What’s a blockchain smartphone, and do you need one?
HTC's Exodus smartphone claims to keep your bitcoin and cryptocurrencies secure. But who is it really for?
The release of HTC Exodus 1, the Taiwanese manufacturer’s much-hyped, much-anticipated blockchain-focused handset, has perhaps answered the first of those questions; the jury is still out on the second.
The tech press first got wind that Exodus was in the works in May, when HTC’s "Decentralized Chief Officer" Phil Chen hinted that he was working on a smartphone geared towards people owning cryptocurrency – such as bitcoin, ether, or one of the thousands of new coins that have been mushrooming over the last two years. In October “early access version” of Exodus was finally made available for purchase, at a cryptocurrency-only price of 0.15 bitcoin or 4.78 ether – equivalent to £750 at the time of writing. The handset will be available in 34 countries, with the noteworthy exception of China, which recently cracked down on cryptocurrency trading.
On the face of it, Exodus looks like a bid for a niche market – as HTC feels the squeeze from its juggernaut competitors Apple and Samsung – complete with a nice PR buzz. As such, the crypto-only sale is a gimmick, and one with the likely effect of making it harder to buy Exodus. At the same time, though, HTC frames the move as a deliberate policy to keep amateurs and no-coiners (internet-lingo for people who don’t own cryptocurrency) at arm's length. As things stand, Chen explains, Exodus is supposed to cater to the blockchain and cryptocurrency community only.
That’s not to say that – blockchain element aside – the handset is not a good one: it boasts impressive specs such as 6in Quad HD+ display, 6GB of RAM, a Snapdragon 845 processor, 3,500 mAh battery, IP68 waterproof rating and dual cameras both on the front and back. Exodus’s unique point of sale, though, is something called the “secure enclave”. That’s essentially a section of the hardware that is ring-fenced from the main processor and the Android operating system.
The technology is not particularly new: Apple has been using a similar architecture to shelter biometrics data on its iPhone – fingerprints, and, later, Face ID information – since 2013. But HTC Exodus will use that locked portion to store the users’ cryptocurrency wallet keys – the numeric codes necessary to spend one’s cryptocurrency stash.
Having their keys stolen is a cryptocurrency holder's worst fear, and a constant source of angst and antics. Right now, many cryptocurrency owners content themselves with software wallets: mobile or desktop apps that are portable and easy to use. These apps either store the keys themselves, or entrust them to the servers of a third party, such as an exchange or the app’s developer. As everything connected to the internet, though, software wallets are potentially vulnerable to hacking, which – given some cryptocurrencies’ recent spikes in value – can result in seven-figure losses.
Hence the crypto-super-rich’s preference for hardware wallets, which store keys on a USB drive kept offline for most of the time, albeit it still needs to be plugged into an internet-connected device to carry out transactions. Hardcore crypto-fans sometimes take it up a notch, resorting to paper wallets, i.e. a sheet of paper printed with a string of digits, or an equivalent QR code, which can be typed or scanned at the time of payment. It is not infrequent for these offline – or “cold storage” – wallets to be guarded in oddball ways, including Faraday-cage-equipped air-gapped safes, or padlocked briefcases perpetually lugged around by their owners. Needless to say, cold-storage wallets score high on security, but they are much less usable than smartphone wallets.
What HTC aims at doing with Exodus is providing a middle-ground solution. While the safe enclave is not totally unhackable (nothing is), keeping one’s keys on a quarantined chip is safer than storing them on a software wallet, fully tied with the smartphone’s operating system. In the same breath, Exodus promises to be less unwieldy to use on a frequent basis than most cold-storage wallets are – possibly a desirable feature in countries, like Japan, where cryptocurrency payments are accepted in several stores.
With Exodus HTC also hopes to fix another typical crypto-nightmare: losing your cryptocurrency keys – through forgetfulness, theft, or destruction of a phone or hardware wallet. A mechanism dubbed Social Key Recovery will allow users to select a few trusted contacts, and hand to each of them a parcel of their key – thus the code can be pieced back together if the need arises.
HTC Exodus’s website is plastered with quotes from cryptocurrency grandees – including Ethereum’s cofounder Vitalik Buterin and Litecoin creator Charlie Lee – enthusing over the device. Chen says that more than 30 leaders in the space advised the Exodus’s developing team “at critical touch points”.
Will this be enough to win over the cryptocurrency ecosystem, one characterised by a knee-jerk hostility towards incumbents and corporations? Not everyone is convinced. Andy Bryant, a Chief Operating Cfficer at the European branch of cryptocurrency exchange bitFlyer, commented “serious investors keep [their bitcoin] in cold storage, possibly in a safe; less sophisticated holders, usually have everyday software wallets. So who is going to use it?” “A lot of people in the space will think: ‘Am I going to trust a phone manufacturer?’.” He adds that, as most cryptocurrency owners are currently holding rather than spending their funds, this is not an ideal moment to launch a product that can only be bought in crypto. “It’s not a very big market.”
HTC’s Chen counters that Exodus’s safe enclave is “almost on a par with cold storage”. The company will also release APIs to enable cryptocurrency developers to build on Exodus’s hardware, and further enhance its security. “We’re not perfect, but we’ve gone out and said: ‘Hey, help us make it better’,” Chen says. He is at pains to underline that Exodus is not only about bitcoin. Following Facebook's recent privacy-related scandal, several crypto-savvy developers have proposedharnessing blockchain technology to give users greater control over their personal data. HTC Exodus might be the first mainstream step in that direction. “Cryptocurrency is a part of [HTC Exodus], but not the most important part,” Chen says.