Blockchain in Your Pocket? The Phone Behind Sirin’s $157 Million ICO
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.
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.
You may be interested
Major Spanish Bank BBVA Closes €150 Mln Loan With Porsche Holding Using Blockchainbtcethereumadmin - December 14, 2018
Spain’s second largest bank, Banco Bilbao Vizcaya Argentaria, has closed a €150 million loan using blockchain technology. Spain’s second largest…
Bitcoin Cash Tanks 13 Percent as Major Cryptocurrencies All Fall Hardbtcethereumadmin - December 14, 2018
The cryptocurrency bear market continues in earnest as Bitcoin Cash investors in particular see holdings evaporate. Friday, Dec. 14 —…
Top Crypto Exchange Binance Adds Circle’s USDC to Its Combined Stablecoin Marketbtcethereumadmin - December 14, 2018
Major crypto exchange Binance has added Circle’s USD-pegged stablecoin USD Coin as a quote asset in its combined Stablecoin Market.…