Expanding Mobile Services with Device Licensing and Cryptocurrency

The Internet is the backbone of the modern information order, yet an estimated two billion people still do not have access to it. This may be because traditional telecommunications operators find it commercially unviable to provide Internet services to some remote geographic regions, despite the fact that:

• Money is tokenized by 134 countries, which accounts for 98% of global GDP, as research continues to be conducted to implement a central bank digital currency (CBDC). This may not include the United States, as the US House of Representatives has passed FIT 21, a bill that prohibits the Federal Reserve from issuing CBDCs. If the Senate also approves FIT21, such a CBDC ban would halt the tokenization of the US financial sector;
• Mobile payments are replacing cash in more than 23 countries. A report by the Federal Reserve Bank of San Francisco found that cash payments accounted for just 18% of all payments in the U.S. in 2022.

Wireless traffic—particularly due to tokenization and mobile payments replacing paper money—is expected to grow about 80-fold by 2030 compared to 2020. To expand user access to the Internet via mobile phones, Helium Mobile founders Amir Haleem, Shawn Fanning (who also created Napster, one of the first peer-to-peer file sharing platforms, in 2013, and Sean Carey created the LoRaWAN blockchain-based decentralized wireless infrastructure (DeWi) to support Internet of Things (IoT) devices. Helium Mobile leverages blockchain technology and cryptoeconomics to provide wireless coverage and connectivity via decentralized peer-to-peer networks built and operated by individuals to efficiently leverage all existing network resources, including private wireless access systems owned by individuals.

As increased wireless traffic raises concerns about congestion and connection failures due to signal loss, the company released Helium Hotspots in 2019, with blockchain and digital asset payouts to expand Helium Mobile’s cellular coverage. The goal was to create a world with always-on wireless connectivity, built and operated by the people who use it — and priced so they can afford it.

A hotspot is a wireless access point that allows users to connect phones, tablets, computers, and other IoT devices to the internet. They are built into most smartphones, but users can also get dedicated mobile hotspot devices that provide faster speeds, connect more devices, and have longer battery life than a phone.

Helium Hotspots act like miniature cell towers, creating a peer-to-peer wireless network to connect small, low-power devices over long distances via an ever-growing constellation of user-owned Helium hotspot towers in over 170 countries. Users need a cellular plan with hotspot data to connect to a hotspot smartphone or personal device.

Helium Mobile’s cellular service operates on a mix of towers, such as T-Mobile in the U.S., Telefonica in Mexico, and Helium Hotspots, which are hosted by individuals. The operators of these hotspots receive MOBILE/NFT tokens (HNT) as payment, as do phone subscribers who opt into Helium Mobile’s location-tracking service, which theoretically helps determine where new hotspots should go. Helium Mobile subscribers and hotspot deployers are equal parts of the network that creates dynamic wireless coverage. This enables communities to improve internet and cellular coverage without the infrastructure of traditional telecom companies. As Amir Haleem, CEO of Nova Labs and creator of the open-source Helium Network, noted about the traditional top-down network building model in the telecom industry:

“In my opinion, that’s not really a sustainable model. I think it’s starting to break down now.”

Amir expects more traditional mobile network operators to support DeWi models in the future. In particular, with Helium Hotspots, users can earn HNT at a price of $3.46 starting June 24, 2024, to provide essential connectivity to nearby Helium Mobile subscribers.

Helium Mobile minted nearly a million HNT Hotspots to enable other decentralized physical infrastructure projects (DePINs) to verify location data using Solana’s blockchain technology. Solana relies on network participants to run software that keeps the system running. Participants can stop contributing to the computing resources if the cash rewards for participating are not attractive enough to encourage those contributions. At current levels, Helium Mobile subscribers who use Discovery Mapping earn more than 2,000 HNT MOBILE tokens per day, according to CoinDesk.

Fast, scalable and affordable, the Solana blockchain charges Helium Mobile users a small fee (average transaction fee of 0.000014 SOL) in SOL tokens, covering sending tokens, staking tokens, making payments, exchanging tokens, creating NFTs, claiming rewards from Helium Hotspots and all transactions on the Helium chain.

Helium Mobile has added thousands of new customers in the U.S. with its $20-a-month nationwide unlimited 5G mobile plan by partnering with Google to connect the Pixel 8 smartphone to Helium’s services and hotspots. The company also powers a variety of other devices, including the Solana Saga, the first native web3 phone.

Last year, Solana Mobile, a subsidiary of Solana Labs, introduced the Android-based Solana Saga phone. The phone is designed to provide users with a mobile, web3-centric experience, an exciting step forward in mobile technology. The phone combines everyday smartphone usability with heightened levels of security and privacy in the digital currency landscape, providing seamless access to Solana’s blockchain defi protocols.

Phone users can directly access decentralized applications (dApps), digital wallets, NFT markets, web3 apps, and other blockchain platforms without the need for multiple intermediaries or additional devices directly from their Solana Saga phone.

Helium Mobile’s mission to transform the $3.1 billion global wireless network infrastructure by offering a licensing program for web3 access points and phone devices is a significant milestone for an industry that seems poised to embrace DeWi. Communication giants such as AT&T, T-Mobile, NTT, Alibaba, and Tencent have already incorporated blockchain technology for various purposes, such as identity and access management, digital business process tracking, communications, data storage, and computing.

World Mobile is tackling wireless dead zones with balloons and towers in the UK, providing token payouts from the Cardano blockchain. And telecom giant Vodafone has decided to combine blockchain technology with smartphone functionality by integrating cryptocurrency wallets directly into SIM cards. So, according to Helium’s website, there are already several third-party manufacturers and suppliers for IoT networks. However, Helium Mobile is currently the only blockchain-based mobile coverage device provider. As Amir Haleem commented:

“Licensing the Helium Mobile technology stack is a key step in our mission to deliver accessible and cost-effective wireless connectivity to communities across the United States and around the world. We believe that access to the Internet is a fundamental human right, and for many, that access comes via smartphone. Enabling other device manufacturers to leverage our technology will help accelerate a global revolution in wireless infrastructure. This initiative is about empowering individuals and communities, driving progress, and building a more connected world.”

Staking provides a way to earn rewards while owning a specific digital asset. If the digital asset you own supports staking — such as Ethereum, Tezos, Cosmos, Solana, Cardano, and others — you can “stake” a portion of your assets and earn rewards.

Last July, the U.S. Internal Revenue Service issued new guidance clarifying when staking rewards for digital assets are taxable as income. The agency considers staking rewards taxable both as “Other Income” disclosed on Form 1040 Schedule 1 when you receive and have power and control over the digital asset, and then taxed again as capital gains upon disposition of the digital asset disclosed on Form 1040 Schedule D.

To determine taxes on staking digital assets, you must report the fair market value of your staking rewards upon receipt or when you have authority and control over the digital asset that serves as your cost basis. You will use this cost basis to calculate the corresponding capital gain or loss if and when you sell your staking rewards.

With the implementation of Rev. Rul. 2023-14, taxpayers such as Helium Mobile users engaged in staking can expect to be required to pay taxes on HNT rewards at the time they are acquired, even if they have not converted their digital assets to fiat currencies.

For proposed digital asset tax disclosure rules for brokers and tax rules for NFT collectibles, see Tokenization of Art, Gaming, and the Future of NFTs | Opinion. Digital Asset Tax Disclosure Policy can be found here: What You Need to Know About the IRS’s Cryptocurrency Question on Tax Returns | Opinion

Editor’s Note: This article was written before gossip that Solana is being researched for its native token, SOL. Therefore, it does not contain any discussion of SOL characterized as a safeguard by the SEC last year in their cases against Binance.US and Coinbase. This investigation potentially has the potential to impact any project related to Solana. The editorial team will be following this news to keep you informed.