The Wireless Network That Will Connect Everything to Everything
Helium is one of the most exciting companies I’ve come across in recent memory. They are building a peer-to-peer network of wireless hotspots around the world. The day I learned of Helium (April 2, 2021), they had just crossed 25,000 active hotspots globally. 10 days later, as of this posting, they’re over 26,400.
I recently purchased a hotspot so that I can support “The Peoples’ Network,” as they call it. It’s hard not to feel like a movement is afoot—25,000 metaphorical middle fingers to the major telecom companies blanketing the land in dirt cheap wireless connectivity. It’s like Napster for HAM radio nerds.¹
My hotspot hasn’t arrived yet, and probably won’t for at least a few more months. Helium-compatible “miners" (more on that term later) are currently back-ordered to the tune of hundreds of thousands of units. Approved manufacturers are desperately trying to ramp up production as message boards fill up with impatient customers.
These are more-or-less $300-500 hobbyist radios that serve no purpose besides participating in the Helium network. Yet somehow demand has reached such hysterical heights that people are selling their old units for thousands of dollars on Ebay…
What on God’s green Earth is going on here?
Hint: it involves cryptocurrency speculation.
First, a Deeper Dive into What Helium Actually Is
I think of Helium as two things:
2) the company that enables it.
LongFi is sort of like WiFi but specifically designed for low-bandwidth, long-range connections of the sort sparsely distributed IoT sensors can use to send data back to wherever their hive mind lives on the internet. A quick example:
Imagine you run an urban bike sharing service. Life is difficult for you already, because you run an urban bike sharing service. You can barely afford to bathe yourself on a regular basis, let alone spare enough change to cover a huge “machine to machine” cellular plan for your entire fleet of undignified beach cruisers. So, instead, you decide to attach cheap GPS sensors to them and connect to The Peoples’ Network via LongFi. If you had 1,000 bikes and set them to update their location once every 10 minutes, and you were able to compress your over-the-air GPS ping to less than 24 bytes (with best practices you can comfortably fit a lat/lon pair into just 6 bytes), a full year of service would run you about ~$525 for the entire fleet. All 1,000 bikes. Every 10 minutes. Insane.
Helium’s hardware looks a lot like a WiFi router. Each “hotspot” sends and receives messages using a radio transmission protocol abbreviated LoRaWAN (short for Long Range Wide Area Network). LoRaWAN relies on an RF modulation technique called “chirping” to carry information-dense signals over long distances with relatively low power consumption.²
Each hotspot is a node in a global network of similar transceivers. The primary function of hotspots is to receive information from the field and pass it along to its final destination via the internet (a process often referred to as “backhaul”). Most hotspots use Wifi or ethernet to connect to the internet, although some use cellular networks. The most effective hotspots with the broadest coverage are usually positioned in high, unobstructed places like the roof of a house. Makes sense.
There is a small but growing roster of independent manufacturers of hotspots. Helium (the company) initially manufactured the devices under their own brand and allowed for DIY setups, but they’ve since ceded hotspot manufacturing to a few partners and locked down security (including putting the kibosh on homemade rigs). You can check out all of their limited options here: https://www.helium.com/store.
What makes the hotspots “special” is a little bit of logic and some cryptographic keys that allow them to join the Helium network and verify their credentials.
Which brings us to the software component of Helium and the place where things really start to get interesting. Helium (the company) built out the actual logic of how each node would communicate with the rest of the network while remaining relatively fault tolerant. I imagine that was (and continues to be) a fairly challenging programming challenge unto itself—although wireless network architecture is fairly well-trodden territory, that doesn’t make it easy. Helium’s code is also “almost entirely” open source and worth poking around.
But the secret sauce, and the whole reason I’m excited about them, is the extremely clever incentive mechanism built directly into the Helium protocol that motivates participants in the network (i.e. the humans) to act out of self-interest in a way that constructively benefits the network overall.
And now, we get to talk about everyone’s favorite dinner party topic: cryptocurrency.
Ballin’ on the Blockchain
I am no great fan of blockchain technology. There’s an old saying in tech, “It is better to remain silent and be thought stupid than to start talking about blockchain and remove all doubt."³
And yet, Helium is the first (and so far only) example of a blockchain-based project that has made me wonder…maybe this actually makes sense? The transactional token associated with the Helium blockchain is abbreviated HNT (Helium Network Token). Participants in the network earn HNT by behaving in ways Helium has decided to reward. The hotspots, once active, “mine” (earn) HNT by doing one of four main activities:
Challenge - Any hotspot in the network can issue a “challenge” to any other hotspot in the network. The challenge travels over the internet and arrives at its destination (or doesn’t). Challenges earn a teeny, tiny bit of HNT (0.95% of the overall tokens accrued any given day). They set the table for the next activity.
Emit a Beacon - A hotspot that gets challenged emits a beacon that should be detectable by nearby hotspots if coverage is good. Emitting a beacon is worth a little more than issuing a challenge, but not much—hotspots emitting beacons gobble up about 5.31% of the overall pie. So far, we’ve proven that the challenger and the beacon-producer are both connected to the internet. We’ve only reached the “necessary but not sufficient” part of the checklist.
Witness - Remember the remake of Mad Max? If a War Boy huffs paint before yelling “witness me!” in the open desert, and no one’s around to hear him, does he make a sound? A hotspot issuing a beacon is like one of those post-apocalyptic bald freaks screaming at the top of their lungs. Other nearby beacons that hear the shrieking and log it are called “witnesses,” and they get compensated a lot for lending their ear. A whopping 21.24% of all HNT mined in a day goes to Witnesses.
Transfer Data - Yeah, the whole point of the network, right? Beacons that actually facilitate a data transfer are compensated for their efforts handsomely. 32.5% of the pie is reserved for them.
There are technically some other ways to earn HNT, but that’s for you to find out as you spiral deeper and deeper into this godforsaken rabbit hole.
The proportions tell the tale—witnessing and data transfer are the two main things that are rewarded and they are both primarily about receiving data rather than transmitting it. In that bike share example I shared above, the company isn’t sending firmware updates over the air. They just want to know where the dang bikes are. That’s what LongFi is great for. Therefore, nodes in the network that can listen to large areas consistently should be rewarded.
Now’s as good a time as any to point out the two huge asterisks:
(Almost) no one is actually using the network right now. So data transfer rewards are almost non-existent. I had a hard time finding any official figures, but on a recent podcast one of Helium’s early investors quoted a figure of ~$200/week of data credits currently being used…that’s a staggeringly low number. I don’t think anyone is earning much from facilitating data transfer currently.
Since (almost) no one uses the network, the fastest way to earn HNT is to witness other screamin’ beacons. That means if you set up a hotspot in a coverage desert where, theoretically, it’s providing a ton of valuable additional capacity to the network, it is barely rewarded at all because it has no one to witness. In the future, if the network becomes popular, these nodes will make money from providing the valuable utility of data transfer, but for today, there’s no incentive plant new flags in far-flung places unless you can bring a bunch of friends along with you.
The algorithm for rewarding witnesses is carefully designed to reward optimal geographic density—ideally, no nodes are closer than 300 meters to each other and four nodes fit into one 5km² hexagonal cell.⁴ You can use this handy tool to check if you’re in the “sweet spot”.
For a sense of just how much money active nodes are passively earning at the moment, have a poke around Helium’s coverage map. You can click on any node and see historical statistics—this random hotspot in a quiet suburban Austin neighborhood near where I live raked in 8 HNT today. As I write this, 1 HNT sells for $16.50 (up from around $4 a month ago). So that one hotspot is cranking out $132/day equivalent in imaginary internet money for whoever had the foresight to set it up. Last month, the most active hotspot in Austin earned just shy of $13,000 worth of HNT.
Cryptocurrency Speculation Has Its Merits
I already mentioned (almost) no one actually uses the network. Ultimately, without usage, this is all just another example of a speculative cryptocurrency bubble and it will, eventually, pop.
But what’s special about this particular bubble is how it’s channeling the attention of tens of thousands of people to personally invest in infrastructure that will power a more connected world. Despite acting out of rational economic self-interest, by the end of the year, Helium will have grown into a massive wireless network with hundreds of thousands of nodes. That’s a pretty great side effect of speculation. I wish more memecoins had similarly lofty missions.
If you believe the IoT revolution is only in its early days, and you think The Peoples’ Network will be able to provide a cheaper, better service than its large corporate competitors, then it’s easy to see how usage could increase over time. But if you are skeptical of either or both of those assumptions…maybe don’t buy a hotspot.
Even if you do believe those things, think twice before spending your precious fiat on Helium gear. As more nodes come online, the fixed number of HNT that are mined each day will be split among a bigger and bigger crowd. 10x more hotspots are backordered right now than are connected to the network, so you can reasonably expect a roughly 10x dilution in rewards for each participant once those all come online.
And it gets worse—in August (around the time a lot of these devices are planned for delivery), there will be the first of a regular series of every-other-year “halvenings,” when the monthly supply of new HNT rewards will be cut in half (from 5 million to 2.5 million the first time).
One mitigating factor in all of this is the price of HNT. In the last month it has more than quadrupled from $4 to over $16. As new supply becomes more constrained, that price could continue to climb because of scarcity. Additional data transfer would also cause upward price pressure. It’s difficult to say how much of that is already “priced in” to the $16 number. The network did not get 4x more valuable over the last 30 days. The price action screams speculative bubble and could collapse at any time. Or it could quadruple again next month and never look back. I have no idea and neither does anyone else.
Connect All the Things
Helium, and IoT in general, is mostly bound today by a lack of imagination. It’s a lot like satellite imagery analysis in that sense—there are ton of cool and reasonable sounding ideas but very little practical and valuable stuff happening in real life.
Almost every conceivable sensor has already been pre-fabricated in a form factor that already supports the LoRaWAN protocol and is available for purchase today. Water, pressure, temperature, motion, vibration, you name it—the lego bricks are in the big box, all mixed up, waiting to be stacked into something beautiful.
I look forward to seeing what folks come up with—new businesses, art installations, fun side projects, everything. In a world where data plans can costs just a few cents per month with no minimum commitments…a whole lotta cool stuff is going to get built.
¹ I use the phrase “HAM radio nerds” affectionately. My father keeps a collection of working 19th century telegraph keys, has known Morse code almost since he could spell, and holds an Amateur Extra License from the FCC (the highest of three permissions tiers). My grandfather was a radio operator in a bomber during World War II and bonded with my Dad over electronics tinkering when he was still a little boy. Radios were a big part of my childhood, too—Dad kept a CB radio in the truck that he used to talk to truckers on the highway. He also strung a massive 100+ foot antenna between the pine trees above our house with a homemade slingshot so that he could communicate with people all over the world with his telegraph keys. At one point, we built a working crystal radio together when I was really young, which I felt very proud of at the time. He used to take me with him to HAM radio meetups and competitions all over North Carolina, and while I didn’t exactly catch the “bug” (I am not a licensed amateur radio operator), I will always have a soft spot in my heart for the strange and wonderful world of HAM radio nerds—my father among them.
² Chirping gets its name from the wave pattern formed by the modulation—when translated to audible frequencies, it sounds like a bird’s chirp. Regular readers of this illustrious publication know that I work for a company that is launching a constellation of Synthetic Aperture Radar (SAR) satellites (Umbra). Chirping is a technique often employed in SAR systems as well. In SAR, chirping allows for more energy to be sent down at Earth and subsequently captured by the satellite’s antenna as it bounces back—more energy translates to better spatial resolution per unit of power. So, it’s somewhat like LoRa in that chirping is an energy-efficient way to transmit complex data over long distances.
³ Blockchain is a tricky topic; I think it’s an interesting application of cryptographic research that is rarely practical. At Azavea, my previous employer, they implemented the concept of a “breakable toy” in our professional development plan for apprenticing engineers. It was typically an instructive exercise that tangibly illustrated an important programming concept while allowing engineers to learn by doing. Bitcoin is like an unbreakable toy. As a paradigmatic, conceptual implementation of a “blockchain,” I think it’s beautiful. As a store of value or a digital currency, I think it’s a massive speculative bubble with extremely limited utility. I own a pathetic amount of Bitcoin, not because I think it’s intrinsically valuable as a currency or asset, but because I need a hedge against a scenario in which it goes up forever, and I have to live with regret that I didn’t buy any.
⁴ Helium is using Uber’s open source hexagonal indexing scheme, H3, to define its optimal density. Why not just use a regular square grid? Probably because hexagons are just way cooler. The person who first told me about H3 was Sina Kashuk, now the CEO of Unfolded (an exciting startup based on yet another open source project from Uber, Kepler). He will undoubtedly be pleased to see it in the wild. I still don’t get it. Sorry, Sina!!!