HNT Price Fluctuations & Our Forecast for the Future of Helium’s Utility Token 

An Overview of the HNT Ecosystem

HNT is the native cryptocurrency token that powers the Helium Network. Its utilization within the Helium ecosystem is two-fold. Firstly, it’s distributed as a reward for active Helium hotspots that either complete “Proof of Coverage” tasks or facilitate Network Data Transfers from IoT sensor devices. This type of crypto-incentivization is one of the primary ways in which Helium’s LongFi network has exponentially expanded over the course of the last year. 

On the other side of the coin, HNT is used to purchase Helium’s Data Credits. These credits function similarly to “pre-paid cellphone minutes” and enable users to actually transfer data over “The People’s Network”. The price of Helium’s Data Credits is fixed at $0.00001 USD and the HNT that’s used to purchase them is permanently “burned” from the total supply. We’ll dive deeper into this “Burn-And-Mint Equilibrium” later on, but for now, you can think of this structure as the foundation for HNT’s fundamental value. 

HNT Price Fluctuations in Q4 of 2021 

The price of HNT has shot up nearly 50% over the course of the last month. It momentarily reached an all-time high of $54.88 on November 17th before settling back down to about $40 over the past two weeks. That huge spike can primarily be attributed to the announcements surrounding a partnership between Helium and Dish Network.

This monumental telecom-blockchain deal marks a huge step towards the acceptance and legitimization of Helium’s decentralized wireless network infrastructure. Per the terms of the arrangement, “Helium will supply 3.5 million hotspots to Dish” in order for them to start onboarding some of their clients to “the People’s Network”. According to Dish’s Wireless Office of Innovation, they plan to take part in Helium’s latest 5G network implementation in order to supplement their own coverage “when and where it makes sense”.

Regardless of the specific partnership details, the Dish-Helium arrangement highlights a tremendous increase in mainstream approval of blockchain-based wireless communications networks. Earlier this year, HNT experienced another sizable price spike when they announced a successful $111 million token sale to a handful of heavyweight investors, including Andreessen Horowitz. This news came right on the heels of the Helium Network reaching a 100k hotspot milestone. Clearly, the HNT price spikes of the last few months are directly correlated to widespread network adoption and big-name validation.

What’s Stopping HNT from Experiencing a Crash?

With a 2,864% price increase, HNT has had an undeniably incredible year so far. Of course, this kind of “hype” based growth trajectory is not exactly sustainable. Still, there’s no reason to think that the price of HNT will plummet any time soon. While strategic partnerships with well-known partners will likely continue to create spikes here and there, the true power of HNT lies in its fundamentals.

First of all, Helium’s LongFi network has recently surpassed 350k hotspots around the world. Each one of those hotspots is a tangible device that’s actively transmitting data from one building or IoT sensor to the next. There’s an almost incalculable amount of real-world potential for this decentralized network and its participants are able to see that whenever they check on their device’s activity and subsequent earnings.

More importantly though, the Helium Network’s Data Credits have a similar economic structure to that of the “petrodollar”. More often than not, other countries convert their currencies to USD before making a purchase of oil. In fact, the vast majority of “international transactions, including oil, are priced in [U.S.] dollars.” This creates a global economy that props up and stabilizes the value of USD.

When it comes to the Helium Network, all data-driven participants are required to purchase HNT in order to acquire Data Credits. So, let’s say you’re a smart scooter company hoping to use “the People’s Network” to transfer data from your scooters to the blockchain and beyond. In order to accomplish that, you’d first have to buy HNT and then convert it into Data Credits. Those Data Credits can then be utilized to send your IoT sensor device data across the network and finally to your servers.  

The Burn-And-Mint Equilibrium of HNT and Helium Data Credits

This ingenious token economic structuring inherently stabilizes the price of HNT. As long as the Helium network continues to thrive, so too will its native utility token. And that fundamental stability is further established through Helium’s “Burn-And-Mint Equilibrium” (BME).

Each time HNT is used to purchase Data Credits on the Helium Network, those tokens are “permanently removed (“burned”) from the circulating supply.” These Data Credits are considered “payment tokens” while HNT are “value-seeking tokens”. Simply put, HNT is a tradeable cryptocurrency that’s meant to accrue more value over time, whereas Data Credits are non-exchangeable and can only be used to facilitate data transfers over the network.

When a Helium client converts HNT to Data Credits and “burns” the token, that client “publicly acknowledges (on chain) that the service provider did the work for the money that was burned”. This structure helps decentralized networks to incentivize “all platform participants to work to the system’s advantage,” while also enabling the organization to achieve consensus more efficiently.

Basically, by requiring their network users to “burn” HNT in order to receive Data Credits, Helium is establishing an economy in which HNT is actually being consumed while also creating an equilibrium for the total supply of available coins. This ensures that HNT price fluctuations will primarily happen based on the actual supply and demand of Data Credits, aka the utilization of their network, and less so because of the often-erratic cryptocurrency trading markets.

When Helium officially announced its BME token economics system back in August 2020, the HNT price rose from $0.67 to $1.77 within a few days. In November of that year, Helium announced a maximum supply limit of 223 million HNT. This limited supply coupled with their biennial halving of mineable HNT per year has furthered the rise and general stability of their utility token’s value.

Other Factors Influencing HNT Price Fluctuation

Of course, any signals of growth or important developments within the Helium Network can lead to an HNT price fluctuation. Even though they’ve established a “petrodollar” scenario with Burn-And-Mint Equilibrium using their Data Credits, Helium’s HNT is still considered a “value-seeking” token that can be potentially impacted by the same booms and busts of any currency. These market variations are mostly spawned by speculative trading rather than the fundamental values associated with the Helium Network’s actual utilization.

For example, when Helium officially announced its plans for implementing their own 5G network with a FreedomFi partnership, the price of HNT went up from around $12 to $20 as traders began to register the news. Similarly, Helium’s very first “halving day”, or “halvening”, took place on August 1st of this year, creating a small HNT price boost that continued upwards as their $111 million fundraiser sale was finalized.

This “halvening” was introduced within HIP 20 (Helium Improvement Proposal 20), which is just one iteration of the ongoing community-driven and democratically-chosen updates to “the People’s Network”. These community-based proposals can and will continue to impact the total HNT circulation, amount of mineable HNT per month or year, and other critical factors that directly affect the token’s tradeable value. Still, the beauty of HNT is that it will always be tied to Helium’s Data Credits. This makes certain that as long as there is wireless communication being paid for within the larger Helium ecosystem, HNT will retain much greater stability than the vast majority of the countless other utility tokens out there.

Predictions for the Future of HNT

While we can’t say for certain what will happen to the markets or even to the Helium Network as a whole, HNT is generally considered a stable, safe, and potentially very lucrative investment at the moment. Most forecasters predict an HNT price increase to at least $60 by the end of 2021 followed by an additional bump to about $75 within 2022.

Those forecasts might seem overly conservative considering the huge boost HNT has seen over the course of this year. That’s because they’re based on ongoing network expansion and utilization rather than occasional blips that can occur outside of the realm of fundamentals. The truth is, HNT becomes more fundamentally valuable the more the network is activated. And, considering its potential for real-world utilization, we think Helium hasn’t even begun to scratch the surface of its applicability.

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