Helium Network Token (HNT)

Helium Network Token (HNT)

Most recent update: [January 30, 2024] 

What is HNT? 

HNT is the cornerstone cryptocurrency of the Helium ecosystem, a decentralized platform built for the Internet of Things (IoT). This digital token was introduced concurrently with the launch of the Helium’s mainnet in mid-2019. Its primary role within the Helium Network is to incentivize participants, including individuals, who set up and manage hotspots for network coverage, as well as businesses and developers, leveraging the network’s capabilities. Notably, HNT was not subject to pre-mining, ensuring equitable distribution amongst the network’s contributors and stakeholders.

The Helium Network is unique in its dedication to creating a distributed, wireless infrastructure, catering to a wide range of industrial applications. Contributors to the network, particularly those establishing hotspots, earn HNT as a reward. These hotspots are multifunctional; they secure the blockchain as miners and provide essential wireless gateway services, facilitating Internet connectivity for IoT devices. Helium uses an innovative Proof-of-Coverage consensus mechanism to validate the physical location and performance of these hotspots, ensuring the network’s effectiveness and expansive reach.

Who is behind HNT? 

The inception and growth of the Helium Network, home to the HNT token, can be attributed to the collaborative efforts of its founders: Amir Haleem, Shawn Fanning, and Sean Carey, who established the network in 2013. Haleem’s expertise lies in the esport and gaming industry, providing a strong foundation in technology and digital innovation. Shawn Fanning’s notable contribution to the digital world through Napster, a pioneering Peer-to-Peer Internet service, brings valuable insights into decentralized network systems. Sean Carey, with his extensive experience in tech development, particularly in the advertising sector, adds to the team’s comprehensive skill set.

This founding team’s diverse background has significantly influenced the development of the Helium Network. Their focus has been on revolutionizing IoT connectivity through a blockchain-based, decentralized approach. This vision led to the creation of a platform that not only supports IoT devices but also incentivizes the establishment of a widespread wireless network. The team’s dedication to applying blockchain for practical, real-world applications has positioned the Helium Network, and its native token, HNT, as a distinctive and innovative presence in the cryptocurrency domain.

How does it work? 

The Helium Network is an innovative blend of blockchain technology and wireless communication, designed to support the Internet-of-Things (IoT). This network leverages Helium Network Tokens (HNT) as its driving force. Integral to its functionality are Helium hotspots, unique devices that merge the capabilities of a wireless gateway with those of the blockchain mining apparatus. These hotspots are pivotal in enabling IoT devices to connect to the Internet wirelessly, thus playing a key role in data transmission across the Helium Network.

Helium’s operation is characterized by its unique consensus mechanism, Proof-of-Coverage (PoC), which sets it apart from traditional blockchain mining that often requires significant computational resources. PoC operates through radio waves, verifying the presence and legitimacy of hotspots across the network. This verification process is crucial to ensure these hotspots are actively providing essential wireless coverage. By confirming both the physical location and operational efficacy of the hotspots, Helium ensures a dependable and extensive network for IoT devices.

The Helium ecosystem incentivizes the expansion of its network through HNT rewards, given to hotspot operators. These rewards are for their contributions to network coverage and data transmission tasks. This reward mechanism motivates the addition of more hotspots, subsequently broadening the network’s reach and enhancing connectivity for IoT devices. Helium’s decentralized, scalable network infrastructure is key to the ever-growing IoT world, offering a practical, efficient connectivity solution for a diverse array of devices in multiple environments.

The HNT Token and Tokenomics 

HNT tokens are currently available for sale on multiple exchanges worldwide. The maximum supply is capped at 223,000,000 tokens, and as of January 25^th 2024, the market cap for HNT amounted to approximately US$1,080,727,853. The circulating supply of HNT tokens is around 160,437,352.

The initial distribution for HNT is broken down as follows:

• Network Data Transfer: 33.33%
• Hotspot Infrastructure: 33.33%
• Helium, INC and Investors: 33.33%

The HNT token is purported to serve as a utility token to pay for transactions and services on the network and to also be used a liquidity mechanism for value transfers.

Security 

The Helium Network’s security mechanism is anchored by its distinctive Proof-of-Coverage (PoC) consensus mechanism, which is essential in maintaining network integrity. PoC diverges from the norm in blockchain security by utilizing radio waves instead of relying on computational power. This unique strategy confirms the physical presence and operational capacity of Helium hotspots, which are crucial for network functionality. By ensuring that each hotspot is accurately placed and actively contributing to the network, PoC effectively mitigates the risk of fraudulent activities, enhancing the network’s overall security.

Further bolstering the security of the Helium Network is its inherently decentralized structure. With hotspots individually owned, and managed by a wide range of participants worldwide, the network avoids centralized vulnerabilities, making it more resistant to potential attacks or system manipulations. The decentralized model not only diversifies the network’s operational control but also heightens its resilience to coordinated threats. Additionally, the Helium blockchain employs advanced cryptographic methods to secure data and transaction processes, adding an additional layer of protection. This comprehensive security strategy ensures that the Helium Network remains a reliable and secure platform for IoT connectivity and data transmission.

Drawbacks and risks 

The Helium Network, while innovative in its approach to IoT connectivity, encounters certain limitations and risks. A primary concern is its dependence on a broad and evenly distributed network of hotspots. In regions with sparse hotspots, the network’s effectiveness diminishes, which could affect its expansion and practicality, especially in less densely populated areas.

Financial volatility is another risk associated with HNT, as with any cryptocurrency. Market fluctuations can influence the motivation for maintaining and expanding the network of hotspots, potentially impacting, the network networks were and development. 

Due Diligence  

Before listing HNT on the VirgoCX Platform, VirgoCX performed due diligence on HNT and determined that HNT is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis includes reviewing publicly available information on the following:  

• The creation, governance, and location of HNT and/or its primary development team; 
• The supply, demand, maturity and liquidity of HNT; and 
• Legal and regulatory risks associated with HNT.  

Statutory Rights under Securities Legislation 

VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30th 2022 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision. 

Further Reading 

To learn more about the technology behind HNT, check out these in-depth resources here: 

• The official site of HNT
• Coinmarketcap’s overview of HNT
• Coingecko’s tokenomics overview of HNT
• Coinbase’s overview of HNT, along with the relevant news and blogs related to HNT.