Unless you have been living under a rock, you know that blockchain has been one of the biggest tech-related buzzwords of the last year or so. But does it make sense to have native blockchain support on a smartphone? With at least three different companies hard at work on blockchain phones, it may be worth considering if blockchain will be an asset or a liability in the smartphone realm, and whether or not blockchain phones are poised to become the new norm.
As I am sure you know, blockchain technology is based on the use of a decentralized ledger. The decentralized nature of blockchain means that there is no centralized data repository for a hacker to break into. Furthermore, each entry within the ledger is mathematically tied to previous entries, thereby making it nearly impossible to alter an existing ledger entry. Because blockchain has been designed to protect the integrity of transactional data, it is widely used as the basis for cryptocurrencies. But does it make sense to have a blockchain-based smartphone?
A bigger question
When I first heard about the efforts to create a blockchain-based smartphone, I immediately assumed that such phones would essentially act as digital wallets for the cryptocurrency crowd. While I have little doubt that blockchain phones will eventually allow for that type of functionality, I think that there is a bigger question to consider.
I’m sure that some people would argue with me on this point, but I don’t really think of cryptocurrencies (or digital wallets, for that matter) as being mainstream. Sure, anyone can buy cryptocurrencies, but I can only think of one person that I know who actually uses cryptocurrency. It’s possible that I have friends or family members who use cryptocurrencies, and have just never mentioned it to me, but I still don’t think of cryptocurrency as being used in the mainstream. After all, I have never been standing in line at the grocery store and overheard the person in front of me asking the cashier if the store accepts bitcoin.
The same can also be said (albeit to a lesser extent) for digital wallets. Digital wallets have existed for many years, and they even allow you to pay for things using real money (as opposed to cryptocurrency). Even so, it has only been on the rarest of occasions that I have seen someone use their phone to pay for a purchase. I see digital wallets used more frequently at coffee shops and airport gift shops, but in my day to day life, I almost never see anyone use their phone to pay for something at a store.
So with that in mind, the question that I think needs to be considered with regard to blockchain smartphones is whether such phones will be a one-trick-pony, or if there is more to the concept than meets the eye.
Do they make any sense for business?
When looking at the prospects for a blockchain-based smartphone purely from a business perspective, I am betting that there will be use cases that go far beyond simply acting as a digital wallet for cryptocurrency. Again, you are free to disagree with me, but let’s pretend for a moment that I am right and that both digital wallets and cryptocurrencies are both still relatively niche. Would it really make sense for smartphone manufacturers to invest big bucks in developing a phone whose main selling point is something that falls well outside of mainstream use? If blockchain phones are going to compete with devices such as the iPhone or the Samsung Galaxy, then manufacturers are going to have to give potential customers a more compelling reason to choose their phone over those being offered by the competition.
So with that in mind, I think that the key to understanding how blockchain phones might be of use is to consider how smartphones are being used today. In fact, I will take things one step further and suggest that the key to the blockchain phone’s future lies in the phone’s past evolution. Let me explain.
As I write this article, there are two phones sitting on my desk. One is a smartphone, and the other is a 5.8GHz cordless phone connected to my landline. Aside from being wireless, the cordless phone really isn’t all that different from the telephones that were in use 100 years ago. Like those phones of the past, it’s a completely utilitarian device. It does one thing and does it well. More importantly, I have no more personal attachment to that cordless phone than to any other utilitarian device in my home. Like a garage door opener, a blow dryer, or a coffee maker, the cordless phone is completely mundane and if it were to stop working, I would probably go buy another one without really thinking much about it.
Cell phones initially started out the same way. I got my first cell phone back in 1992, and aside from being larger and heavier than the cordless phone on my desk, there weren’t a lot of differences between the two. My cell phone from 26 years ago was incapable of doing anything beyond making and receiving phone calls.
Fast-forward several years, and smartphones began to come onto the scene. Unlike the big, heavy, utilitarian cell phones that came before them, smartphones eventually evolved into becoming highly personalized devices. If I were to lie my smartphone down onto a table containing a hundred other phones just like it, it would be really easy to figure out which phone was mine because of the way that the interface has been personalized. Never mind the fact that our phones store lots of very personal data such as our pictures, videos, and text messages.
The point is that our smartphones are almost an extension of ourselves. In my case, for example, my phone contains pictures and videos from some of my happiest moments in life. It also contains messages to and from the people who are closest to me. Even things as simple as the operating system’s color pallet and icon layout are direct reflections of my personality. When you combine the deeply personal nature of most people’s phone contents with the fact that our phones rarely ever leave our side, it becomes obvious how closely our phones are tied to our personal identities. This simple concept may be the one thing that makes blockchain phones a success.
Our smartphones have become such a big reflection of who we are, and have become so pervasive, that many software vendors already leverage smartphones for use in multifactor authentication.
Blockchain phones: The bottom line
Blockchain has the potential to more closely map our identities to our phones. Eventually, I think that our phones (with the proper safeguards in place) will act as irrefutable proof of our identity. Hence, I don’t think that blockchain phones will be limited to acting solely as a glorified digital wallet. Instead, I think that all of those cards that we carry around all the time could eventually be replaced by our blockchain phones. That goes for everything from credit cards to warehouse club membership cards, and even shopper loyalty cards, health insurance cards, and maybe even our drivers’ licenses and auto insurance cards. A blockchain phone could conceivably replace all of that, just as current generation smartphones have replaced a myriad of electronic devices.
The key to the blockchain phone’s success will, of course, be the underlying ecosystem. A blockchain phone will only be of use if enough people buy into the concept. It’s kind of like how electric cars only became practical when charging stations began to show up in public places.
Featured image: Shutterstock
