A heated discussion about the company’s long-term prospects has resulted from a recent critique of the Helium blockchain project by novelist and businessman Liron Shapira.
According to Web3 critic Liron Shapira, the “total lack of end-user interest for Helium should not have come as a surprise.”
The Internet of Things (IoT) blockchain Helium, which was founded in 2013, is constructing a decentralized peer-to-peer wireless telecommunications network using its own machine networking technology.
Shapira, a vocal opponent of Web3, questioned the hundreds of millions of dollars invested in Helium in a Twitter discussion dated July 26.
The “total absence of end-user demand for Helium should not have come as a surprise,” he said, citing statistics that show the project only generates $6,500 per month in income from data consumption. He also made mention of recent remarks on the Helium subreddit concerning the diminishing benefits of node hotspot operators’ work.
“On average, they spent $400-800 to buy a hotspot. They were expecting $100/month, enough to recoup their costs and enjoy passive income. Then their earnings dropped to only $20/mo,” he said.
Shapira elaborated on his remarks in a follow-up interview with Tactical Investing on July 28. He even went so far as to call the idea a “Ponzi scheme”:
“People see those two numbers, $6,500 a month vs $350 million raised, and they say ‘how does this make any sense?’. It only makes sense in the case of a very very early stage startup.”
Helium’s wireless network is structured so that node operators are rewarded in the HNT token for validating transactions with 35% of the data use income. A hotspot device from Helium Systems must also be purchased and installed in addition to staking 10,000 HNT, which is valued around $89,000 at the time of writing. Operators “keep false optimism,” according to Shapira, that they would see a profit on their investment.
Amir Haleem, the creator of Helium, responded to the conversation with a lengthy post of his own that addressed the concerns.
“So why is there only $6,500 worth of data being paid for? Unlike cellular networks there aren’t millions of existing devices that can switch to Helium. The best applications haven’t been built yet, and it takes months or years to build them.”
Haleem said that it is not a simple task to carry out the project’s aim of creating a secure, decentralized, and inexpensive IoT network, and that he also anticipated it taking 5-10 years. Applications are beginning to be developed on the network, despite the fact that “realistically there’s only been usable coverage for the last 6-9 months,” according to him.
User PuppypuppyX replied to Shapira’s criticisms on the Helium subreddit and expressed similar views. Although they acknowledged that some of the criticism of Helium was legitimate in relation to the node operational infrastructure (faulty goods and slow shipment), many members of the community are aware of how difficult the task is and how long it will take to complete.
“Creating a network of millions of nodes with different protocols (LoRa, 5g, and more) that spans the globe and is not beholden to a multinational corporation is one of the most ambitious technological projects ever undertaken,” they wrote, adding that:
“IF Helium works (and I’m not saying it will) it can revolutionize the way data is shared.”
