Helium Network is a crypto project that has been making headlines recently thanks to the rapid growth of its Hotspot network. The project, which serves as a crypto-powered distributed network of long-range wireless hotspots, amassed more than 500,000 individual Hotspots. With each Hotspot representing a miner, that means that half a million miners from all around the world joined the network in the last two years since its launch.
The Helium network has been growing at a rapid speed, and the more miners it attracted, the faster the speed at which its network grew. As mentioned, the project took two years to attract 500,000 miners. Now, according to its calculations, it expects to attract another 500,000 in the next six months and finally hit the 1 million mark during the summer of this year.
With Helium becoming a hot topic due to its progress, many among the analysts are wondering whether its HNT token might be the next one to explode.
How does Helium work?
As mentioned, Helium network depends on its Hotspots. These are devices that can be plugged into regular electric outlets, and connect to the internet. In doing so, they can extend Wi-Fi for miles, and provide coverage even in areas where cellular network do not work. In doing so, they are providing a connection to local devices, most of which are expected to be from the IoT sector.
At the same time, Hotspots act as nodes within the Helium network, providing their owners with HNT cryptocurrencies for simply operating the Hotspot. Helium uses a token model called Burn-and-mint equilibrium, and it has two units of exchange — HNT and Data Credits (DC).
Those who wish to use the network to transfer data are meant to use DC. The tokens are set at a fixed rate of $0.0001 per 1 byte. Whenever a DC token is acquired, HNT gets burned, which effectively reduces the token’s circulating supply, and in doing so, it increases appreciation in the token’s price. Essentially, the more people use the network to send data and mint DC, the scarcer the HNT becomes.
Helium: A project with great potential
According to Fundstrat Global Advisors VP of digital asset strategy, Sean Farrell, people might be underestimating how quickly Helium could explode over the next few years, and how big of a portion of the market share it could take over from incumbent wireless carriers. The project’s token has dropped by 32% over the last 3 months, but it managed to remain in the $20-$40 range in 2022. Previously, it reached its ATH in November, just before the price drop, at $54.81.
Given the current state of the wireless market, Farrell also said that he expects that the value of holding HNT might be greater than the equity in a wireless carrier very soon. He also compared the project to T-Mobile, which is the largest 5G network right now. The company’s market cap is above $150 billion, while Helium currently sits at $2.9 billion. He noted that this comparison falls short, given the significant advantage that the network has, which is the decentralization of hardware costs.
Farrell concluded by saying that Helium’s market potential is likely larger than anything in the existing wireless market. Right now, the crypto industry’s general availability to US investors is acting as a significant damper for the price, and this same availability might lead to a regulatory intervention under the standing security laws.
The US SEC defines securities as fungible, negotiable financial instruments that represent a type of financial value, typically taking the form of options, stocks, and bonds. The SEC’s Chair, Gary Gensler, previously noted that those who are raising money from others while giving the investors a reasonable anticipation of profits based on the efforts of others — fit what could be described as a security under the current laws.
With that in mind, Ferrell expressed concern that HNT might be considered a security under the same laws, and therefore not listed on local US exchanges.
To learn more about this token visit our Investing in Helium guide.