Smartphone-Blockchain Love Affair — continued?

Readers of the Distributed Economy newsletter might recall — in our first edition we unveiled how earlier this year the smartphone industry shyly started to tinder with blockchain technology: Sirin Labs launched the Finney blockchain phone, HTC the Exodus and Samsung introduced the Galaxy S10 with an integrated crypto-wallet. In addition, the $80 dollar Electrum crypto-phone and the phone from cybersecurity software company Sikur are on the market. We analysed who might fall in love with these phones and looked at the development in the blockchain device market in a dedicated article.

So what’s new? Well, the love affair got somewhat more intense over the past two weeks. According to Sina finance reportChina Telecom announced a whitepaper on 5G at the end of August, which includes plans to introduce a blockchain-enabled 5G SIM card.

Several decentralized applications (DApps) are going to be built around the ‘5G blockchain SIM card’. This includes apps for identity verification, financial asset management and secure access to legal documents. A potential use case for digital identity verification is anti-theft management for stolen phones. Here, blacklists of phones based on anonymized IMEIs (International Mobile Equipment Identity) are created and managed with blockchain technology. When a mobile device gets blacklisted, telecom operators, smartphone manufacturers and end-users can immediately receive the information and disable the stolen device. Korea Telecom and Deutsche Telekom are working on similar projects to prevent hacks and track stolen phones.

China Telecom’s blockchain-enabled 5G SIM cards will provide support for Ether as well as ERC20 tokens and will be compatible with all types of smartphones. What’s maybe most important about the project are the plans to turn smartphones into decentralized nodes of a blockchain network. If the endeavor succeeds this network can easily include millions of users considering that China Telecom currently serves already more than 300m mobile subscribers. With a corresponding node count, the network and phones might become highly prone to cyber-attacks.

On top, 5G SIM cards and in particular electronic SIMs will not only be installed in smartphones, but any kind of connected device in the future. This is why leading telecom carriers currently explore how blockchain technology could prove an effective means to monitor and ensure network security in large scale deployments of the Internet of Things in 5G networks.

Overall, China Telecom’s plans are ambitious and a launch date for a working product hasn’t been announced yet. So some patience is likely required before the first working product and application will be available. However, China Telecom is not alone when it comes to the latest crypto&phone love affair, even not in China. In the first week of September, the Chinese crypto-currency exchange Huobi, with daily trading volumes above $700m one of the largest crypto exchanges in the world by volume, announced the launch of the “Acute Angle” blockchain phone.

The Acute Angle is made by Whole Network, a startup that Huobi invested in. The device can be purchased with Huobi’s native token HT at a price of around $515, which is more affordable than i.e. Sirin Labs’ pioneering blockchain phone ‘Finney’, which was launched at $1,000. Targeting cryptocurrency traders, the Acute Angle has built-in crypto-trading features like push trade notifications, a DApp wallet, and an optional cold-storage plugin. Owners will be rewarded with tokens for activities like watching ads, downloading apps, inviting friends and sharing content — a similar concept to that of the Brave browser and the Basic Attention Token. It’s seemingly intended to build a blockchain enabled ecosystem around the Acute Angle. The phone is currently available in China, a Q4 2019 launch is planned for Southeast Asia. And this is only the first of a series of blockchain phones likely to be brought on the market by Whole Network. There are plans for 5G enabled devices as well.

To complete the picture on recent moves: Wallstreet Journal reported last week that Samsung is launching the “Klaytn Phone” in a joint effort with Kakao, South Korea’s largest social media network. The “Klayton Phone” is a Galaxy Note 10 with a preinstalled cryptocurrency wallet and a DApp store. The name of the smartphone originates from Kakao’s blockchain network Klaytn and buyers will get a certain amount of “Klay” tokens as cryptocurrency. Note that earlier this year Samsung not only launched the Galaxy S10 with a cryptocurrency wallet and decentralized apps but already announced plans to enable budget Galaxy phones with DApps to reach more price sensitive market segments.

Overall, all three recent events — China Telecom’s 5G blockchain SIM-card, Huobi’s phone market entry and Samsung’s product line extension, further spark the ‘blockchain — smartphone love affair’. They show how important a holistic eco-system will become for growing blockchain adoption. This includes interlinking blockchain with 5G and IoT technology as part of a wider convergence stack that will likely also comprise AI and automation going forward.

Key in all these eco-system building efforts are smart partnerships. We will soon publish an overview of state-of-the-art alliances and partnerships in the telco blockchain arena. In a new territory with strong industry player dynamics and accelerated technology development you better not walk alone.

Stay tuned!

Author: Dr. Karl-Michael Henneking

Karl-Michael is passionate about digital incubation and transformation, the distributed economy and in particular dlt, blockchain, STOs and crypto regulation. He builds on an international career in consulting, CXO positions in tech companies and venture capital.

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