Forbes India – Maybe there is a use for crypto after all

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Helium, a cryptocurrency-powered wireless network, hints at the practical promise of decentralized services. (Beatrice Sala/The New York Times) One of the most frequently asked questions by crypto skeptics is: what can you actually do with crypto, other than financial speculation and crime?

This is a difficult question to answer, in part because most of the successful (and legal) uses of cryptocurrency so far have been in finance or finance-adjacent fields. There are many crypto exchanges, non-fungible token trading platforms, and video games that involve buying and selling crypto tokens. But so far, few crypto projects have had what I would call “normed utility” – solving problems that exist for people outside of the crypto world, which aren’t primarily about buying or selling. sale of digital assets, and which would be impossible to solve with normal, unencrypted technology.

Recently, however, I discovered one that does.

This is called Helium. And while it’s not the most interesting crypto project – no cartoon monkeys or copies of the Constitution involved – trying it out helped me see how crypto can be very useful for solve certain types of problems.

At its core, Helium is a decentralized wireless network for “Internet of Things” devices, powered by cryptocurrency.

The network is made up of devices called Helium hotspots, gadgets with antennae that can send small amounts of data over long distances using radio frequencies. These hotspots, which cost around $500 each and can reach 200 times farther than conventional Wi-Fi hotspots, share their owners’ bandwidth with nearby Internet-connected devices, such as parking meters, air quality sensors or smart kitchen appliances.

Anyone can use the Helium network, although most of its users so far have been companies like Lime (which used Helium to keep tabs on its connected scooters) and company Victor mousetrap (which uses it to a new range of Internet-connected traps). Over 500,000 Helium hotspots are in use worldwide, and thousands are added to the network every day.

This is where the crypto part comes in: in addition to transmitting data, Helium hotspots reward their owners for participating in the network by creating units of a cryptocurrency called $HNT. These tokens can be bought and sold on the open market like any other cryptocurrency, and the more a hotspot is used, the more $HNT tokens it generates.

Helium, which was founded in 2013, did not start out as a crypto company. Its founders originally tried to build an old-fashioned long-range peer-to-peer wireless network – by persuading individuals and businesses to set up hotspots and chain them together. But they struggled to get enough participants, and the network stalled.

Frank Mong, Helium’s chief operating officer, told me the company was running out of money in 2017 when an engineer suggested during a scotch-drinking session that more people might be willing to create hotspots if they could earn cryptocurrency by doing so.

“That crypto-powered incentive model actually made sense in this case,” Mong said.

So the company tore up its old business model and opted for a new one. Instead of building its network itself, Helium would make it entirely decentralized and let users build it themselves by purchasing and connecting their own access points. Participants would be paid in crypto tokens and could vote on proposed ideas to modify the network. If the price of these tokens increased, they would earn even more money and create even more hotspots.

The new model, released in 2019, worked like a charm. Crypto fans rushed to set up Helium hotspots and start generating crypto tokens. They traded tips on Reddit and YouTube to increase the reach of their hotspots, attaching them to tall buildings or installing antennas on their rooftops. Some hotspot owners claim to have earned thousands of dollars a month this way, although revenue has dropped as new hotspots have been added to the network.

This, I have learned, is one of the superpowers of crypto – the ability to launch projects by offering an incentive to enter on the ground floor. Not everything could be improved by tying to a cryptocurrency mining scheme. But in the case of Helium, crypto made sense as a way to encourage participation and give hotspot owners the satisfaction of building something they owned.

I can find a lot to like about Helium. Unlike many crypto projects, this is a real product used daily by real people and real companies. Those involved are not brazen speculators, and most seem genuinely interested in creating a decentralized wireless network. (A cardinal rule of Helium’s 140,000-member Discord chat server is that you’re not allowed to discuss token prices.) And that’s going to become more useful in the coming months, as new point types 5G access devices allow data to be sent over the network at higher speeds.

Additionally, Helium’s blockchain is secured by a type of algorithm called “proof of coverage”, which requires much less energy than the “proof of work” algorithms used by Bitcoin and other cryptocurrencies and is significantly less harmful to the environment. (Helium says its hotspots use about the same amount of power as a 5-watt light bulb.)

Just to make sure I’m not being misled here, let’s run helium through my normal utility test.

Does it solve a non-crypto problem? Yes. There are millions of connected devices around the world, and connecting those devices to the Helium network is significantly cheaper than buying a cellular data plan for each device. Due to the hotspots’ long range, Helium’s network can also reach places that typical Wi-Fi and cellular networks cannot.

Is it useful for anything other than speculation? Yes too. The Helium Network itself is valuable, and while hotspot owners can (and do) profit when the price of $HNT rises, the primary way they make money is by adding new hotspots. hot, not to trade $HNT tokens. on a crypto exchange.

Could Helium have worked without crypto technology? Not really. The company tried the unencrypted approach and nearly went bankrupt. But adding tokens to the mix solved what technologists call the “cold start problem” – the fact that attracting first users to a new network is often difficult because the network has not yet a lot of value.

Helium is not perfect. Like many crypto projects, it exists in a regulatory gray area, and users could be in shock if Washington decides to crack down. (Federal regulators have suggested that many crypto tokens could be considered securities, potentially subjecting Helium hotspot owners to all sorts of thorny securities laws.) And right now, most hotspots are in high-density cities, making them less useful to people in more remote areas.

Installing a helium hotspot in your home may also technically violate your ISP’s terms of service, as it involves reselling some of your bandwidth. The Terms of Service for Comcast Xfinity Subscribers, for example, prohibits the use of your connection “for purposes other than personal, non-commercial residential use.” So far, ISPs haven’t cracked down heavily on Helium users, but that could change.

“We hope ISPs are open-minded to explore what Helium is,” Mong of Helium told me.

What I love about Helium, despite these limitations, is that it has largely avoided the hype and inflated claims that surround many crypto projects. It does not promise to revolutionize commerce and culture, deliver us from government censorship, or change the fabric of our daily lives. It’s just a useful piece of real-world infrastructure attached to a crypto-mining scheme that allows the whole thing to work without a big corporation sitting in the middle.

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©2019 New York Times News Service

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