A new startup, 37Coins, has launched a bitcoin wallet that can be used on any mobile phone, by using the lowest technological common denominator – SMS.
SMS is an attractive way of handling cryptocurrencies as it opens up a whole new tier of users around the world. However, it does decrease the decentralised nature of bitcoin by introducing a single point of failure. However, it would be worth the risk to cater for the billions of “unbanked” individuals by making cryptocurrencies more accessible.
The so-called “unbanked” are those people who live in poorer parts of the world, and to whom bank accounts are just not available or too expensive. For these same people, knowledge from the Internet has been made accessible through various SMS services (e.g. Wikipedia).
These people can benefit the most from cryptocurrencies, which provides fast and secure payment transactions.
Jonathan Zobro, one of the company’s founders, said to CoinDesk:
“We can give tools to people to help bring bitcoin’s benefits to their economy.”
37Coins, requires an SMS gateway to be present in each country it operates in.
For each country, 37Coins plans to establish a gateway for its service. At the time of writing, 37Coins was offering gateway SMS numbers for 37 countries.
37Coins asks on its website for users to sign up as SMS gateways. This is done by registering with the company and then running an app on an Android device. Gateway owners can then set their own transaction fee. As research for this article, I tried to sign up as a gateway provider, but the verification process failed.
37Coins is necessarily centralised, as users do not run wallet software of their own. Therefore, 37Coins is holding all the wallets. Interaction with the service is done by sending text commands by SMS to one’s local 37Coins gateway number. E.g. “Send”, “Help”, “Bal”, and so on.
Sending bitcoin is flexible as the SEND command will accept a phone number or bitcoin wallet address. If funds are sent to someone who does not use the service, a wallet is created and the coins are stored for the recipient to transfer the funds.
As more bitcoin recipients send payments on to other phone numbers, more and more people will have wallets available to them via 37Coins.
Signing up for a wallet is easy, one just needs to sign up at the website with their phone number, or just text to the local gateway number. For example, the “Addr” command returns your bitcoin wallet address on 37Coins. If a new user sends this to their local 37Coins gateway number, their phone number will be added to the system and a wallet generated for them.
37Coins, or something like it, could be an important step for cryptocurrencies, as it takes out the complication of creating and looking after a wallet. Furthermore, the spread of mobile phones outstrips those who are currently on the Internet. However, it comes at the cost of a hosted wallet service that could be subject to attack or external economic pressures.