A whitepaper published by China Telecom reveals the state-owned firm’s plans for a new way to store digital assets in the 5G era, according to Sina News. Unlike other existing products, the blockchain-based wallet will store private keys on a phone’s SIM card. China Telecom claims ERC20 and other Ethereum-based tokens will be supported.
The firm hopes to use blockchain to combine the user’s identity and private key on the phone’s SIM card. When the user transfers digital assets, for instance, a smart contract is executed to verify their identity and authorize the transaction. Using biometrics, such as facial recognition and fingerprints, only the correct user is authenticated.
China Telecom’s whitepaper, “Blockchain Smart Phones in the 5G Times”, was released on the 27th of August. It outlines how the advent of 5G “should allow more people to enjoy the right to obtain high-security and high-performance mobile phones.” In particular, blockchain-enabled smartphones.
Combining distributed ledger technology (DLT) and 5G unlocks five new applications for mobile phones, according to the whitepaper. These are identity verification, supply chain traceability, express delivery, and financial and judicial sectors. However, these scenarios require private key storage safe from fraud and phone theft.
China Telecom’s solution is a novel digital wallet. Currently, there are two main types on the market: a hot wallet and a cold wallet. A hot wallet stores information so that’s online all the time, potentially on your phone or computer, so the user can access keys and hence digital assets as any time. Though being online, these are susceptible to hackers and viruses. The alternative is a cold wallet, mainly offline physical storage often in the form of a USB stick. While they can’t easily be hacked by anyone else, carrying a cold wallet around is inconvenient. Plus, if it’s stolen or misplaced, the keys are lost.
The SIM card application appears to be a third type of wallet. While it is physical storage, like a cold wallet, there’s nothing extra to carry around. If the phone is stolen or lost, the use of biometrics means that private keys cannot be taken. It looks like a SIM card wallet combines the advantages of hot and cold wallets, without their downsides.
Some blockchain phones have come onto the market that use ‘secure enclaves’ to try to segregate the private keys from prying eyes. But buying a new phone is expensive.
In contrast, China Telecom claims that any phone manufacturer could use the SIM system.
The firm has also considered how to keep the wallet accessible to the mainstream market. The more people who adopt the technology, the safer it gets. For instance, phone scams targeting vulnerable people can be blacklisted, so transactions paying the scammer will be stopped at the authorization stage.
Recently, Samsung released its blockchain-enabled smartphone, the KlaytnPhone. Available in South Korea, the phone includes a cryptocurrency wallet built-in, likely secured with the firm’s Knox technology, a type of secure enclave.