee are known as witnesses. They transmit and verify that the target has completed a PoC challenge.
What Is Helium's HNT Token?
The HNT token is the native cryptocurrency used in the Helium ecosystem. Tokens are paid out as a reward for hotspots contributing coverage, depending on how much data they process and how many other hotspots are close to a user's location.
There will only ever be 223 million HNT tokens ever mined. In that sense, HNT has a similar tokenomic structure to other cryptocurrencies like Bitcoin. According to the halving schedule of HNT, all of those 223 million tokens will be mined within 50 years.
Around 30% of all HNT tokens are allocated for rewarding devices that relay information to the internet. Another 35% of HNT tokens are rewarded for participating in PoC challenges. The remaining 35% is returned to Helium's governance, founders, and investors.
Helium Data Credits
Another type of non-tradable cryptocurrency used by Helium is known as a data credit. Data credits are always worth US$0.00001—or US$1 of HNT will result in $100,000 data credits. Data credits are used to transfer a byte of data on the Helium network. They're non-exchangeable and tied to each user.
How Does Helium Mining Work?
Unlike regular cryptocurrency mining, which uses intensive pieces of hardware like GPUs or ASICS, Helium mining is carried out via radio wave technology. As a result, it's significantly less energy-intensive compared to traditional crypto mining methods.
Earning Helium tokens via mining depends on passing PoC challenges and receiving token rewards. Plus, the exact formula of how many tokens a user can earn depends on their hotspot's traffic and how many other hotspots are in their area. The more competition in their area, the less they will typically earn. A rural area may have less competing hotspots but will also see much less traffic.
The token rewards also vary depending on the hotspot's role in the PoC challenge process. Of all mining rewards generated during a period of time, around 0.95% is allocated to rewarding challengers, 5.31% is allocated towards transmitters, and 21.24% is allocated towards hotspot witnesses.
How Can You Become A Helium Miner?
Anyone can become a Helium miner as long as they make the initial investment in purchasing a Helium hotspot from a third-party provider. The performance differences between the different hotspot miners are pretty minor. Instead, success as a Helium miner has to do more with a user's location and competition.
Other factors, such as how they place their antenna or whether they place their hotspot near a window all have an impact on its ability to transfer data. The general range limit for a hotspot is approximately 10 miles.
While Helium mining becomes less profitable as more hotspots are set up, in theory, this should be balanced out by the steadily increasing popularity of the Helium network itself as a way to transmit data.
Unlike mining Bitcoin, which has become far less profitable for the average user, Helium is a young enough project where individuals can still make a decent side income from setting up a Hubspot. Helium also offers a Helium explorer application, which lets users see how much network coverage there is in certain geographic locations.
Helium represents one of the more ambitious, as well as immediately practical, blockchain projects out there. It's a decentralised wireless network that isn't controlled by a big carrier but is made possible thanks to thousands of participating local hotspots.
Considering that Helium promises to be significantly less expensive than cellular data and wireless, there's a chance it could become to wireless data what the internet was to global communications.
Helium is the 52nd largest crypto project by market cap, with a valuation of around US$3.6 billion as of late April 2022. Compared to the nine and ten-figure valuations of the world's largest cryptos, Helium has a lot of potential if its network becomes more popular. It's a network that may be immediately practical and usable to most people, which can't be said for many other coins.
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