Decentralization is one of the most important advantages of cryptocurrency. But this is also not something that every Crypto project currently has. This is because the networks we use to interact are owned and operated by centralized service providers. An example would be the BNB which is operated by Binance. In this article we will take a look at the project Helium which is creating decentralized peer-to-peer networks. This could be a very important project for the future of crypto.
How It Works & Blockchain
Lets start of and try to understand how Helium works. It essentially contains of three things: hotspots, console and the blockchain. Hotspots can be imagined as the routers that we are using for WiFi. The difference is that helium hotspots don’t transmit a WiFi signal but a long-Fi signal which is similar to radio. This gives Helium a range of hundreds of kilometers compared to the range of normal WiFi routers. This feature makes it easy to transmit small packets of data to and from any supported wireless devices which fall within the range of this helium hotspot. Furthermore, the long signal frequency used by these hotspots also means that they use almost no energy. And the best thing about it is that the instructions to make a helium hotspot are open source which means that anybody can make their own helium hotspot from scratch. Due to the fact that these hotspots are connected to the Internet it is possible for developers to request data from any compatible device which falls within the aforementioned range of the network. Furthermore, organization and individuals could deploy their own helium-compatible devices to do things like supply-chain management or do a more fun application like the tracking of electric scooters in the city. All of this data would me allowed to be requested and managed using a helium console which can be integrated with platforms like Google-Drive.
In order to get this data, it will cost you or the companies crypto currency and this is exactly where the Helium blockchain comes into play. It was built from the ground up and uses a consensus mechanism based on the honey badger BFT which is especially designed to support nodes with a spotty connection. This is needed because not all Helium hotspots are always online. It is furthermore possible that a hotspot which is part of the consensus group could go offline in the middle of validating a block.
Additionally to the Honeybadger consensus mechanism, Helium runs a secondary consensus mechanism which is called “Proof of Coverage” which is also Helium’s primary incentive structure. As the name suggests this mechanism involves checking whether a helium hotspot is broadcasting a Long-Fi signal or not. This check is done by a randomly selected Helium hotspot which is in the range of the hotspot which we are checking. This should encourage network participants to set up their hotspots in a range where it would overlap with other hotspots. When the hotspot passes this challenge, both the challenger and the challengee earn a portion of the block rewards.
Additionally to the helium hotspots, there are further two network participants that are earning block rewards. One of these is Helium’s validators. They were brought in because the rapid growth of the network was making it harder for hotspots to effectively participate in the first consensus that I mentioned above. Those validators must stake exactly 10 thousand HNT. Staking more or less then 10k HNT is not allowed and unfortunately delegation is not possible. The other participant in the network that earn helium block rewards are Helium investors and Helium Inc which brings us to the next part of this article: Tokenomics.
Tokenomics
HNT is the native cryptocurrency of the blockchain. It has a maximum supply of 223 Million and there was no pre-mine and no ICO. This means that the supply started from zero and in the first years of being around over 100 million were minted. Every two years the emission will be cut in half until the maximum amount is reached which should take about 50 years.
Which is very interesting is that HNT is technically not used to pay for the network fees. All transactions are paid in data credits including fetching data from devices connected to the helium hotspots. These are created by burning HNT. Furthermore, these credits are pegged to the U.S. dollar at a ratio of 100 thousand to one. Unfortunately, this credits can not be transferred back into HNT which makes HNT a deflationary cryptocurrency. So what would happen if the last HNT is mined? For this scenario, the HNT community passed a proposal to enable net emissions. This involves taking a small portion of data credits and converting them back into HNT.
Roadmap
This brings me to the next portion: the roadmap where we take a look at potential developments for the future. One of them is “HIP 24: Reward Splitting”. This wants to introduce, as the name suggests, the reward splitting which would make it possible for helium hotspots to send their HNT rewards to multiple wallets instead of one. Another HIP would be HIP 31 which wants Helium to introduce on-chain governance via HNT Token. Further proposals are being made and you can all read them on: https://github.com/helium/HIP
Concerns
One thing that seems to be missing is a proposal for a scaling solution for the Helium blockchain which will be required if the network continues to grow the way it does right now. This brings us to the penultimate part of this article: the concerns. Unfortunately, Helium has a lot of competition from legacy network providers. Big companies like Amazon and SpaceX are big competitors in this sense and it will be very interesting to see which will play out in the future. The fact that Helium is open source does not help if you are competing with big tech giants like these.
Another concern would be the regulation part. It is most likely to be considered as a security by the SEC. This could mean that HNT wont be listed on any U.S. exchanges anytime soon and this is where most traders and investors are located including the ones that are invested into Helium Inc.
The last concern that I see is a potential privacy risk that people could face by installing hotspot devices. Although all of the data that is being transmitted over the helium network is encrypted it seems like this is not the case for all third party hotspots.
Conclusion
I really think this could be one of the biggest projects in crypto if the market stays bullish like the past few months. Furthermore, I believe that such a project would bring us further to the vision of a decentralized society and maybe even closer to the next evolution step in technology. Unfortunately, it has to overcome a lot of issues and it is not clear if everybody in the world would be ready to use such a network for personal usage. Nevertheless, I think that this idea is very cool and I will continue tracking this project in the future.
Published by ga38jem on
Publish0x|LeoFinance|Steemit|read.cash
On 6th November 2021
Sources:
https://docs.helium.com/blockchain/helium-token/
https://freedomfi.com/helium5g/
https://ichi.pro/de/helium-coverage-map-internet-der-dinge-247399134808431
https://medium.com/poa-network/poa-network-how-honey-badger-bft-consensus-works-4b16c0f1ff94
https://blockbuild.africa/review-what-you-need-to-know-about-helium-crypto/
