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Broadband Built Block-by-Block by Blockchain – Part 1 – Helium & LoRaWAN

A Helium LoRaWAN Hotspot - Image courtesy of Helium
A Helium LoRaWAN Hotspot – Image courtesy of Helium

If broadband adds thousands of dollars to a home’s value, then why not unlock that value to help pay for the last-mile network? A form of this question was first posed in this Viodi View article, Property Assessed Broadband – A Bottoms Up Way to Build Community & Broadband. As shown in that article, this approach could leverage limited government funding to bring broadband to unserved areas.

Some of the biggest challenges in creating such a grassroots network are organizing one’s neighbors, obtaining rights-of-way, and managing the network. At least two initiatives, the Helium Network and Althea, may have found a way to overcome these obstacles.

They both take a bottom’s ups approach that uses blockchain as their foundation. Blockchain effectively removes much of the management overhead required to operate an ISP.

[Note: This article examines how blockchain forms the basis for a grassroots IoT network that threatens to disrupt approaches from traditional service providers. It is part one of a three-part series.]

Helium & LoRaWAN – The Foundation of The Peoples Network #

IoT via the Helium Network is a great IoT example
Tracking micromobility assets via the Helium Network is one example of IoT – Image courtesy of Helium

Founded in 2013 by Shawn Fanning of Napster fame, Amir Haleem, and Sean Carey, the building block of the open-source Helium Network is their blockchain, Helium, and the associated Helium tokens (HNT). Governed by the non-profit, Decentralized Wireless Alliance, Helium serves as a distributed ledger providing accounting, payments, and routing for a communications network.

In a nutshell, Helium’s token economic model of max supply, burn-and-mint, and net emissions provide an incentive to build out the network and then to pay for its operation.¹ Helium has an impressive list of investors that include Google Ventures, Munich RE (the insurer of insurers), Marc Benioff, and, more recently, Multicoin Capital.

Their first foray into the telecom market is through LoRaWAN, the unlicensed, low-data rate, low-power wireless network protocol. LongFi is the network that results from the combination of LoRaWAN and Helium. LongFi is essentially a last-mile(s), Internet of Things (IoT) connection. Helium claims they have the largest, public LoRaWAN network in the U.S. (78K+ Hotspots as of 7/5/21) with lower pricing than IoT networks from traditional carriers.

Helium LoRaWAN – Tracking Patients, Parking Spots, Pets, & More #

LoRAWAN is a wide-area (LPWA) networking protocol that connects low-power, often battery-powered, devices to the public Internet and private networks. In the U.S. and Canada, it uses the unlicensed 902-928 MHz spectrum to achieve bidirectional data transmission rates between 0.3 kb/s to 50 kb/s. Because of the relatively low frequencies and low-bit rates, LoRaWAN can extend as far as 9 to 12 miles. The LoRa Alliance®develops and maintains its specification, which defines parameters such as end-point classification, modulation, and security.

Precision agriculture with Agulus
Precision agriculture with Agulus – Image courtesy of Helium

The Helium network works with any of the 200+ LoRaWAN-certified devices.  According to the Helium website, companies that are using the network include Agulus (connected agriculture), Barnacle (package tracking), Careband (patient tracking), Lime (micromobility), Nobel Systems (parking space management), and Salesforce (connecting their employees).

To be clear, these corporate applications pay for the use of LongFi. Helium touts the advantages of its approach over Verizon, A&T, and T-Mobile as²:

  • Pay for only the data that is needed
  • A sim card and its associated expense is not required
  • Pooling of data across devices
  • No caps – unlimited data with no overages

Pricing is based on a 24-byte unit called a data credit (DC) and is $0.00001 per data credit, regardless of location.  This translates to about 2.4 Mb/s per dollar. As Stacy Higginbotham calculated, this means the cost for a device to transmit a 24-byte message (e.g. location, temperature, weight, etc.) every 5 minutes would be $1.05 for an entire year.

Data credits represent real money injected into the Helium ecosystem to pay the network owners and operators.

Decentralized Network Ownership #

By now you are probably asking

Who are the network owners and the operators of Helium’s 78k+ Hotspots (25k added in June 2021 alone)?

The short answer is anyone who purchases a Hotspot could be considered an owner and operator. From a provisioning standpoint, it is as simple as finding a good location, plugging into an AC outlet, and connecting to the Internet. Helium’s Mark Phillips recommends a minimum distance between hotspots of 300 to 500 meters, depending on whether the hotspots are in rural or urban locations.

Helium HNT Sharing Over Time - Source: Helium website
Helium HNT Sharing Over Time – Source: Helium website

The Hotspots earn HNT by providing data transfer, proof of coverage, and Consensus Group participation.* For its part, Helium, Inc and its investors, initially receive 35% of the revenues with a declining percent allocated to them over time.  Again, it is the decentralized approach, enabled by blockchain, that sets Helium apart.

“Our goal is to grow and maintain our global wireless network without requiring Helium to be a middleman or central authority.”

To encourage network buildout, a declining percentage of revenue is allocated for coverage, while the majority of the revenue will go to providing data transfer and Consensus Group participation.

*Validators – Making the Network More Robust and Secure #

As of July 7th, 2021, Hotspots will no longer perform Consensus Group functions.4  A new entity, a Validator, will be added to the Helium Blockchain. These validators will operate externally to the network and will validate transactions and add new blocks to the blockchain. Validators will receive the 6% allocated to the Consensus Groups. The Validator’s purpose is to improve network scaling and sustainability.

This external signaling network addresses issues caused by limitations of consumer-grade, Hotspot hardware, spotty connections to the Internet, and dynamic IP addresses associated with residential Internet.  In the future, the Validators will act “as proxies for lightweight (non-chain-following) gateways.” It is expected that traditional cloud providers (e.g. AWS, Azure, etc.) will host Validators, as well as decentralized cloud solutions, like the Akash Network.

In examining the literature, it is not clear how much Validators will impact the system’s energy efficiency, but it will probably continue to be significantly more efficient than Bitcoin with its Proof of Work approach.

Hotspot Economics #

From an expense perspective, Helium’s Mark Phillips writes in a blog post that the peak power consumption of a typical Hotspot is about 5 Watts or $.05 per day of electricity. There is an ecosystem of Hotspot manufacturers with indoor and outdoor units ranging in price from $400 to $650.

A Helium Hotspot and the Helium App - Image courtesy of Helium
A Helium Hotspot and the Helium App – Image courtesy of Helium

Unfortunately for anyone wanting to become a Hotspot provider, the backlog is measured in quarters with some suppliers not accepting new orders. Helium’s COO Frank Mong suggests that there would be 220,000 Hotspots deployed, if not for this backlog. Mong believes the network could grow to 600,000 by the end of 2021, assuming adequate Hotspot production.

Higginbotham reports that her Hotspot earned 1,100 HNT in about a year or almost $15,000 at current exchange rates (like all cryptocurrencies, the price of HNT fluctuates). The amount a particular Hotspot earns depends upon several factors, including location, antenna, and the number of nearby Hotspots. The biggest factor may be when you install your Hotspot, with the advantage going to those who deploy early.

Like Bitcoin, the amount of HNT is fixed (233M total). It has a two-year halving schedule based on a 50-year mining lifetime. What this means is that on August 21st, 2021, Hotspot owners and Consensus Group participants will collectively share in a monthly pool of 2.5M HNT, which is half of Helium’s initial 5M HNT monthly pool.

In an April 9th, 2021 Coinbureau post, Steve Walters wonders how halving will impact Hotspot owner’s returns.  He points out that halving might “create enough upside in the value of HNT to offset that loss of token income.” The question is whether this value is already accounted for in the 10x meteoric rise of HNT in the first half of 20214.

Stay tuned for the 2nd part of this article, which will examine how Helium’s decentralized approach applies to 5G.

[Note: At the time of publication, this author does not own HNT, a Helium Hotspot nor an HNT staking position. However, that may change as participating in the Helium economy seems like it could be a good educational experience.]

References #

1 As the Helium website explains,

“The distribution of HNT changes over time to align incentives with the needs of the network. In the early days, a higher proportion of HNT is allocated to Hotspot owners for building and securing coverage. As the network grows, Hotspots earn more for transferring device data on the network while Helium Inc. and investors earn less. After 20 years, distributions no longer adjust and remain fixed.”

Coinbureau provides a good overview of what max supply, burn-and-mint, and net emissions mean in this post. Further, this post provides an overview of the burn-and-mint equilibrium. Frank Mong provides a simple explanation of how the balance between buildout and operation changes over time in this Jimmy is Promo interview.

² Others that offer low-power, wide-area networks include MachineQ, a Comcast Company, Amazon Sidewalk, and Sigfox, which claims 17.6M registered devices and 69.1M daily messages.

³Most of the suppliers seem to include the onboarding ($40) and assert location ($10) fees as part of their hardware cost.  The assert location fee is required every time a hotspot is moved. Accurate Hotspot location information is important in determining Proof of Coverage.

4This document describes Helium’s Consensus Protocol. It is based on the HoneyBadgerBFT protocol from the University of Illinois, Urbana-Champaign. The design goals are

  • for it to be permissionless
  • truly decentralized by design
  • Byzantine Fault Tolerant
  • Based on useful work
  • High rate of confirmed transactions
  • Censorship-resistant transactions.

5According to CoinMarketCap, HNT’s price rose from $1.29 on January 1st, 2021 to $12.85 on July 1st, 2021. The Helium market cap is approximately $1.15B with a fully diluted market cap of $2.88B at the time of publication of this article.

A More Efficient Proof Than Bitcoin #

Special Obsidian Dolphin challenges Cheesy Brick Mustan in a Proof of Challenge.
Special Obsidian Dolphin challenges Cheesy Brick Mustang.

Helium uses what they call Proof-of-Coverage (POC) to validate that a Hotspot is authentic. Unlike, Bitcoin, which uses Proof of Work and requires an ever-increasing amount of computing power and electricity to validate a transaction, Proof-of-Coverage uses the characteristics of the Hotspot’s radio signal. PoC Challenges sent from a selected peer group of Hotspots validate that hotspots are accurately representing their location and demonstrating their wireless network coverage.

An example of a Proof of Coverage Challenge is shown here. In this case, Special Obsidian Dolphin challenged Cheesy Brick Mustang. Five witnesses vouched for Cheesy Brick Mustang.

Author Ken Pyle, Managing Editor

By Ken Pyle, Managing Editor

Ken Pyle is Marketing Director for the Broadband Forum. The mission of this 25+-year-old non-profit “is to unlock the potential for new markets and profitable revenue growth by leveraging new technologies and standards in the home, intelligent small business, and multi-user infrastructure of the broadband network.”

He is also co-founder of Viodi, LLC and Managing Editor of the Viodi View, a publication focused on the rural broadband ecosystem, autonomous vehicles, and electric aviation. He has edited and produced numerous multimedia projects for NTCA, US Telecom and Viodi. Pyle is the producer of Viodi’s Local Content Workshop, the Video Production Crash Course at NAB, as well as ViodiTV. He has been intimately involved in Viodi’s consulting projects and has created processes for clients to use for their PPV and VOD operations, as well authored reports on the independent telco market.

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9 replies on “Broadband Built Block-by-Block by Blockchain – Part 1 – Helium & LoRaWAN”

One thing that may be academic, as the data transfer is fairly low given the application. Still, one has to wonder if passing data of another network through a residential internet connection would violate the terms of service of the ISP?

You are right. The distinction with this one is that it is sort of a subtending commercial network. ISPs have typically put restrictions in their residential terms of use. They would want to sell a commercial contract, similar to what they might sell to a cell phone company or a business that runs its own network.

Another interesting thing that is happening is that multiple hotspots are being purchased by people to create mini-networks. An ecosystem is developing around helping people create their own networks. An example is this company Kroo, which acts as a turnkey installer and will even troubleshoot a broken hotspot.

Another application of Helium’s LongFi is from Lark Alert. This Medium article describes how this Billings, MT-based firm has created a sensor network capable of doing things like one-button surveys in commercial restrooms, to tracking water trough readings on remote ranches to monitoring refrigerator temperatures for commercial applications (This is something this author could have used when he was involved with youth sports’ snack shacks).

And the company website

Was much of the Helium commercial relationships more fluff than substance? This Fortune article summarizes some of the criticisms made towards Helium and questions its long-term viability.

With that said, the number of hotspots continues to grow and is at 940k for the IoT network and 3.5k for the mobile data network.

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