What happened
Among the cryptocurrencies making headlines this week is Helium (CRYPTO: HNT), an intriguing blockchain-based Internet-of-Things (IoT) play. This network, which allows users to install Helium hotspots and receive decentralized 5G wireless network coverage, made a big announcement on Tuesday. Developers behind the Helium project put forward a proposal, dubbed HIP 70, that would transition the entire Helium network onto the Solana (CRYPTO: SOL) blockchain.
Helium's HNT token has been on a downward trend since the announcement. As of 1 p.m. ET Thursday, Helium has lost 11% over the past 24 hours. Since Tuesday's peak, Helium has lost approximately 20% of its value.
So what
This proposed shift has certainly startled many within the Helium community. Helium has operated on its own blockchain since its inception in 2013. However, developers have noted that Solana can provide economies of scale that aren't possible with the current network. Accordingly, many in the Helium community appear to have initially backed this proposal.
That's not to say everyone's happy with this idea. Some have pushed back against Helium's switch to the Solana blockchain. Among the concerns cited are downtime issues and questions of how decentralized the Solana blockchain really is.
Now what
Truth be told, Helium is a project I've yet to dive into. At first glance, there's some real utility that appears to be possible with the Helium network, should end users really start adopting this network. Thus far, it appears demand for Helium's 5G wireless services remains limited, with some reports of only $6,500 a month in revenue, despite capital raises of around $350 million.
Like most crypto projects, Helium is still in its infancy, and attempting to find a way to grow into the large-scale project many believe it can become. Maybe transitioning to the Solana blockchain is the key to success. Or maybe generating more awareness ought to be the goal of the Helium team.
Whatever the case, this proposal appears to be generating more ill feelings than positive ones right now. For crypto investors with strong feelings about Helium either way, this sort of volatile period could provide an interesting entry point.
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Chris MacDonald has positions in Solana. The Motley Fool has positions in and recommends Solana. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
