Blockchain smartphones: worth the hype?
Will a blockchain smartphone solve the security issues of a smartphone? Is there a mass market for such phones?
Most of us would agree that our smartphones are not secure devices. There are hundreds of apps that can compromise the security and privacy of our data on any given day, making these so-called smart devices sitting ducks for cybercriminals. Hence, the idea of having a phone that runs on a blockchain to ensure that no there are no breaches is certainly an appealing idea at first glance. The question, of course, is: will a blockchain smartphone solve the security issues of a smartphone, and is there a mass market for such phones?
Consider these developments. In the past fortnight alone, two companies including one from India have announced plans to introduce blockchain smartphones in the global market. Both are touting themselves as the “world’s first blockchain phone”.
On 26 September, for instance, Sirin Labs said it was developing an open-source model that runs on blockchain. It is the same company that had introduced the $14,000 Solarin smartphone in 2016, which “is sold via our London store in Burton”. Sirin Labs is planning a crowdsale event to raise funding for its new Finney electronics range, which includes the smartphone and an all-in-one personal computer (PC). The start-up hopes to raise $100 million to fund development of the two smart devices. The Finney devices are named after the late Harold (Hal) Thomas Finney II—cryptographer, coder and bitcoin pioneer.
According to a white paper by the company, the Finney devices will run on the Labs’ own open source operating system (OS) called Shield OS, which is designed “to support inherent blockchain applications such as cold storage crypto wallet, secure exchange access, encrypted communications and a P2P (peer to peer) resource sharing ecosystem for payment and apps, supported by the SRN token”. SRN is Finney’s default currency.
Sirin Labs plans to partner with consumer electronic manufacturers for the same.
According to a report by website Android Authority, the Finney smartphone will be priced at $999, including a 5.2-inch QHD (quad high definition) display, 8GB RAM, 256GB internal storage space, as well as a 16MP (megapixel) main camera and 12MP wide-angle selfie camera. The device, the report added, is not yet in production, and “won’t be available for an estimated nine months after the crowdfunding campaign”.
Closer home, Embedded Downloads announced on 29 September that it had commissioned the development and manufacturing of BitVault—which it touted as the “world’s first crypto communicator and blockchain smartphone”—to Gurugram-based VVDN Technologies. BitVault was first showcased at the London Fintech Week in June. The phone will be launched globally in London, UK, on 31 October. According to Embedded Downloads, the product will be shipped in November.
According to VVDN Technologies, BitVault is a third-party Independent Multilayer Security (3IMS) feature enabled by fingerprint recognition, and iris scans. Functions like voice calling, video calling, messaging, and document sharing are protected with private blockchain, according to the company. Unlike a public blockchain which allows anyone to participate, a private blockchain network requires an invitation and must be validated (called “permissioned”) by the person who starts the network or by a set of rules that s/he has put in place.
The phone sports a 5.5-inch touch screen, 64 bit 2 GHz Octa Core Processor, 4GB RAM and 64GB Flash Storage, 4G LTE (long term evolution), wifi, Bluetooth, 13MP Back camera and 8MP front camera. “BitVault”, Vivek Bansal, founder and vice-president, engineering, at VVDN Technologies, said in a press statement, is devised to cater to the needs of “government agencies, financial institutions, defence/police, power plants, logistics firms, cyber security companies, and any business or individual who needs private communication network”.
BitVault offers five bitcoin wallets, and has its own a BitVault application store for blockchain and cryptocurrency apps. However, current mobile applications will not work on BitVault nor will any BitVault application work on another device. Developers will be have to purchase a developer license and a developer BitVault device from the company to enable development of applications by developers.
The success of blockchain—the underlying digital ledger used by cryptocurrencies such as bitcoin—lies in the fact that it establishes trust, accountability and transparency. It is a distributed ledger shared via a P2P network and maintains an expanding list of data records. Each participant has a copy of the ledger’s data, giving everyone a ledger that reflects the most recent transactions or changes. Thus, blockchain reduces the need for establishing trust using traditional methods. Blockchain acts as an open ledger and reduces the duplication of access to data or checking of data. The other benefits are scalability and lower cost.
The benefits of blockchain are not restricted to banking and financial institutions. Many companies, including Mahindra and Mahindra Ltd, are trying to build applications on top of blockchain to offer solutions across industries.
Jayanth Kolla, founder and partner at Convergence Catalyst, a research and advisory firm, acknowledged that by way of its design, architecture and implementation, blockchain does provide “relatively higher security for various applications and solutions that are developed using that technology” but added that since the application development on blockchain is still in nascent stage, the technology cannot be mistaked for a “blanket” cybersecurity technology for all applications and use cases of a smartphone.
He argued that a blockchain smartphone will also require a whole ecosystem to nurture its growth.
“The race of smartphone ecosystems is already over and has been won by Google and Apple. It is nearly impossible to kick-start and grow a new ecosystem (in the form of new OS, developer ecosystem, etc.) in the smartphone space in 2017. The recent withdrawal/slowdown of Microsoft’s Windows 10 Mobile OS development, it’s spinning off of Nokia mobile devices business, and the inability of Cyanogen and Firefox Mobile OS(es) to sustain growth is a sign of this,” Kolla said.
Kolla believes that since the growth of the smartphone as a product category has plateaued globally, it will be very difficult for young companies to establish and grow new operating systems and technologies in this space. He adds that while there will be niche adoption of these devices by tech-savvy consumers who need them for specific use cases, scaling these devices for mass-market adoption will be difficult.
“This might urge current players to look at integrating Blockchain in their own platforms for specific applications and solutions, but blockchain-only smartphones might struggle to garner critical mass and grow substantially to evolve as key players,” Kolla said.