Blockchain and cryptocurrencies are, in the minds of many people, linked to high-powered computers and dense forests of servers dedicated to mining. This kept the technology remote and shrouded in mystery to the average consumer, most of whom are only aware of it at all because of Bitcoin.
This could all be about to change.
The next year will see blockchain firmly enter the mobile space, placing the technology directly into the hands of most consumers.
News is already beginning to emerge of smartphone manufacturers racing to launch devices capable of leveraging the technology. The Lenovo Group, recently introduced its Lenovo S5 which will feature an encrypted ‘Z-space’ blockchain-based payment system. Bloomberg has also reported that Huawei is working with Swiss startup Sirin Labs to develop a blockchain ready phone.
This is not just a question of hardware. Blockchain could also become a feature of mobile app development over the medium to long term. From payments to security compliance and quality checks, there are a range of processes that could potentially benefit from the introduction of blockchain technology.
We spoke to two companies, Electroneum and Aricent, about the challenges and benefits of mobile blockchain and what kind of developments we could see in the near future.
Electroneum are a British-based company that is looking to allow users to mine cryptocurrency using their smartphones. The choice to use smartphones is specifically about putting digital currencies into the hands and pockets of as many people as possible. “We are trying to get a cryptocurrency that gets mass adoption and mass use,” says CEO and founder Richard Ellis.
The amount of Electroneum tokens that a user will typically mine amounts to around $2-3 a month, which will not sound much to Western consumers. In the developing world, however, this could amount to a significant addition to a person’s regular income. The company has chosen to partner with mobile operators as its route to market, with the goal of Electroneum miners being able to use the currency to access services from their smartphone providers. The average revenue per user often amounts to no more than $5 a month, so the amount mined could considerably offset the cost of their phone if they are able to spend it with operators.
The company has also partnered with a retail company with 1.2 million outlets around the world. These are the places that people go to top up their mobile phones with cash. “We have done a deal with them primarily because if we can get those people, who are entrepreneurial people by definition, to start accepting Electroneum for topping up phones then there is nothing to stop them accept it for a bottle of water or anything,” says Ellis.
Merchants would have an incentive to accept Electroneum for goods and services because they can in turn use it to buy airtime from the airtime provider to then sell on to their customers. “Suddenly, we have introduced a cryptocurrency into an ecosystem that has never had it before,” says Ellis. “We are giving micropayments, and digital payments, to people that have no bank account and no facility for that kind of payment.
“I mean, you are not going to get people in the west excited about $3, its going to be tricky. But in many parts of the developing world, not only is the $3 actually useful, but also the mobile operators struggle much more in terms of revenue and there is very little loyalty”
The company uses a hybrid system to avoid extracting a high operating cost on the user’s phones. This allows the company to not have to use the phone’s CPU to do the mining. The mining itself is a centralised system for the app, while the Electroneum currency is a decentralised blockchain.
For Ellis, the key to mass adoption of cryptocurrencies lies in properly harnessing the device that the vast majority of people in the world carry around with them everywhere they go:
“It will be introducing digital currencies to people that would never have gone out and bought some on an exchange”
The user numbers are already looking like they could be huge. “We’ve got access to around 130 million users of smartphones now,” says Ellis. Now, that the miner is live, users can recommend their friends, the payment integrations can be put in place and the company can begin trying roll the system out into the wider world.
Being based on mobile does have some disadvantages though. The centralised nature of the mining service exacts a high cost. “We’ve a high backend cost in comparison to other, fully decentralized cryptocurrencies. Because of that, we will likely need some kind of revenue stream in the future.”
“it will be introducing digital currencies to people that would never have gone out and bought some on an exchange”
Moving away from cryptocurrency mining, Aricent think that blockchain and mobile devices could have a flourishing relationship in other areas, particularly app development. The company is a design engineering organisation that is an R&D partner for its clients.
The company has had an active interest in blockchain for some time. “Blockchain fits into a big trend, a big theme that has been emerging for a while, which is decentralization,” says CTO Walid Negm.
“Monolithic app microservices is actually a thread through that. We strongly believe that our clients are pushing the limits of decentralization and that infrastructure is being broken up into these smaller units of value.”
In the hunt for a killer use case for blockchain, the Aricent team have focused upon the software supply chain. From a product development perspective, Negm believes that the technology could speed up cycle time and increase throughput.
“We are very enthusiastic about blockchain in the software supply chain to speed up production and throughput, and we’ve got some great results from working with Bitfury and this digital supply chain,” he says.
In particular, the use of smart contracts could enable developers to ‘fail fast’. By automating each part of the development process and testing and only allowing progress to the next stage if certain key conditions are met, projects involving multiple teams from different organisations can be made more efficient and transparent.
But aside from productivity gains in software development, blockchain has a range of potential applications when it comes to mobile devices. For Aricent’s leader of global security strategy & blockchain Shaan Mulchandani, these range from hardware to software.
In terms of the parts that make up our smartphones, blockchain can be used to prove the provenance of parts but also to assure customers that there are no things like hardware trojans present. “Maybe there are some safeguards to prevent chip manufacturers own issues such as Spectre and Meltdown, having broader impacts,” says Mulchandani.
Perhaps one of the best use cases for blockchain technology for Mulchandani is applying it to an app store. It is possible to set up a decentralised store is which blockchain can be used for micropayments, establishing trust and accreditation. “It’s not just the store that facilitates payments and the transactions of the apps, but it goes back to the idea of how trust is created in that app,” he says. “Every app will have gone through a certain set of security compliance, quality checks.
Blockchain could also be used to extend the concept laid out by Apple Pay and Android Pay, where functionality is built into the devices themselves. “There is no reason why you every phone manufacturer couldn’t have their own hardware-based chip that allows for blockchain-based payments,” explains Mulchandani. “That not only facilitates payments but also extends ‘traditional’ blockchain use cases like micro finance and micro payments.
“Coin regardless, the point is that payments are possible. In fact, you could have settlements with multiple coins because you are performing or validating multiple different transactions of multiple networks.”
Mulchandani thinks it is a good possibility that major hardware manufacturer would be willing to establish a payment system in which everybody with any model of that particular brand’s devices would be able to freely exchange money. There could also be a conglomerate formed of low and medium segment phone manufacturers, based around an agreement to support a certain standard.
Ultimately, whether we do see companies grouping together or one large vendor dominating the space, this development will make it easier for other players to get involved. “One large vendor or a conglomerate is itself enough of a backbone for other systems to start anchoring to that network. Because right now it is also about the network effect,” Mulchandani says.
“You see a number of different startups or blockchain networks that ultimately anchor to the bitcoin network purely because of size. Not because of anything else. But, if you are a large player in this space you can create that anchor network and do it in a very decentralised way because you have a market full of phones.”
Successfully leveraging blockchain on mobile has a lot of potential, primarily by removing friction for consumers who want to begin making use of the technology. Most people don’t have the technical knowledge or desire to delve into blockchain as it currently stands, but if you put the tech in their pocket and give them a range of apps that actively improve their lives, this could change very quickly.