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Helium Blockchain Network

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Helium is an open-source blockchain network designed to power Internet of Things (IoT) devices with wireless connectivity. 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 following topics will be discussed here:

  1. Introduction To Helium.
  2. History.
  3. Helium Network’s Proof of Coverage.
  4. What Makes Helium Unique?
  5. How Does Helium Network Work?
  6. Helium Key Components.
  7. Usecases of Helium Blockchain Network.
  8. Helium Cryptocurrency (HNT).
  9. How Is Helium Network Secured?
  10. What Are Helium Data Credits?
  11. Pros Of Helium Blockchain.
  12. Cons Of Helium Blockchain.
  13. Future Of Helium Network.
  14. Conclusion.

Let’s start discussing each of these topics in detail.

Introduction To Helium

Helium is a distributed network of long-range wireless hotspots. The primary goal of Helium Network is to create a blockchain-powered network for the Internet of Things (IoT) devices. Each operator of a Helium Hotspot thus builds the network and owns the associated nodes themselves.

Thus, the Helium network is a composition of many individuals and is therefore also called the People’s Network. So, Helium is building the world’s first peer-to-peer wireless network for the Internet of Things devices and is already in more than 1,000 cities in the US. Devices include smart pet collars, e-scooters, medical devices, and more.


Helium was founded in 2013, only a few years after the inception of Bitcoin, the original cryptocurrency. 

  • It was founded in 2013 by Shawn Fanning, Amir Haleem, and Sean Carey, with a mission to make it easier to build connected devices. 
  • Helium was 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. 
  • It was founded with a clear mission to make it easier to build connected devices. 
  • Helium believes that today’s wireless connectivity options are totally inadequate for the next generation of machines. 
  • To solve this they developed the Helium Hotspot, a combination of a physical blockchain node and wireless gateway that network participants can deploy to receive compensation in HNT, the native token. 
  • In order to receive rewards, Hotspots must submit proof of wireless coverage in a cryptographically verified location and time. 
  • Once the network is deployed, any sensor using the Helium LongFi wireless protocol can connect to the network which is intended for battery-powered devices sending small amounts of data over miles of range.
  • Hotspots are rewarded in HNT based on the quality of the coverage they provide and the amount of LongFi sensor data they transport for devices on the network. 
  • HNT is burned to create Data Credits, a non-fungible token used for all transaction fees on the network. Data Credits are required for things like sending sensor data and asserting Hotspot location. 
  • Any LongFi-enabled IoT device can send data through any Helium Hotspot that’s providing coverage.
  • In 2019, Helium pivoted into the cryptocurrency world and witnessed moderate success. It would experience a massive boom in early 2021, going from roughly 15,000 hotspots worldwide to nearly a million by January.

Helium Network’s Proof of Coverage

The Helium Network uses Proof of Coverage (PoC), a novel work algorithm that rewards users for verifying coverage, thus proving location and network connectivity. 

  • Proof of Coverage is built on top of the Helium Consensus Protocol, which incorporates the HoneyBadgerBFT multi-party computation consensus protocol.
  • Participants deploy Hotspots to participate in building the Network and earn Helium mining rewards through a novel incentive model powered by the Helium blockchain. 
  • The Helium Network’s implementation of mining is carried out by means of radio wave technology rather than traditional mining rigs like GPUs or ASICs, making Hotspots much less energy-intensive than their traditional counterparts.
  • Hotspots are occasionally given tests to cryptographically prove that they are indeed providing radio coverage in a particular place and at a particular time. These tests are assigned randomly and automatically, and passing them earns a Hotspot operator HNT rewards.
  • Helium Hotspots can also earn HNT by transferring data from nearby devices over the Network. The more data transferred, the more rewards earned.
  • Hotspots earn HNT in proportion to the value they contribute to the Helium crypto ecosystem by completing PoC challenges, serving as witnesses for peers’ performance, and transferring device data, with the largest volume of HNT rewards going towards network data transfers.

What Makes Helium Unique?

Unlike most blockchains, which focus on the decentralization of software, Helium aims to decentralize physical hardware through the interconnection of devices.
The Helium network is also powered by proof of coverage, a novel consensus algorithm created specifically for the network. The mechanism is combined with the Honey Badger Byzantine fault tolerance (HBBFT) protocol, which allows for consensus amidst certain node failures.

How Does Helium Network Work?

Hotspots are the fundamental pillars of the Helium network as they provide connectivity for IoT devices. The closer a hotspot is to another hotspot, the better, as not only makes the network denser and provides wider coverage but also increments rewards to the owner.

  • These hotspots act as nodes, allowing IoT devices to send and receive data between them and also secure the Helium blockchain. 
  • When users plug a hotspot into an outlet and run it, they start mining HNT, which is rewarded to them as an incentive.
  • Helium aims to create a reliable, decentralized, and global network for IoT devices that rely 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 as discussed earlier 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.

Helium Key Components

Below are some of the key components of Helium:

1. Helium LongFi: LongFi is simply the proprietary name of the Helium network. LongFi is the combination between the Helium blockchain and the LoRaWan architecture. LoRaWan (Low-power wide-area network) refers to a distributed architecture sitting on top of a physical layer called LoRa (short for long range) which provides wireless, low-power communication links for IoT devices.

2. Helium Proof of Coverage: Now that we have explained how Helium hotspots work, let’s look at how the Helium network is powered: the proof-of-coverage (PoC) consensus mechanism. The PoC consensus algorithm allows nodes (hotspots) to communicate with each other via radio frequency. It constantly tests hotspot nodes using a mechanism called PoC Challenge to verify that the hotspot nodes are where they claimed to be.
The Challenge has three key roles, each receives a portion of HNT for carrying out their specific task:

  • Challenger: It is also known as the Transmitter, is the validator in charge to execute the PoC Challenge.
  • Beaconer (Challengee): It is the target being tested. The challengee needs to submit what’s called “challenge packets” as proof of work.
  • Witness: It is in charge of validating the Beaconer’s challenge packets and submitting them to the Transmitter.

The Helium network can punish nodes that act maliciously, for example: preventing other nodes in a consensus group from performing their tasks. The number of rewards that a punished validator receives decreases considerably, not to mention they can lose the chance to participate in consensus groups. All the network participants are rewarded with Helium crypto tokens (HNT) with the completion of proof of coverage and network data transfer.

3. Helium Consensus Protocol: It is a novel consensus protocol construction that creates a permissionless, high throughput, censor-resistant system by combining an asynchronous byzantine fault tolerant protocol with identities presented via Proof-of-Coverage.

4. Helium and the aBFT Consensus: The PoC mechanism leverages the HoneyBadger BFT (HBBFT) consensus, which is an asynchronous Byzantine Fault Tolerant (aBFT) algorithm. It allows network nodes to reach a consensus by themselves without worrying about time assumptions. In simpler words, nodes are capable of executing commands at their time and speed without waiting for nodes to reach an agreement. This enables the network to run without disruption and process a larger number of transactions.

5. Helium Hotspot: A low-cost hardware device that serves as both a Helium miner and a wireless gateway for Helium. The Helium Hotspot enables anyone to own and operate a wireless network for low-power Internet of Things (IoT) devices. The Helium Hotspot provides hundreds of square miles of connectivity and can transmit data at a fraction of the cost of a cellular network.

6. WHIP: An open-source wireless network protocol to locate the positions of hotspots. It is designed for low-power devices over vast areas. This protocol is designed to run on existing commodity radio chips available from dozens of manufacturers with no proprietary technologies or modulation schemes required.

7. Proof of Location: A system that verifies the hotspot locations via WHIP. Helium Network outlines a system for interpreting the physical geolocation of a Device using WHIP without the need for expensive and power-hungry satellite location hardware. Devices can make immutable, secure, and verifiable claims about their location at a given moment in time which is recorded in the blockchain.

Helium aims to decentralize physical hardware through the interconnection of devices, unlike most other blockchains, which focus on the decentralization of software. It connects enabled devices through a series of hotspots, and hotspot hosts can earn the Helium cryptocurrency for being part of the network.

Usecases of Helium Blockchain Network

  • The network provides useful coverage for low-bandwidth, long-range IoT devices.
  • Blockchain enables a smoother growth model with more effective incentive structures.
  • Helium replaces Bitcoin-style hash work with the work needed to provide coverage. 

By offering blockchain-based tokens, Helium incentivizes anyone to own a Hotspot and provide wireless coverage, so the network belongs to participants, not a single company. A network can be scaled much faster and more economically than if a single company tried to build out infrastructure.

Helium Cryptocurrency (HNT)

HNT is the native cryptocurrency and protocol token of Helium. The native token powers the entire ecosystem and is rewarded to the nodes that participate in the blockchain. 

  • Miners earn HNT when they provide and validate wireless coverage, and when devices on the network connect to the internet through the Helium hotspots.
  • The maximum supply of Helium is capped at 223 million tokens. The total supply of HNT balances out, as tokens are burned with the creation of Data Credits, which ensures that the maximum supply will never exceed 223 million tokens.
  • Enterprises and developers burn HNT in return for Data Credits that pay for their network usage. They can either purchase Data Credits with a credit card or burn the HNT they mined.

How is Helium Network Secured?

Helium network runs on a blockchain infrastructure with a unique proof of coverage consensus protocol combined with a proof of location system. The blockchain is connected through radio waves transmitted by nodes running low-cost special mining devices known as hotspots. The hotspots can be purchased from the Helium website.

The proof of location mechanism validates the hotspot locations, while proof of coverage verifies that miners are indeed providing network coverage. The blockchain rewards the participating nodes with its native token, Helium (HNT). HNT is given to Helium miners whenever hotspots transfer connection data across the blockchain.

HNT is designed to meet the needs of two key elements within the Helium ecosystem:

  1. Hotspot Network Operators: They are responsible for mining HNT and securing the network.
  2. Organizations and Developers: They use Helium to connect wireless devices and build IoT applications.

The hotspot devices on Helium use Data Credits (DC) to transfer data across the network. These are also used as blockchain transaction fees. Data Credits are created by burning HNT. They are non-interchangeable and tied to a single user.

Helium Mining 

HNT cannot be mined as a result of the unique consensus mechanism that it uses. However, this does not mean that users cannot earn HNT. 

  • The idea of helping the network by running a Hotspot is a welcome idea, albeit altruistic, and Helium has set itself up to offer HNT as an incentive. 
  • This means that most people will not simply help the network without expecting something in return. 
  • However, the presence of incentive rewards makes it possible to earn HNT tokens while running a Hotspot. 
  • Helium only rewards Hotspots who have earned them once each epoch ends. Each epoch in Helium is 30 blocks, and the network aims to create a new block every minute. 
  • This means that the total theoretical time for an epoch is equal to 30 minutes.

As of April, 65% of the mining rewards are distributed to Hotspots and the remaining 35% is distributed to Helium, Inc. along with some other earlier investors. Users, and subsequent Hotspots, can be rewarded for all the following activities: By submitting valid proof of coverage challenges, as a “Challenger”. The successful participation in PoC as a Target, or “Challengee”, by witnessing a PoC challenge. Transferring device data over the network. Serving as a consensus group member.

What Are Helium Data Credits?

One can think of Data Credits like mobile minutes someone might purchase for a prepaid phone plan. In order to pay for the transmission of sensor and device data, enterprises and developers need to use Data Credits.

These credits can only be produced by converting, or “burning,” HNT. Operators can only redeem Data Credits for network utilization, they can’t be traded with anyone else. They serve as the currency for transaction fees on the Helium network.

There are 5 million HNT being minted every month right now, and that number will automatically be cut in half every two years starting on August 1st of 2021. Even though you have to burn HNT to create Data Credits, the supply of HNT doesn’t have anything to do with how many Data Credits are being used.

Pros of Helium Blockchain

  • Naturally decentralized by design: The network provides no incentive to take advantage of factors, such as the cost of cheap energy or distributing more hardware in the same place. Hence, powerful players won’t need to get together to form mining pools, which frequently results in an increasingly centralized protocol (as is often the case for proof of work mechanisms such as those of Bitcoin and the current version of Ethereum).
  • Revolutionized Network: Helium uses innovative technology that can revolutionize the world of telecommunications 
  • Economical: Mining is done via an affordable, simple device, rather than an expensive GPU. It takes only a simple installation of a hotspot by the window and one can start mining.
  • Less Wasteful: Since the blockchain is connected through small devices, the energy needed to run them is far less than that required for the proof of work protocol.
  • Cryptocurrency Appreciation: The Helium network is growing, and the price of its cryptocurrency is on a general upward trend. Because it’s a peer-to-peer network, anyone who gets a Helium hotspot has the potential to earn Helium crypto.
  • Scalable: Helium is scalable and secure.

Cons of Helium Blockchain

  • Competing with established companies: Helium may be unable to gain traction, as its concept of an IoT framework is already offered by tech giants like Amazon and Google. There are also already many existing open-source IoT platforms, such as Kaa IoT and Zetta.
  • Production of Helium hotspots: Because the Helium network is so popular and production of Helium hotspots has slowed, it can take months to receive a hotspot after purchasing it. Also, if there are not a lot of hotspots in your area, earnings will not be as high.
  • Helium Investing can be dangerous: Every project can have a token just like Bitcoin or Ethereum. Similarly, the name of the Helium token is HNT which is available on exchanges. Investing in HNT, like any other cryptocurrency, may be hazardous. Cryptocurrencies are extremely volatile, which makes them a very riskier asset. The price of HNT has fluctuated a lot in the past, which might be a major disadvantage for certain investors, especially novices. Furthermore, HNT’s fees fluctuate a lot, which is also troublesome. The Helium Network & HNT cryptocurrency could still fail, so we should not invest more than we can afford.

Future of Helium Network

Helium is building a next-generation wireless network with the potential to connect billions of compatible devices all around the world. As of July 2021, the Network already hosts over 88,000 Helium Hotspots in more than 8,000 cities globally and is adding the second major wireless network in the coming months, Helium 5G. In addition, Validators using a Proof-of-Stake model just launched on the Helium blockchain to further secure and scale the Network.

  • Beyond the growth of Hotspots, the Helium ecosystem is scaling quickly and includes an array of hardware and software solutions. 
  • This growing community brings together Hotspot manufacturers, IoT businesses and applications, developers, staking providers, and more.
  • The Helium Network also includes a number of new businesses, such as D-Web Technologies, who are expanding the Helium crypto ecosystem by deploying Hotspots and implementing sensor solutions for leading businesses across industries.

The Helium Network is making incredible headway in tackling the challenge of IoT connectivity as the number of IoT devices increases exponentially and serves as a blueprint for how all wireless infrastructure of the future can be built.


In a world where blockchain projects strive to be relevant, Helium stands out as a decentralized wireless network created for the Internet of Things (IoT). Its unique consensus protocol has allowed it to become the world’s first peer-to-peer blockchain network to provide low-power IoT devices with a secure and cost-effective way to send data to and from the internet.

Helium revolutionizes the way blockchain is used to facilitate connection for devices on the Internet of Things, all while incentivizing network participants. Thanks to the specially designed mining devices that allow users to mine more efficiently with less power, users can earn rewards in the form of HNT for supporting and securing the network. As the need to connect devices through the Internet of Things is becoming more important, Helium may find a useful place in the global network of IoT devices. With valuable technology that allows users to easily generate and distribute radio frequency for wireless devices, Helium justifies the name “The People’s Network”.

Last Updated : 20 Jul, 2022
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