Does the world really need a blockchain phone?
Sirin Labs is betting it does. The startup, which recently raised $157 million in an initial coin offering (ICO), is building an Android smartphone from scratch with special features for cryptocurrency enthusiasts: an app store for distributed apps (dapps), cold storage for private keys and easy conversion between tokens.
The Switzerland-based company says the product will fill a need in a fast-growing market: a secure device that can simplify the use of cryptocurrency across multiple applications. But as an old tech adage goes, “hardware is hard,” and in blockchain it may be even harder, since devices must be engineered to protect not only information but unrecoverable money.
In a nod to the device’s target audience, Sirin has dubbed the phone “Finney,” after computer scientist and bitcoin pioneer Hal Finney.
Estimating this audience’s growth over the years, Sirin Labs CEO Moshe Hogeg told CoinDesk:
“You have more than 10 million people that are all in crypto in one way or another. I think the community will at least double in size by the end of this year.”
The phone is expected to retail just shy of $1,000, putting it in the high-end range with the likes of Apple’s iPhone. And it can only be purchased using Sirin’s crypto token (based on the ERC-20 standard). The firm sold 40 percent of the 573 million total tokens it created during the recent ICO.
As an Android device, the phone will include all the usual applications, including the full Google Play store. As Hogeg explained, “We’re talking about user experience. If you don’t have Facebook then forget about it.”
But what makes Finney different is that sirin tokens will also be stored on the device to facilitate payments for a wide variety of dapps.
Crypto app store
The decentralized app store on the Finney phone will provide users with access to a whole host of dapps – the products of a host of blockchain-based projects that have issued tokens via ICOs.
These could include blockchain-based alternatives to popular tech companies such as Uber, which Hogeg said would be better for users by connecting providers directly to customers, reflecting the industry ethos.
As such, the Finney would provide a one-stop shop for crypto enthusiasts to browse through dapps and spend their crypto on products and services. And through a partnership with Bancor, the decentralized liquidity market that raised $150 million last June in an ICO, Sirin’s software will convert users’ sirin tokens to whatever cryptocurrency is needed for a particular transaction.
“A user shouldn’t care about technology. He shouldn’t care about how things work. He should care about the value of them,” said Hogeg. Hence, “the experience should be simple.”
Simplicity will be a prerequisite for these token-based platforms to gain traction, he said.
“If we want those technologies to become mainstream, we have to fix this issue of multiple tokens,” Hogeg said. “Our software is going to allow the user to seamlessly convert between different tokens within our phones.”
Sirin faces some competition in the decentralized app store arena. Coinbase CEO Brian Armstong is also working on a browser for dapps called Toshi.
In a recent Medium post, Armstrong similarly talked about the need for one platform for consumers to manage dapps. Yet, while Coinbase’s solution wouldn’t need specialized hardware, Hogeg said he believes that by the time these decentralized marketplaces are ready, early adopters will want a distinct device to safely store the cryptocurrency they’ll use.
And while it’s proven to be difficult to get developers to switch from the two marketplaces currently dominating mobile (the Apple store and the Google Play store) to a new development platform, Hogeg said he has a way to convince them.
“We raised enough money to incentivize a community of developers,” he said.
But while Hogeg has a plan for incentivizing developers, the harder part might be luring consumers to purchase the pricey device.
But he says that for crypto users, the phone’s security features will be hard to resist. Not only does the Finney phone use behavioral monitoring to detect possible exploitation, it also allows for multiple types of biometric identification and comes with cybersecurity protection from the operating system through the application layer, according to Sirin.
All of these features, Hogeg admitted, can be found in one form or another on other devices, but there’s one feature on the phone that stands out: cold storage.
The Finney phone allows users to disconnect their cryptocurrency’s private keys from the rest of the device and from the internet, Sirin says. This provides added protection since hackers would have to physically go to the phone’s storage vault where the private keys are held to get access.
Hogeg told CoinDesk:
“I think it will differentiate us. I think it’s unique, and it will grow.”
But Peter Todd, a prominent cryptography consultant and bitcoin developer, was skeptical about the effectiveness of cold storage in this context, telling CoinDesk, “Why does that protect you? You need to connect to the internal electronics to accomplish anything anyway, at which point the attack can happen.”
Still, a spokesperson for Sirin contended cold storage still reduces risk, which is why people use crypto-wallets like Trezor and Ledger. He explained, “We do all the signature ‘foreplay’ in advance of the actual signature” – that is, making the connection as brief as possible. “This is a well known cyber security methodology of decreasing the attack surface and time exposure,” he wrote.
Further, even Hogeg acknowledges that security doesn’t sell hardware. So Sirin is also setting up the devices to be able to cooperate and share resources, for instance, in a way that allows strangers can pay each other in microtransactions for borrowing computing power or bandwidth.
Yet that raises another issue.
In Sirin’s whitepaper, these services lean heavily on the “Tangle,” a technology pioneered by the distributed ledger startup IOTA.
Pitched as a solution tailor-made for the internet of things, IOTA requires devices to make a few proof-of-work computations in order to participate in the chain, rather than pay a fee to miners as with bitcoin.
“This is how we allow it to be fee-less,” Hogeg said.
Yet, IOTA and its technology have been a flashpoint of controversy since over-the-counter trading of its cryptocurrency began in 2016. For instance, MIT Media Lab actually disputed the claims in an MIT Technology Review article describing the security of IOTA.
Further, the lab’s Digital Currency Initiative found a serious security flaw in Iota in September. The IOTA Foundation acknowledged the researchers’ work, while arguing that it did not represent a realistic attack and said it has always planned to submit its final cryptographic design, once ready, to academic review in order to insure its solidity.
Val A. Red, a security researcher with experience in IoT systems, told CoinDesk that any blockchain-based application raises issues.
“If I were looking at this outside of cryptocurrencies and from the perspective of a secure mobile or BYOD [bring-your-own-device] network administrator, I would also have reasonable concerns looking at a proposal involving interoperability with IOTA or any digital ledger technology in production.”
Hogeg didn’t dispute that there are doubts about the protocol at present, but said, “Maybe we’re going to change to a different fee-less network, and there are a bunch who are talking about it. Probably it’s going to be IOTA.”
Although he continued, “We are not going to announce 100 percent it is IOTA until we are 100 percent satisfied.”
Hogeg confirmed that IOTA is not an investor in Sirin.
But even with the Finney project’s blockchain architecture still up in the air, Hogeg is confident the phone will be released by the end of this year.
And, he said, prototypes of the device should be available soon at retail stores the company plans to open in cities around the world, where people will be able to pre-order phones and talk to staff about its structure.
That may sound expensive, but remember that Sirin raised $157 million in its token sale, triple what it initially estimated it would need to develop the phone.
Also in the works is a Finney PC, based on the Android OS.
If this all sounds overambitious, it’s worth noting that Hogeg has been effective at generating chatter around his projects. In 2014, he created the joke app Yo, a messaging app that initially only allowed users to send the single word “yo” back and forth.
Around the same time, he snagged backing from Leonardo DiCaprio, Lance Armstrong and Serena Williams for his short-form video service, Mobli.
At Sirin, he has already had some success in manufacturing mobile devices, building a privacy-oriented Android phone called Solarin, which came with a $13,800 retail price tag.
Still, his projects have also not matured without some stumbling blocks. In 2016, even though it had some real traction, Mobli was shut down, and in early 2017, Sirin laid off 30 percent of its staff after sales of the Solarin phone failed to support the business model (they are still sold, though).
But according to Hogeg, the way in which the software for Finney was built, allowing other Android manufacturers to use it in their devices as well, hedges the company’s bet on building a piece of hardware from the ground up.
Addressing the uncertainty of the business, but also his optimism going forward, Hogeg concluded:
“Could be that we will become a very big phone manufacturer. Could be. Could be, also, that phone manufacturers will use our software … and we give them everything we do for free, as long as they use our token as the engine for everything.”
Smartphone interior image via Shutterstock.
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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency
World Wire is based on standards developed by SWIFT, says IBM’s Head of Blockchain Solutions
Jesse Lund, the Head of Blockchain Solutions and Digital Assets at IBM, spoke about whether there were concerns regarding the functions of World Wire, and the safety of its transactions, in an interview with CNBC. He also spoke about the impact World Wire would have on financial service systems like SWIFT.
Earlier this week, IBM announced the launch of World Wire in collaboration with Stellar. World Wire is a payment system that utilizes the benefits of blockchain technology, the Stellar Network in particular, and cryptocurrency, to settle cross-border payments in real-time. The US Dollar and Stellar Lumens [XLM] would be the currencies used to kick-start the payment network.
In the interview, Lund was asked about the implications Bitcoin would have on their network, considering the recent turn of events associated with the coin. He was also asked whether there were concerns and questions pertaining to the functions of World Wire and the safety of transactions. He said,“[…] Bitcoin kind of started the momentum of all of this blockchain. And what IBM has been doing, […], is adding security and confidence to the system. So we are building on new idea, which is the ability to store monetary value electronically and to be able to move that value around the world in real-time.”
He further spoke about what made World Wire different, in light of the presence of Western Union and MoneyGram in the same field. He stated that the current cross-border payments system had issues, adding that there were inefficiencies in the way banks communicate and that World Wire was separate from the network.
“[…] Those things are distinct and they require a lot of co-ordination and reconciliation after the fact, that adds, who would call friction, that adds, you know, time complexity, and cost. And so, by having a digital store of value that can move with the payment data, we make the whole process a lot more seamless and a lot more point to point.”
This was followed by Lund speaking about the existing financial systems such as SWIFT. He stated that SWIFT “was a messaging platform”, while what IBM provided “was messaging like SWIFT”. He said,“We’re based on standards that SWIFT has ultimately developed. Standards that have come out of SWIFT, you know, are inherently part of the platform itself. So, yeah, we’re trying to help banks optimize the way that they service their customers and its becoming more and more global, so money moving cross-broader needs to move more efficiently.”
Further, he was questioned on whether they faced any pushback from banks or whether they were viewed as a threat. Lund strongly disagreed, stating that IBM’s role in Word Wire was “as the network operator” and an infrastructure provider. He said,
“We’re trying to build the foundation on which banks can continue to enhance their businesses and to build new applications that will ultimately affect their customers. So, we’re just trying to make it easier for them to pass along improvements and better user experience for flocks like us.”
Permissioned Blockchains Will Dominate the Public Ones
Undermining the principles of openness and trustless-ness, the EU Blockchain Observatory and Forum recently has suggested that permissioned blockchains with specific use-cases will lead the adoption of blockchain in the first wave.
The EU working group is assigned with producing thematic reports relating to blockchains and this recent report is titled “Scalability, Interoperability and Sustainability of Blockchains”. The group is also expected to present another report by the second half of 2019 related to other issues of blockchain such as privacy and confidentiality.
A blockchain is essentially a distributed database maintained by decentralized nodes present in the network instead of just a single party. Within the domain of a blockchain, it can either be public, private or permissioned.
In a public blockchain, anyone can enter the network and act as a node. It is fully open in nature and the data is visible to everyone in the network.
In a private blockchain, the nodes in the network are added by a single controlling party. For example, a bank can select the nodes to run a blockchain network itself. One can think of a private blockchain network as a centralized-decentralized framework where a decentralized network is controlled by a centralized party.
In a permissioned blockchain, although anyone can join the network, the amount of data visible to a node is controlled by its role in the network. This is the kind of blockchain structure that makes the most sense for businesses and industries. For example, a node in the supply-chain department only needs to access the data related to it and does not need to get involved in what’s going with the logistics.
Permissioned blockchains have an access control layer built directly on top of a node which filters the amount of data visible to a node and this feature of permissioned chains will drive the adoption of blockchain as the role of every node in the network can be designated for a specific purpose, which is desirable by almost every network in the world.
Although private and permissioned blockchains go against the main principle of decentralization and transparency, this is something that is desirable by many businesses and companies that do not want their processes to be visible to anyone outside of a trusted network.
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As stated by Ian Kane, the founder and chief operating officer of Ternio, a scalable blockchain platform capable of performing 1 million transactions per second:
“Private or permissioned blockchains have their place specifically in an enterprise environment. Companies will not want to put sensitive data on a public blockchain, because of competitive intelligence issues. I think the future of blockchain will be a combination of both public and permissioned blockchains that have interoperability.”
Within a private system of operations, it does not make sense to make use of public blockchains. Public blockchains can expose internal mechanisms and processes of a company or a corporation to the competitors in the game. But for a specific company, a specialized blockchain that holds data relevant to that entity only, internal frameworks can be more transparent and efficient. This is the reason why the usage of permissioned blockchains is expected to drive adoption in the corporate sector.
READ ALSO: Apple Teams Up With Blockchain Technology To Make Their Products More Ethical
Permissioned blockchains are dedicated to specific purposes. If a blockchain is dedicated to the logistics of a hospital, there is no need for the entire world to see what is happening in the hospital. Only the relevant parties need to see the local proceedings. This makes public blockchains of little use in such scenarios as not everyone wants their activity to be visible to the entire world.
Despite the potential to drive the wave of blockchain adoption, permissioned blockchains still face a lot of issues, one of them being interoperability. Public blockchains make everything visible but with private blockchains, transfer of information from one native ecosystem to another is an issue.
Permissioned blockchains make their own little ecosystems and when there is a need to transfer from one blockchain to another, there is no protocol defined yet to do that. What framework is going to be used for cross-chain communication and how much information is going to be shared in order to maintain the validity, are some of the questions that need to be answered. This area needs to be explored and these questions need to be tackled before the adoption can be made widespread.
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Even though the EU report threatens the principles of openness put forward by public blockchains, such as that of bitcoin and ethereum, it might just show the way to making blockchain adoption more widespread.
Facebook Prepares For Blockchain Adoption, Posts Job For Legal Blockchain Counsel
Facebook is making strides in the blockchain industry with new hires as they prepare to launch their US dollar-backed stablecoin, which will purportedly launch in the first half of 2019.
According to Facebook’s career center where the company posts job openings and upcoming positions, a job description detailing the need for a senior lawyer with experience in both blockchain and payments was recently posted.
Facebook Prepares for Rollout of New Cryptocurrency
As previously reported by IIB, Facebook is said to be developing a stablecoin cryptocurrency that will enable users to transfer money across the social media giant’s popular messaging app, WhatsApp. It’s rumored that Facebook will eventually integrate their cryptocurrency across all of their social media platforms.
This not something to be taken lightly as the rollout of “Facebook Coin” will attract a lot of attention from the mainstream, as well as lawmakers and regulators around the world. Therefore, Facebook is now seeking a Lead Commercial Counsel to guide the rollout of this new blockchain technology.
Per the job posting, Facebook detailed the responsibility of this new position, stating that the person hired will be required to present Facebook’s blockchain initiatives and products in a legal and strategic way to clients and businesses on an international basis.
The posting reads:
“You will be responsible for drafting and negotiating a wide variety of contracts related to our blockchain initiatives, including partnerships needed to launch new products and expand such products internationally. You will also advise clients on the various legal risks, business strategies and other issues related to commercial transactions and general operations.”
All in all, this job posting simply goes to show that Facebook is gearing up to launch its “Facebook Coin,” as well as other possible blockchain-related products and initiatives.
Furthermore, IIB previously reported that Facebook was growing their blockchain team with a slew of new hires including software engineers specializing in blockchain technology, among other positions back in December 2018.