Understanding HNT: Helium’s Native Cryptocurrency

HNT is the native cryptocurrency of the Helium network, a decentralized wireless infrastructure that aims to provide broad, affordable, and community-driven wireless coverage. Helium, the company responsible for creating HNT, was founded in 2017 with the goal of building a system that allows anyone to deploy and benefit from decentralizing wireless network infrastructure. Since then, the project has grown significantly in terms of network nodes and user participation.

Helium: A Decentralized Wireless Network

The Helium network functions by incentivizing the deployment of physical devices called hotspots, which enable wireless coverage for Internet of Things (IoT) devices. These hotspots both provide and expand Helium's wireless network while participating users are rewarded in HNT for contributing to the network’s expansion and maintenance.

Hotspots on the Helium blockchain operate through a proof-of-coverage (PoC) mechanism, which verifies that they are legitimately providing connectivity services in specified geographic locations. This unique consensus mechanism differs from traditional mining methods used by other cryptocurrencies, as it focuses on quality network coverage rather than raw computing power.

Minting and Burning HNT

Helium incorporates a dynamic model that controls the issuance of new HNT tokens. HNT is earned by network participants predominantly through the proof-of-coverage mechanism and through data transfer from connected IoT devices that leverage the network. A portion of HNT is also burned in exchange for Data Credits (DC), which are non-transferable tokens required to transmit data across the network. This burn-to-mint equilibrium ensures that the total token supply evolves in a way that keeps the network utility sustainable.

HNT Token Utility

The primary value of HNT lies in its utility in the Helium ecosystem. As the network grows, HNT is used to purchase Data Credits, which are essential for IoT device communication. These DCs act as a unit of service on the Helium network, allowing devices to send data packets and fully leverage the benefit of long-range, low-power wireless connectivity.

In addition to hotspot owners, businesses and developers utilizing the Helium network for IoT applications can also benefit from holding HNT. By allocating certain amounts of the token to buy Data Credits, these entities can establish IoT networks tailored to their needs.