This company hopes its cryptocurrency can help the internet of things reach its true potential

Anyone who hears that an internet-of-things startup is getting into blockchain technology would be forgiven for laughing it off as another hollow scheme. But Amir Haleem, cofounder of Helium, says he has no interest in making a quick buck off the irrational exuberance that permeates the cryptocurrency world. In fact, just the opposite—he’s interested in cryptocurrency only as a way to build a true internet of things, once and for all. And he knows his idea is so far-out it could take a while before people catch on. 

Haleem started Helium in 2013, along with Napster creator Shawn Fanning. The company’s first product, which is now on the market, is a hardware system that uses a homegrown wireless standard to provide long-range, low-power wireless coverage for devices like sensors that track and monitor medicine or food supply chains. Software routes the data to internet-based applications hosted by whoever owns the sensors.

But the internet of things hasn’t materialized as many people thought it would, says Haleem, at least for low-power devices. That’s because there’s little incentive to build widespread wireless coverage that is secure, reliable, and super-cheap. Established wireless carriers don’t see a business case for building networks geared for devices that might transmit less than a dollar’s worth of data per year, he says.

As one example, Helium is working with a pharmaceutical company that wants to track individual medicine bottles and monitor their temperature in close to real time, without interruption. That product can’t exist today, says Haleem, because it can’t rely on having coverage everywhere it goes. He and his colleagues are convinced they can use a blockchain to change that. The plan is to launch a new public distributed ledger like the one underlying Bitcoin, but replace the “proof-of-work” process Bitcoin’s miners use to secure its ledger of peer-to-peer paymentswith a novel system that Helium calls “proof of coverage.”

Bitcoin miners expend large amounts of computing power to prove that they did the work required to cryptographically secure the blockchain. Helium has come up with something similar, monitoring the physical signatures created when a device emits radio waves to cryptographically verify that they are providing coverage in a specific location.

Miners connect to the network using devices called gateways, which are something like wi-fi routers, only they use less power and provide better range. They get paid to take data from connected devices and transport it to its destination through the internet. The details of how, exactly, these transactions are meant to work are fairly technical. But let’s say you have a gateway in your house: if a vial of medicine were to enter your coverage zone, it would send its location and temperature data to your gateway, which would then send it to its proper destination in return for a previously agreed upon cryptocurrency fee. These steps would then be cryptographically verified and recorded in the distributed ledger.

Helium’s cryptocurrency may end up providing genuine utility, but right now it’s still only an idea in a white paper(PDF). Creating a whole new monetary system and getting people to use it are big challenges. Given the amount of rash investment generated recentlyon the basis of little more than claims in white papers, a bit of skepticism is understandable.

In fact, there are so many crypto-tokens out there that it’s hard to gauge whether anynew entrant can get traction, says Martha Bennett, an analyst at Forrester, who says she has reviewed roughly 1,000 blockchain startups. Nonetheless, Bennett, who is familiar with Helium’s white paper, thinks it does offer a “unique value proposition.” Unlike similar-sounding projects, she says, Helium is an established company with a real product and demonstrated experience in wireless networking.

Meanwhile, the company will hold off on an initial coin offeringuntil after its network launches, which it says will happen before the end of this year. And Haleem is eager to see the Wild West vibe of the current cryptocurrency moment fade. “The next generation of these things are just going to be held to a higher standard,” he says.