Helium’s crypto currency HNT prepares for redenomination

Helium is a global network and relies on people to add hotspots for devices to connect to it and provide area coverage. In return, they can earn the HNT cryptocurrency which is mined during the times their hotspots are operating. Depending on various conditions, the HNT rewards can vary, but it is a great way to earn passive income.

HNT is still a relatively small cryptocurrency in comparison to Bitcoin. Despite that it is already a big market in itself with about a market cap of $2.8 billion as of Nov. 3, 2021. Its current circulating supply is 45% of the total, so there’s still a lot more potential in this cryptocurrency.

Big changes ahead

In order to maximize this potential, HNT may undergo some pretty big changes. One of them is a current proposed redenomination. What is redenomination you ask? This is basically a recalibration or adjustment of a currency’s value. In most cases, the process is used after hyperinflation to readjust the currency back down to more practical values. It is also possible to use the process to increase the denomination to a higher value. This is exactly what the HNT redenomination will look for.

The proposal is currently in a discussion phase. If approved, it will change the current HNT values by a significant margin. The official proposal is quite complex, but it essentially boils down to a simple change. For example, if you have 1 HNT in your wallet, after the redenomination, you will have 1000 HNT. If you have an average daily earning of 0.25 HTN now, after the process, you will earn 250 НNT.

It’s important to stress that this doesn’t mean you will receive 999 HNT to get to 1000. It’s simply adding three zeroes to the number. The actual value basically remains the same. Essentially, you will simply refer to your HNT amount in the thousands, instead of a single digit. If 1 HNT is $27, 1000 HNT will now be $27 after the redenomination.

Why is this necessary?

The proposal factors in three specific motivations for the change. Chief among them is future proofing. Current expectations are that there will be more than 3 million gateways (hotspots) online over the next two years. And that will happen in conjunction with the second halving of the HNT mining reward. There’s an aspiration for the reward to not fall below 1 HNT per gateway per day.

Second, the upward redenomination will help calculations, especially for transactions. There will be much less decimal points, which will make everything much easier in daily life. The proposal gives the example that if you buy 1000 DCs at the current setup, it could equate to 0.0001 HNT vs a much simpler 0.1 HNT after the redenomination.

Third, a psychological effect over small token investments. Usually tokens below $1 are perceived as in expensive. Meanwhile, if a price jumps from $20 to $1000, this is seen as a far greater jump than from $0.002 to $1. So, people tend to put greater interest in the latter.

Possible risks

Such massive change doesn’t bring only positives. There are some risks, too. One of them is that some people may perceive the redenomination simply as a way to “inflate” the market cap and make the cryptocurrency seem bigger. The proposal claims that this risk will be short-lived as people will quickly forget.

It does note a second risk which would be confusion in measurements of HNT instead of bones. There are measures that are possible to implement to minimize the risk of that.

Will it happen?

The discussion is slow, but lively. As you can expect, people have varying opinions on this. Supporters expect the change will make HNT more attractive to potential investors and could lead to more people adding hotspots. Other people are against the change and feel it’s a “unit bias” or “moving goalposts”.

As with any change, there won’t be full agreement on it. It’s all down to whether it will have enough support to be viable and if it will live up to the expectations.

There is still no date for making the proposal a reality. Some people call to have a vote on the topic, while others are either fully for or against it immediately. If agreed to implement, the process will still take a lot of time to complete and it will involve communicating the change to crypto exchanges, coin tracking systems and so on. So, it is a big change with a lot of implications and this is why there’s no rush in making it happen. Eventually though the decision will have to made and either bring it to reality or move on to a different proposal.