What is Helium Cryptocurrency & How Does It Work?#IoT
What is Helium (HNT)?
Helium is a blockchain-based network that connects IoT devices. Helium technology enables communication between the devices, while the system sends data across the network nodes. The nodes that compose the network are known as Hotspots in the Helium system. The Hotspots provide public network coverage and rely on LoRaWAN. LoRaWAN is a media access control layer protocol that has a cloud component to which platforms like Helium can connect.
Helium is one of the biggest LoRaWAN networks with over 25,000 Hotspots that act as nodes on the network. Hotspots combine the power of LoRaWAN and a mining device based on blockchain technology.
Helium is also dubbed “The People’s Network” and aims to prepare an efficient and functional IoT for the future while addressing all the issues and inadequate solutions. One of the biggest problems in the IoT sector is the privacy of popular Internet of Things hubs, such as Google or Amazon. Thanks to decentralization and the blockchain technology used for building Helium, privacy soon won’t be a concern when it comes to connecting devices to the Internet of Things.
How Does Helium Work?
Helium aims to create a reliable, decentralized, and global network for IoT devices that relies on the community of HNT holders. The network consists of nodes, i.e. Hotspots that are run by node operators who are actually HNT holders. By hosting Hotspots and managing nodes, users are incentivized for their participation in the network’s functionality.
WiFi already has support for IoT devices. However, supporting as many different devices as possible brings up privacy concerns. Helium solves this issue using a decentralized architecture and consensus mechanism that gives the network 200 times greater coverage compared with WiFi connection with the IoT.
The consensus mechanism that the network runs on is known as Proof of Coverage, and is also responsible for distributing rewards to HNT holders and node operators. Users need to purchase a mining device from the Helium website to set up Hotspots. Miners produce radio frequencies by connecting to the network, while the Proof of Coverage mechanism validates Hotspot locations.
Network participants can have one of the three roles crucial to the network’s functionality: Challenger, Transmitter, and Witness. The rewards distributed through the system also depend on the role in the Hotspot network.
Who Are the Founders of Helium? (History of Helium)
Helium was founded in 2013, only a few years after the inception of Bitcoin, the original cryptocurrency. Helium launched under the company Helium, Inc. to become the first global peer-to-peer wireless network with the capacity to connect different devices and form the Internet of Things that anyone can use globally.
Helium was co-founded by Amir Haleem, Sean Carey, and Shawn Fanning. The project raised over $53 million in four separate funding rounds from 2015 to 2019. The network finally went live in 2019, intending to resolve common issues noted in the sector of IoT, like privacy.
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 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.
How Many Helium (HNT) Coins Are There in Circulation?
There are currently 100,539,362 HNT in circulation out of a total of 223,000,000 HNT HNT. Helium has a capped max supply, while none of the HNT tokens were pre-mined. Although new HNT is mined to reward Hotspots, this is balanced against the HNT that is burned to generate Data Credits in a Burn-and-Mint Equilibrium token model. The inflation rate decreases over time, ensuring that the total supply never exceeds 223 million.
The number of Helium (HNT) coins multiplied by the current price of Helium in the market equals the market cap. The market cap defines the rank of HNT in comparison with other cryptocurrencies in the market and also determines its market share and dominance.
Other Technical Data
The Helium network is based on a unique consensus mechanism that was developed especially for the Helium protocol. To insert functionality and decentralization into the network’s infrastructure, the Proof of Coverage consensus mechanism supports three different types of Hotspots, which are Challengers, Transmitters, and Witnesses.
Challengers create challenges on the network to validate radio frequencies, which occur once every 240 blocks. They then send the challenge to Transmitter nodes, which then require Witness nodes near the Transmitter node to confirm the validity of the challenge. Participants of the network can also earn HNT by building Hotspots and mining.
How is the Helium Network Secured?
The Helium network is secured through the use of the Proof of Coverage protocol which relies on network participants to ensure network stability through mining. Proof of Coverage is an advanced form of Proof of Work, which is why the network relies on miners for security.
The protocol was specifically developed to ensure connection even with low power, so mining is enabled with a simple device that you can buy from Helium and 5W power. That is how Helium achieves efficiency and facilitates a connection between devices on the Internet of Things network.
How to Use Helium?
Helium is used to easily connect devices on the Internet of Things by using low power with efficiency and effectiveness. Helium also enables mining of HNT, as well as staking, so users can make a profit based on their network participation.
To start using Helium as Hotspot node providers, users can buy special mining devices that are available on the official Helium website and earn rewards based on their participation. The rewards are distributed in HNT. HNT can be sold in the cryptocurrency market and used to generate non-exchangeable Data Credits.
Helium creates a unique infrastructure for an entirely new wireless economy empowered by decentralization, hence the name “The People’s Network”.
How to Choose a Helium Wallet?
The Helium dev team recommends the Helium App, a digital wallet for HNT that supports Android and iOS operating systems and offers pairing and Hotspot setups. The Command Line Interface Wallet is another digital storage solution that provides a secure environment for HNT. The Command Line wallet is for more tech-savvy users, so it is recommended that beginners use the Helium App.
There are also plenty of other places you could store your HNT and the wallet you choose will likely depend on what you want to use it for and how much you need to store.
Hardware wallets or cold wallets like Ledger or Trezor provide the most secure option for storing cryptocurrencies with offline storage and backup. However, they can require more technical knowledge and are a more expensive option. As such, they may be better suited to storing larger amounts of HNT for more experienced users.
Software wallets provide another option and are free and easy to use. They are available to download as smartphone or desktop apps and can be custodial or non-custodial. With custodial wallets, the private keys are managed and backed up on your behalf by the service provider. Non-custodial wallets make use of secure elements on your device to store the private keys. While convenient, they are seen as less secure than hardware wallets and may be better suited to smaller amounts of HNT or more novice users.
Online wallets or web wallets are also free and easy to use, and accessible from multiple devices using a web browser. They are, however, considered hot wallets and can be less secure than hardware or software alternatives. As you are likely trusting the platform to manage your HNT, you should select a reputable service with a track record in security and custody. As such, they are most suited for holding smaller amounts of cryptocurrencies or for those making more frequent trades.
Kriptomat offers a secure storage solution, allowing you to both store and trade your HNT without hassle. Storing your HNT with Kriptomat provides you with enterprise-grade security and user-friendly functionality.
Buying and selling HNT, or trading it for any other cryptocurrency, is done in mere moments when you choose our secure platform as your storage solution.
Helium doesn’t rely on the traditional Proof of Work mechanism but depends on miners to stabilize and secure the network. Helium uses an advanced version of Proof of Work, based on BFT, which requires miners to validate wireless coverage produced by the Hotspots (nodes).
Although Helium relies on mining, its system is different from the traditional platforms that depend on miners, like Bitcoin. The Helium system of mining enables groups of miners that work independently to work faster when in close proximity. Mining devices still need to be at least 300 meters apart to enable mining.