Blockchain calling

Though HTC lays claim to the world’s first “crypto phone,” the earliest call on the blockchain was made by a young upstart weeks ago.

You could say that the first words ever spoken over the telephone in 1876 lacked the profundity of the moment. Alexander Graham Bell, presumably, had bigger things on his mind. The history books may one day look back in the same way at the words uttered during the world’s “first blockchain phone call.”

“This is actually a call made fully on the blockchain,” Pundi X CEO Zac Cheah said, on that fateful day, October 10, 2018. Cheah, who co-founded the company, was demoing its latest offering, the XPhone, at the XBlockchain Summit in Inaya Putri Bali, Indonesia. Heightening the enormous excitement, he then accepted a call from his co-founder Pitt Huang. Here is exactly how the call transpired:

Cheah: “Hello? Yeah?”

Huang: “OK.”

Cheah: “Alright.”

The significance of the glorious moment was short lived, however: Last week, Taiwanese phone maker HTC announced that its own “blockchain phone”—the Exodus 1—which will ship in December, can now be pre-ordered. The only way one can buy it is via bitcoin or ether, which seems, frankly, even more historic than the availability of the phone itself.

No word yet on whether you can also buy Pundi X’s XPhone for crypto; indeed, the phone isn’t scheduled to be released until Q2 2019. It’s only a prototype at the moment. And yet its makers are confident they have something unlike anything the competition is offering, including HTC, and are quick to throw a little shade right back:

“We’ve not simply badged a new device as a ‘blockchain phone’ or loaded it with existing applications,” Cheah explains. “We’ve developed a new protocol for data sharing and telephony, and we will stand by that.”

What he means by that is this: The XPhone’s “blockchain mode” works by making use of Pundi X’s very own public chain, Function X. An XPhone can call other devices on the Function X blockchain—each device acting as a node on the network—directly, privately, and without the need for a centralized mobile carrier.

Pundi X claims that by offering a complete “decentralized solution” consisting of five components—the f(x) OS, Function X Blockchain, Function X IPFS, FXTP Protocol, and Function X Docker—the XPhone is capable of fully decentralizing “every bit and byte” in real time, including phone calls. The calls are automatically encrypted and safeguarded against “needless, surreptitious intrusions,” says Cheah.

The Function X ecosystem also uses the Node Name System (NNS) to allow users to register their device on the blockchain with a unique identifier made up of numbers and letters. For example, early adopters lucky enough to score a short node name like “John” can have their friends dial them up via the blockchain network by entering the command “call.john” on their Function X devices.

Unlike VoIP calls made through a centralized server, calls on the Function X blockchain are made directly between users after the call request is broadcasted through the nodes. The call is encrypted and decrypted end-to-end, and there is no middleman to either facilitate or interfere with the communication.

The Function X ecosystem is the only technology that currently “supports decentralized data transmission and telephony as demonstrated,” says the Pundi X CEO. “We’re unique among chains.”

Of course, the XPhone still requires a connection to a Wi-Fi or cellular network to transmit a call, SMS text message, or other data, so the immediate need for a “blockchain mode” on a cell phone is likely not an obvious one for most consumers. However, the draw, says Cheah, is the XPhone’s ability to transmit this data in a “a highly private and secure way that gives complete power to users, rather than centralized intermediaries, over how their personal data is stored and used.”

It’s no small thing. On Wednesday, Apple’s Tim Cook publicly expressed concern over the creation of a “data-industrial complex,” taking aim at his Silicon Valley rivals for their ongoing “surveillance” of tech consumers and the “stockpiles of personal data” from which they build their riches. But no centralized platform—not even Apple’s—gets out of this clean, as evidenced by the compromises to user privacy Cook’s company has been forced to make in China.

“We foresee a large market of people sharing these concerns and looking to take back control of their data,” says Cheah. The XPhone offers consumers a “decentralized solution,” he says, giving end users direct control over securely encrypted data. “Only owners have full control of the data, no one—whether it’s a third party, ISPs, or even network nodes—can control, limit or eavesdrop on your data.”

While Pundi X is placing an emphasis on privacy, and sees a growing market for consumers who are becoming “increasingly concerned” with the data-collection practices of telecom companies, Cheah says their motivations should not be misinterpreted. “By the same token, we’re not anarchists. We operate in markets in full compliance with regulations and we always will,” he says. “This may require compliance with [know-your-customer rules] and other precautions in each market.”

Still, in a decentralized network, there is no central point of authority forced to confront the data management quandaries that companies like Google, Apple, or even Facebook routinely battle. But that doesn’t mean there aren’t other lingering questions, like how much consumers can expect to pay for the privilege of such privacy—not just for the device itself, but in recurring costs to “transact” over the blockchain.

But as far as how this will work, or how the company’s native NPXS token fits into the picture, Cheah says it’s all too soon to say. He says the company is currently holding some “closed-door discussions with potential partners” and will soon have more details to share. “What we presented is a working prototype,” he says. “The end product will be different.”

For now, Pundi X appears content to have achieved a “historic moment” by publicly demonstrating the “first phone call and data transmission that actually uses the blockchain.” At the same time, Cheah says Pundi X is dreaming bigger than just “blockchain-based telephony” and sees the eventual success of Function X as a “driving force for changing minds and expectations among consumers” for all decentralized technologies.

Though the first words spoken via blockchain phones might be banal, the implications of the tech could be sweeping.

Editor’s Note: This story has been updated to include the scheduled release date of the Pundi X XPhone.

Read Next: The canary in the cryptomine