The Helium Network is a decentralized wireless network powered by blockchain technology. It has grown rapidly, with over half a million hotspots deployed globally in just two years. Some analysts are now asking whether its native token, HNT, is poised to increase in value—and what risks might be involved.
Understanding the Helium Network
A Helium hotspot is a small device that plugs into a standard electrical outlet. It uses an existing internet connection to provide long-range wireless connectivity for Internet of Things (IoT) devices. In return for operating these hotspots, owners are rewarded with HNT tokens.
Helium uses a unique "burn-and-mint" token model with two units of exchange: HNT and Data Credits (DCs). Users who want to transfer data over the network use DCs, which are priced at a fixed rate of $0.00001 per 24 bytes of data. When DCs are purchased, HNT is burned, reducing the overall token supply.
This mechanism is designed to drive value appreciation for HNT: increased network usage should, in theory, make the tokens more scarce and valuable.
Market Position and Growth Potential
Sean Farrell, Vice President of Digital Asset Strategy at Fundstrat Global Advisors, noted that based on node growth and adoption rates, “people may be underestimating how quickly Helium could capture market share from established wireless operators in the coming years.”
The HNT token has been trading between $20 and $40 since the beginning of the year and is down about 33% over the past three months. It reached an all-time high of $52.71 in November 2021. As of the latest data, it is trading near $24.
Farrell believes that holding tokens in the Helium network could ultimately be more valuable than holding equity in a traditional wireless provider. He compared Helium to T-Mobile, which has the largest existing 5G network and a market cap of over $150 billion. Helium’s current market capitalization is around $2.7 billion.
“Even this comparison falls short, since a significant advantage of the network is the decentralization of hardware costs,” Farrell stated.
He also emphasized that Helium’s distributed nature allows it to expand into geographic areas that would otherwise be unprofitable for traditional providers.
“Therefore, Helium’s total addressable market is likely larger than the existing wireless market,” he added.
According to Frank Mong, Helium’s COO, the network is currently adding approximately 80,000 new hotspots each month.
Regulatory Considerations
A significant factor currently limiting HNT’s price growth is regulatory uncertainty, particularly in the United States. Farrell pointed out that the token’s availability to U.S. investors is limited, which presents a risk of intervention under applicable securities laws.
The U.S. Securities and Exchange Commission (SEC) defines securities as negotiable and fungible financial instruments that represent some type of financial value. SEC Chair Gary Gensler has previously stated:
“I believe the securities laws are quite clear. If you're raising money from someone else, and the investing public has a reasonable expectation of profits based on the efforts of others, that fits the definition of a security.”
How Does the Helium Blockchain Work?
Helium is a blockchain-driven project focused on building an alternative connectivity network. Its mission is to create a decentralized, cost-effective communications infrastructure for the IoT ecosystem. The goal is for individuals—not large corporations—to own and operate the network.
More than 20,000 people worldwide have already installed a Helium miner in their homes or businesses.
The Internet of Things is driving connectivity between smart devices across the globe. While many devices are capable of smart functionality, affordable and seamless connectivity remains a challenge.
Helium aims to compete with traditional telecom providers by using an open-source, decentralized blockchain network. It uses an innovative consensus mechanism called “Proof-of-Coverage,” which provides a cost-effective way to secure the network while incentivizing true decentralization.
How to Mine Helium
Users can mine HNT by setting up a Helium-compatible hotspot. These devices use long-range Wi-Fi (LongFi) technology. You can purchase a dedicated miner from Helium’s official store or build your own. Currently, a Helium miner costs around $250.
By providing a Helium LongFi hotspot, you help the network offer miles of wireless coverage that can be used for IoT communication between smart devices.
👉 Explore decentralized mining opportunities
The People’s Network
Helium refers to its network as “The People’s Network.” This model is built on an open-source blockchain where individuals who participate by hosting hotspots effectively own the network.
There is something compelling about the cultural shift toward decentralization. It was once hard to imagine that a capital-intensive infrastructure business could be democratized through a decentralized model where everyday users become beneficiaries.
Proof-of-Coverage and its location verification mechanism are particularly interesting because they help prevent the formation of “mega-miners” that could outcompete smaller participants.
HNT and Data Credits
The Helium network uses two distinct tokens: HNT and Data Credits (DCs).
Hotspots can earn HNT not only for providing wireless coverage but also for the amount of data IoT devices transfer through them.
The Proof-of-Coverage (PoC) algorithm autonomously verifies that a Helium miner is operational and providing network bandwidth. Data Credits are used by devices to communicate and are priced at a fixed rate. To create Data Credits, HNT must be burned.
This burn mechanism counteracts inflation: as more data is transferred across the Helium blockchain, less HNT remains in circulation.
Helium Wallets
In blockchain projects, wallet applications help users manage their private keys, sign transactions, and transfer assets.
For the Helium Network, a wallet maintains ownership of hotspots, HNT tokens, and/or Data Credits. Depending on your needs, one of the following wallets may be right for you.
Helium App Wallet
The Helium app wallet is very user-friendly. It can be downloaded on iOS or Android and offers simple pairing and setup with hotspots.
This wallet is ideal for users who want to send or receive HNT or manage their hotspots. Other activities, such as managing end devices and OUIs (network users), are better suited for the command-line wallet.
Command-Line Interface (CLI) Wallet
The Helium CLI wallet is the most flexible option but requires technical expertise. It supports all types of transactions but should be used with caution.
Ledger Wallet
The Helium Ledger wallet is an application that runs on Ledger hardware devices. This is the most secure way to send and receive HNT, though it currently does not support other types of transactions.
👉 Learn about secure crypto storage options
Conclusion
Helium’s vision aligns with a growing trend toward decentralizing technology and putting control in the hands of users. Bitcoin, for example, allows people around the world to participate in a new monetary network. The trend is clear: over time, more networks will become decentralized and user-owned.
It remains to be seen whether Helium’s decentralized network can scale sufficiently, become economically sustainable, and compete with both decentralized and centralized players.
The world is rapidly evolving toward a state where smarter devices and IoT technology are used more frequently. By contributing to the Helium project, you become part of the solution shaping the future of technology.
We believe that decentralized, autonomous or semi-autonomous networks are indeed the future.
Frequently Asked Questions
What is Helium crypto used for?
Helium (HNT) is the native cryptocurrency of the Helium Network. It is used to reward hotspot operators for providing wireless coverage and data transfer services. It can also be burned to create Data Credits, which are used to pay for network usage.
How does Helium mining work?
Helium mining involves operating a hotspot that provides wireless coverage for IoT devices. Hotspots earn HNT tokens through Proof-of-Cverage, which验证他们是否提供了真实的网络覆盖。Mining rewards are distributed based on the amount of data transferred and the quality of coverage provided.
Is Helium a good investment?
Like any cryptocurrency, HNT carries investment risks. Its value is tied to the growth and usage of the Helium Network. While the project has shown strong growth and has a compelling use case, investors should be aware of market volatility and regulatory uncertainties.
What is Proof-of-Coverage?
Proof-of-Coverage is a novel consensus algorithm used by the Helium blockchain. It uses radio frequencies to cryptographically verify that hotspots are providing legitimate wireless coverage in their declared location.
Can I build my own Helium hotspot?
Yes, it is possible to build your own Helium-compatible hotspot. However, most users purchase pre-built devices to ensure compatibility and ease of setup.
How do I convert HNT to Data Credits?
HNT tokens can be burned to create Data Credits through the Helium wallet or supported third-party applications. This process is irreversible and is designed to create a deflationary effect on the HNT supply.