Samsung goes crypto, who has to worry?

Samsung announced support for cryptocurrencies on the hardware level in the Samsung S10 smartphone. Technically speaking, an additional chip was added to store and encrypt critical data. The device works the Exynos chip 9820, which supports physically unclonable functions (PUF), which creates a unique identifier for each chip. It allows you to securely hold cryptocurrency and any other sensitive information on your smartphone through hardware encryption.

For mere mortals, this means that personal data and passwords get another level of security sewn into the chip inside the smartphone. For those who are aware of what is hardware crypto-wallets, you now have A-tier smartphone with such a function. Developers will be able to create software to interact with the hardware of the device, and users will be able to use them to store cryptocurrencies.

However, this is not the firstcomer, HTC Exodus 1 was introduced in October 2018. Its launch was loud but it is unclear what is happening with this project now and whether the device had success in sales. An interesting fact: smartphone was sold at a fixed price of 0.15 BTC (or the equivalent in ETH, LTC), and since cryptocurrencies have fallen significantly, price in the dollar equivalent of HTC Exodus 1 has fallen significantly too. However, as we speak you can already buy it with cash.

Real competition?

Let’s leave aside the business indicators and consider the usability of such a gadget. Samsung is going to add another way to securely store cryptocurrencies. Who have to worry?

• Cryptocurrency exchanges that combine the risks that the exchange will be hacked or the owners of the exchange will ‘lose’ the private security keys.
• Web wallets, such as https://myetherwallet.com, again, are a laconic target for hackers. In addition, the reliability of some providers has to be doubted.
• Software wallets for Desktop and mobile devices. Overall, these are handy apps, but users are always scared about the possibility of them being hacked or money being lost in some tricky way.
• Hardware wallets like Ledger Wallet, Trezor and others. Everything is fine in terms of security. But for the usability of devices, oh well, these wallets are not easy to manage, they need to be connected to a computer or a smartphone. It is extremely difficult to type passwords, since there is no keyboard. In addition, such devices have limited support for the number of simultaneously installed wallets because of limited memory size. For example, to add 4th currency on the Ledger device Nano’s we had to remove a Bitcoin Cash wallet, in order to free up space. What if we suddenly discover that with the removal of the wallet we’ll lose coins?
• Enterprise Cold Custody, there are solutions for Enterprise-level storage of crypto assets. These are expensive but safe storage facilities for the B2B sector in Switzerland and other countries.

Why a smartphone can be a significant competitor? First of all, the default smartphone has an Internet connection — you don’t need ‘interim devices’. In addition, the phone is always at hand, in fact, it is an online Bank with the ability to quickly make a transaction directly from the phone in a few swipes.

Having a hardware crypto key, this gizmo becomes safer than software wallets, while it is much more convenient in terms of authorization: the password is more convenient to enter from the keyboard, the use of fingerprints or FaceID is much more comfortable than entering the password.

Finally, you can install additional apps that expand the opportunities of using the wallet. A good example can be an app that connects you to decentralized exchanges and gives the ability to trade directly from the phone. Basically anything where you may want an additional level of security.

“Okay, that sounds cool, but I don’t use crypto…

… and I don’t care about bitcoins, why would I use that?”. In fact, this feature opens up a lot more opportunities. For example, such a device can become an international passport and store your biometric data, insurance and other documents necessary for verification at customs. Your medical card may also be accessible from such a secure phone. Your phone and gadgets can upload private data about your health to the cloud using chip authorization in the smartphone.

In addition, you can add all the passwords from any system and store them in secure storage. For example, such programs as 1Password, LastPass, KeePass and others can provide such integrations. For the corporate sector, this can be an additional level of cybersecurity for their employees. You can use smartphone just like access-card, and even assign different levels of access.

If we give free play to fancy, then such a system with hardware protected key in addition to a heap of wireless interfaces (NFC, Bluetooth, WI-FI and LTE) can allow your smartphone to become the key to your car, apartment, bank cell. You do not need to have different keys for different entities. However, if you lose your phone — you gotta have a lot of problems

Potential issues and risks

In fact, everything written above is not so simple and cool. What to do if the phone is lost/broken or stolen. How to restore access to the wallet? On HTC Exodus, for example, you can use the Social Key Recover feature, which allows you to assign a group of trusted friends, each of whom will have access to part of your key. When these friends get together, they will be able to recover your data and access it accordingly. At least it’s a good reason to get together.

By using hardware crypto-wallets, we are used to the standard scheme with the generation of seed phrase as a backup access. But in this case, all private keys are also backed up to the Samsung server in encrypted form (centralization!), accordingly, if you lose your phone, you can restore access to private keys through your Samsung account and then destroy the private keys on the lost phone through the Find My Mobile function. However, with the advent of centralized storage of your passwords and private keys on Samsung servers, there is a question of their security and, for example, the potential availability of your data for the government and other third parties.

Also, it’s a new product for Samsung so software and hardware parts can be imperfect’ in some way. There can be security holes that will help malware to access your cryptographic and other data. The appearance of such wallets will spur the developers of viruses and various hackers to pay more attention to hacking smartphones, hence the number of threats to smartphone owners will increase.

Summary

Despite all the possible threats, for Samsung, it means entering a new and potentially fast-growing cryptocurrency market. In this case, Samsung will be one of the pioneers. In particular, they can compete for the market with current wallet developers such as Jaxx, Ledger, Trezor, and others. In addition, you can consider such a solution as a purely marketing move to stand out among dozens of other smartphones. Now it is more and more difficult for smartphone developers to be unique and bring innovations to such a competitive market.

Thus, we are talking about creating a completely new class of devices, which due to the flexibility of smartphones can create a new market for applications for both B2C and B2B sector. This applies primarily to applications related to the management of your personal data, corporate cybersecurity, cars, smart homes and so on.

If you look at the cryptocurrency market in general, one of the main problems for the mass adoption of blockchain-based projects is very poor usability. Try to explain how to buy bitcoin and then store it on your crypto-wallet to your grandmother, most likely she’ll call exorcists. However, with the arrival of Samsung, the chance of convenient, and, what is more important, useful applications for cryptocurrencies increases for tens of millions (in the case of only Samsung users), and potentially hundreds of millions (hardly competitors do not see this niche) of users, which will spur the wheel of mass adoption.

In addition, it means the emergence of a new ecosystem. By adding a hardware crypto-wallet Samsung gives access to the ecosystem of Samsung, respectively, developers can create new solutions and services for such an ecosystem. Naturally, this is good for both the average user and the companies that will work on building new solutions.