What Is Helium (HNT) Crypto? How does It Work? A Complete Beginner’s Guide[2024]

Helium (HNT) crypto is a unique cryptocurrency that has utilitarian purposes outside of the crypto world. It is based on a secured, open-source network which is by far the largest decentralised IoT (Internet of Things) network in the world.

Created to solve real-world problems, it has its unique consensus protocol called the PoC (Proof of Coverage) algorithm. This cryptocurrency helps to connect IoT (Internet of Things) devices using long-range WiFi. Read on to know about Helium crypto, how it works, its history, how to mine and buy Helium crypto and more.

What is Helium?

Helium is the name of a decentralised blockchain network that has the capability to facilitate communication and connectivity for IoT devices. The Helium network is a long-range wireless network that offers public WiFi coverage for LoRaWAN-enabled devices. The network is powered by the Helium blockchain, which offers incentives for individuals who install Helium routers. The users of the network are rewarded with the network’s native cryptocurrency – Helium (HNT) crypto.

Individuals can buy and sell Helium tokens freely on the market like any other cryptocurrency. The more Helium Hotspots people use, the more Helium tokens are generated. 

As IoT networks become more widespread, the importance of the Helium blockchain and, subsequently, HNT tokens increases. It offers several advantages over traditional IoT networks, including broader coverage, increased privacy, security and reliability.

Key Takeaways:

• Helium introduces a novel blockchain network designed to revolutionise wireless communication for Internet of Things (IoT) devices through decentralised technology.
  
• Mining Helium tokens incentivises individuals to provide network coverage, utilising a unique Proof of Coverage consensus mechanism to ensure reliability and expansion.
  
• The Helium token (HNT) plays a crucial role within the ecosystem, rewarding operators for network participation and facilitating transactions and governance on the platform.
  
• Participation in the Helium network as a miner involves setting up a Hotspot and contributing to network density, therefore earning HNT tokens as a reward for providing coverage and validating network transactions.
  
• Before buying HNT, it’s essential to consider the network’s growth potential and token’s underlying utility, and the volatile nature of the crypto market and demand within the expanding IoT landscape.

The History and Founders of the Helium Crypto

The Helium network was launched by Amir Haleem, Sean Carey and Shawn Fanning, a few years after the inception of Bitcoin. Shawn Fanning is a computer programmer and entrepreneur well-known for building Napster. Amir Haleem had previously worked at Diversion, a video game startup and at DICE for Battlefield 1942. 

Helium Inc. was set up to build the first international peer-to-peer wireless network with the capacity to connect to different types of devices. However, it did not start as a crypto company. The founders tried to build a traditional peer-to-peer network by trying to convince individuals and businesses to join. The project was unsuccessful because they were not able to gather enough participants. 

In 2017, the company made the decision to offer Helium cryptos as a reward for setting up network nodes. Instead of building a long-range network, the founders offered users the complete freedom to buy and connect their hotspots. In return, they would receive HNT tokens, which they could hold for profits. 

In 2019, the network went live, with the company launching the HNT crypto on July 29, 2019. 

How does Helium Work?

Helium is a wireless and decentralised network for IoT devices. It provides public network coverage for devices that rely on LoRaWAN. It is a point-to-multipoint media access control layer protocol with a cloud component to which wireless devices can connect. Helium is one of the largest LoRaWAN networks having more than 25,000 hotspots acting as nodes. 

Helium Hotspots are special routers that can send small packets of data over long distances, reaching around 200 times the distances of conventional WiFi hotspots. Anyone can use this network to connect internet-enabled devices like smart kitchen appliances, parking metres or air-quality devices. 

This network incentivises operators of Hotspots with Helium tokens for their part in helping to transmit data. Participants of the network get paid in HNT and can vote on proposed changes to the network. If the price of Helium coins increases, HNT holders can make more money, which would further encourage more people to set up HNT nodes. 

The Helium blockchain uses a unique consensus mechanism called Proof of Coverage (POC). This algorithm verifies the location of Helium Hotspots, which contributes to the blockchain’s success as it depends on providing reliable wireless coverage.

What Makes Helium Unique?

Helium is one of the rare blockchain projects that deal with the Internet of Things, aside from IOTA (MIOTA) which employs so-called “blockless” technology and the Tangle network to connect devices to the IoT. The uniqueness of Helium as a project focused on improving the Internet of Things is noted in the Proof of Coverage mechanism. PoC is a unique mechanism created especially for the Helium network. The consensus mechanism is based on the HoneyBadger Byzantine Fault Tolerance protocol, and it allows the network nodes to reach consensus even when the connection rates vary.

Aside from using the native token HNT, Helium employs another token, which cannot be exchanged, and which users can use to pay transaction fees – Data Credits.

What Is the Helium Token Used For?

The Helium token (HNT) serves multiple, essential functions within the network, making it a cornerstone of the ecosystem. Primarily, it acts as a reward for those operating Hotspots, incentivising the expansion and maintenance of the network’s coverage. This model encourages a widespread, decentralised infrastructure, crucial for the network’s goal of ubiquitous and reliable connectivity for IoT devices. 

Secondly, HNT is used to generate Data Credits, which are required for sending data across the network, as well as blockchain transaction fees, including adding devices to the network. This dual-token mechanism (HNT and Data Credits) ensures that, while the network grows through the participation of Hotspot operators, the cost of using the network remains stable and predictable for developers and businesses relying on it for IoT data transmission.

How Can You Mine Helium?

Mining Helium is unique compared to traditional cryptocurrency mining, focusing on providing real-world utility rather than computational power. The process involves setting up a Helium Hotspot, which requires a modest initial investment. These Hotspots act as nodes on the network, providing wireless coverage and validating transactions. 

Below is a simplified guide:

Purchase a Helium Hotspot: Choose a Hotspot from the range of approved manufacturers. Considerations should include coverage area, connectivity options, and price.

Set Up and Connect: Install your Hotspot in a location with a clear view of the sky to maximise coverage. Connect it to your internet and follow the setup instructions on the Helium App.

Verify Location: Prove your Hotspot’s location to participate in the Proof of Coverage challenges. This usually involves a small fee in HNT to ensure accurate and honest reporting.

Earn Rewards: Once online, your Hotspot will automatically perform tasks like participating in Proof of Coverage challenges, relaying device data, and validating network transactions, earning HNT based on the value contributed to the network.

The attractiveness of mining Helium lies in its relatively low energy consumption compared to traditional mining and the potential for passive income through network participation.

Note that Helium mining is not without controversy, according to this Forbes article.

What Gives Helium Value?

The value of Helium is determined by its utility, technical capacity, the relevancy of the project, and its technology. The intrinsic value of Helium is observed mostly through the prism of its utility and technology. However, the intrinsic value and the market value of HNT often don’t coincide, mostly due to the volatility in the cryptocurrency market.

The market value of Helium can vary greatly from one moment to the next depending on a multitude of various factors. The market value of HNT is also subject to volatility in the market and at times, unpredictable trend reversals, which is why the real-life value of the project is often different from the market price of HNT.

Where Can You Buy Helium Tokens (HNT)?

Helium (HNT) is a relatively new cryptocurrency which is available on limited trading platforms/exchanges. As more crypto investors become aware of this currency, more exchanges are likely to start offering it. 

Currently, the following crypto trading platforms offer the Helium coin:

• Binance: This is one of the largest cryptocurrency exchanges in the world. The benefits of purchasing Helium coins here include lower transaction fees than other exchanges and higher liquidity. 
• WazirX: A part of the Binance Group, WazirX is India’s biggest cryptocurrency exchange having more than 4,00,000 users. It offers Helium crypto, among other options. It is expanding rapidly and accepts clients from around the world. 
• Uphold: This is a highly innovative trading platform offering a number of cryptocurrencies, including HNT. It offers both a desktop website and a mobile trading app for easy trading. It also offers a customisable trading view and a quick one-step ordering service for investors’ convenience.  
• KuCoin: This exchange is well-known for offering competitive fees and trading costs. This platform offers a range of services, including P2P exchange, multiple payment modes and many options for cryptocurrencies. It offers Helium in addition to 300 other tokens. 

How to Mine the HNT?

The HNT mining process is different compared to other cryptocurrencies, which require high-end GPUs (Graphics Processing Unit). Thus, you do not have to pay expensive electric bills or go through complicated setups to start mining HNT. 

Unlike other cryptocurrencies that use the traditional Proof of Work consensus mechanism, Helium uses an advanced PoC based on BFT (Byzantine Fault Tolerance) protocol. It requires miners to validate if their hotspots are providing wireless coverage. 

To start mining, you will need special LoRaWAN transmitters and put them on elevated places like rooftops or balconies. The Bobcat Hotspot Miner, Rakewireless Hotspot Miner and the Nebra Helium Indoor Hotspot are some compatible devices for mining HNT. One can download the Helium app and activate the hotspot to start mining. 

How to Use the Helium Token (HNT)?

The Helium network offers a unique real-world function over traditional cryptocurrencies. You can easily connect IoT devices on the Helium network with greater security and low power usage. Its decentralised structure offers a unique wireless infrastructure with sufficient data privacy. 

Users of the network can mine the Helium crypto based on their network participation. They can sell off their rewards via cryptocurrency exchanges or use them to generate non-exchangeable Data Credits.

How to Choose a Helium Wallet?

According to the Helium developer team, the Helium App is the recommended digital wallet for HNT as it offers a range of uses, including pairing, hotspot set-ups, etc. Another special wallet for Helium is the Command Line Interface Wallet for a more secure experience.

Other than these options, you can store passwords for HNT by using hardware wallets and cold wallets. Wallets like Ledger and Trezor offer the most secure option for storing HNT but they can be expensive for some users. These are well suited for storing large amounts of cryptocurrencies.

On the other hand, software wallets are more convenient for beginners. Many of these are free and can be used on smartphones. Software wallets can be custodial, where the service providers manage and backup on your behalf. Otherwise, they can be non-custodial, which involves securing the private keys on your device. 

Helium Tokenomics

Source: CoinGecko

The total supply of the Helium token (HNT) is 223,000,000, with a circulating supply of 129,480,610 at the time of writing. Of the whole pie, 35% is allocated to the development and support of the hotspot infrastructure. Another 35% is reserved for Helium and its investors. The remaining 30% is to be allotted to support the costs of network data transfer.  

The Helium issuance proposal recommends halving the net HNT issuance every 2 years after the genesis block. The first halving took place on August 1, 2021, and the net HNT issuance was reduced to 2.5 million HNT per month.

The split for HNT miners did not change from the proposed schedule. This condition leads to a theoretical maximum supply of 240 million HNT. But thanks to the slow block times in Year 1 post-genesis, fewer HNT were minted than the planned 60 million. This thus leads to a reduction of roughly 17 million HNT, thus leaving us with the true max supply of 223 million. 

Now let’s look at the tokenomics surrounding HNT mining:

How much HNT a miner earns is dependent on the type of work they perform. Helium’s got an interesting design for its consensus mechanism. It’s called Proof-of-Coverage (PoC), and it works like this.

PoC secures the network by qualifying the type of mining you do. As mentioned, your rewards are dependent on how much value you accrue for the network (aka the type of work). 

There are three types of work:

1. Challengee

2. Witness

3. Network data transfer

Of the three, work involving network data transfers pays out the most, with an allocation of 37.5%. Witnesses, who monitor and report on the PoC activity of other hotspots, receive 18.92% of the pie. The remainder (4.73%) is reserved for challengees. This work involves validating other hotspots’ wireless coverage.

Why Should You Buy Helium HNT?

Here are some reasons why you may want to consider buying the Helium cryptocurrency:

• Not purely speculative: Helium is one of the rare cryptocurrencies whose value comes from something other than speculation. In addition to earning money due to the increase in Helium crypto prices, helium holders also generate income by adding new hot spots. 
• Low electricity usage: Another advantage of Helium is that it uses a unique consensus mechanism that spends minimal electricity. Compared to cryptocurrencies that have been criticised for their high energy usage, HNT uses the equivalent of a single LED bulb to run. 
• High rate of transactions: The protocol behind the Helium crypto aims to achieve a high number of transactions per second. Its consensus mechanism allows network nodes to validate transactions even when the connection rates vary. 
• Improves upon existing wireless coverage: One of the biggest challenges of IoT devices is their limited range. Helium has a unique radio frequency technology that lets it offer broad coverage to all IoT devices.
• Address privacy issues:  A glaring problem of IoT devices is the privacy concerns of a range of devices. Helium’s decentralised nature and consensus mechanism solve privacy concerns with its high security. 

Final Word

The Helium crypto has presented a new use-case for the blockchain. It has enabled a more power-efficient network connection with wider coverage and greater security. Its aim is to improve the existing wireless coverage of IoT devices by encouraging investors to improve connectivity and get lucrative rewards in return.

More details: https://gemini.google.com/app

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