What Is a Blockchain Phone and Why Would Anyone Want One?

HTC is developing a "native blockchain phone" called the Exodus.
HTC is developing a “native blockchain phone” called the Exodus. JOSEP LAGO/AFP/Getty Images

HTC is building “the first native blockchain phone,” the Next Web reported on Tuesday. Details are sparse about the phone, which has been dubbed the HTC Exodus. But the news raised two immediate questions: What is a blockchain phone? And why would anyone want one?

Blockchain refers to the decentralized ledger technology that (among other things) underlies cryptocurrencies like bitcoin. The records kept on the ledger are encrypted in order to protect them from tampering or revision, making it possible to keep track of transactions and other data without a centralized authority like a bank. Computers that participate in the network act as nodes, which each have a log of every transaction and can verify the accuracy of this information.

It’s unclear what exactly makes a blockchain phone stand out from a “normal” one. The Exodus site claims that each blockchain phone will serve as a node, and that “we want to double and triple the number of nodes of Ethereum and Bitcoin.” Jules White, an assistant professor of engineering at Vanderbilt University, said that the upside to a phone that’s already configured to be a node is that it would make it easier for people to enter the cryptocurrency market. “The average person is probably not going to know how to download an application to do something with bitcoin,” he said. “So if you had a phone that had it built in from the beginning … it might allow a lot more participation in these cryptocurrencies.”

People can already download cryptocurrency wallets and exchange apps on average, non-blockchain phones, which essentially converts the devices into nodes, but a blockchain phone may have these apps pre-installed.

The HTC Exodus may add an extra layer of security for phones serving as nodes. “The appeal there is not that this is something you can’t do with a regular phone,” says Douglas Schmidt, associate chair of computer science and engineering at Vanderbilt University. “I think they’re trying to do it in a way that has a bit more hardware protection. They mention a ‘hardware enclave,’ which I think just means having a special chip on the device that is able to store your private keys and information in your wallet that would be able to access this stuff in a way that would be much more difficult for someone to tamper with if your phone was lost or stolen.”

The HTC Exodus’ website also notes that users’ personal info will be stored on the phone and not in the cloud. This apparently suggests that HTC will be using blockchain technology instead of cloud servers for data storage. “There are lots of ways you could store data into a blockchain—the jury is still out on whether this is really a good idea,” White said. The advantage, in theory, of storing data with blockchain is that there’s less chance of losing any of the information if a particular device fails, since every node in the network will have a copy. However, the security of such systems is up for debate. White pointed out, “When you write something into the blockchain, it’s essentially a public record that anybody in the network can see and verify. You have to have some other encrypted controls on it, but that assumes that you would never discover a flaw in the cryptography.”

Another possible feature on HTC Exodus could be developer tools for creating applications that take advantage of the blockchain, which are also known as DApps. Indeed, blockchain has various potential uses beyond cryptocurrency or data storage, such as contracts enforced by encryption. The HTC Exodus’ website claims that it will widen the DApp user base.

If HTC is able to get a critical mass of people engaging with the blockchain on its phones, then there is potential to monetize its customers. Schmidt points out that, much in the same way that Facebook or Google sell data on users so that vendors can better target their advertising, HTC could also track transactions in order to gain marketing insights. “My guess is that they’re trying to set up a Venmo-like private network of HTC customers who are using their devices to get access to special deals, like no transaction fees,” he said.

Depending on what features HTC actually equips the Exodus with, the phone may appeal to consumers who’d like some handholding to get involved in cryptocurrency, or for people who are already versed in blockchain and want a secure device that’s primed for app development.