Helium, a blockchain project, has found itself at the center of entrepreneur Liron Shapira’s heavy criticism which has caused a strong debate over the company’s long-term prospects. Shapira questioned the hundreds of millions of dollars worth of investment into Helium.
He highlighted that the Internet of Things (IoT) blockchain project makes just $6,500 per month from its data usage revenue. Helium’s complete lack of end-user demand doesn’t come as a surprise. It is building decentralized peer-to-peer wireless telecommunications through its own machine networking tech.
Shapira said that on average, node hotspot operators spent $400 to $800 to buy a hotspot. He believes they were expecting $100 per month, which is enough to recoup their costs and enjoy passive income. But then their earnings dropped to only $20 per month. The author tweeted that Helium is often cited as one of the best examples of a Web3 use case. It received $365 million of investment which was led by a16z.
He then went on to accuse Helium of being a Ponzi scheme. Shapira argued that people see $6,500 a month vs. $350 million raised and say how it makes any sense. He said it only makes sense in the case of a very, very early-stage startup. Node operators, as part of Helium’s wireless network structure, receive 35% of data usage revenue as rewards in the HNT token for validation transactions. People need to purchase and install one of Helium System’s hotspot devices to be able to run a node. They also need to stake 10,000 HNT, worth about $89,000. The Web3 critic says operators maintain false hope of obtaining a positive return on their investment.
Amir Haleem, Helium Founder, explained that, unlike cellular networks, there aren’t millions of existing devices that can switch to Helium. He said the best applications haven’t been built yet and it will take months or years to build them. Haleem shared that the project’s goal is to develop a secure, decentralized and cheap IoT network that is not an easy one to undertake. He believes it will take five to 10 years and realistically, there’s only been usable coverage for the last six to nine months.
