Can Wearable Tech and Bitcoin Revamp Mobile Payments? (coindesk.com)

The smartphone revolution kicked off a decade ago, but it really heated up over the past three to five years.

Smartphones are perhaps the most ‘personal’ computer used by the average person and, in terms of usefulness, they are the gadget equivalent of the Swiss Army knife. It’s little wonder, then, that more than a billion people bought a newsmartphone in 2013.

Engineers, developers and designers from Cupertino to Seoul and Taipei have clearly done an excellent job. Sadly, the same cannot be said of marketers, merchants and economists.

Few of them imagined that a phone could have the potential to turn the tech industry on its head and change business practices forever. For example, an estimated 355 million smartphones feature near field communication (NFC), but who actually uses it to make a payment? The same goes for Apple’s Touch ID.

The geeky smartphone ecosystem sounds like a technologist’s wet dream and worst nightmare rolled into one – all that glorious tech is out there and most of it is going to waste. That sounds a bit like bitcoin, doesn’t it?

Where is the mobile payments revolution?

While most people are quite happy to buy a new smartphone, very few of them use it for mobile payments. Bringing one-tap payments to every consumer is an elusive goal and there are a number of reasons for that.

The retail industry was not too keen to embrace new technology, because it’s not easy to deploy and there has not been much demand. In terms of online purchases, consumers still prefer the good old desktop, as the tablet and smartphone user interface is still not as convenient.

Then there’s security: many people still worry that if they lose their phone they might also lose vital credit card info and other personal data. Most of these problems can be addressed and, indeed, are being addressed currently.

So, the mobile payments revolution hasn’t yet materialised, but there have been some positive developments.

Bitcoin is a great medium for mobile payments on more than one level. No credit card data is held in bitcoin wallets, every smartphone can scan QR codes, and hassle-free bitcoin transactions are cheap and fast – however bitcoin is still just too small to make much of an impact.

Wearable craze coming to a theatre near you

Wearable technology is starting to look like the next mobile craze: analysts are bullish and the technology is maturing fast. However, once again many people are scratching their heads and trying to come up with practical applications for wearables, other than fitness trackers.

So how about using wearables to make payments? That is starting to look like an increasingly promising concept: wearable gear is harder to lose than a smartphone or wallet. There’s no need to go rummaging through your bag or pockets when you need to make a transaction and authentication is not a problem either.

The Nymi smart wristband is a good example of truly practical wearable tech. The Nymi features an electrocardiogram (ECG) sensor and, since every person’s ECG is unique, the wristband offers ‘always on’ authentication – as long as it’s on your arm and your heart keeps pumping blood. Therefore, you can make a payment simply by tapping it.

The wristband also features a bitcoin wallet, and the company claims it is one of most secure wallets out there.

However, the Nymi is a niche product designed for a specific use and it will stay that way. Making wearable payments more than a gimmick requires mass market devices with mainstream appeal, and we are finally starting to see such wearables – gear that an average non-geek would like to wear.

Here’s a quick test: would you rather wear Google Glass or the upcoming Moto 360?

We thought so – looks are no longer the problem, but the fact that there are currently very few practical uses for wearables remains a concern.

More integration, more possibilities

The Mobile World Congress in Barcelona is always a good place to check the state of the industry. This year the event was marked by heaps of smart watches and other wearables.

The focus is there and Google left the best for last: a couple of weeks after the event, the search giant announced Android Wear, a streamlined version of its Android mobile OS designed solely for wearables.

Android Wear brings more standardisation, more useful APIs for developers, more incentive to develop cross-platform apps and so on. Android Wear will be open to everyone and, since Google isn’t as hostile towards bitcoin as a certain fruit-logoed gadget maker, bitcoin developers will be free to devise new ways of bringing seamless payments to emerging platforms.

That’s not all. Google recently introduced a few changes to Google Wallet, lessening its reliance on NFC and smartphones. Google is now using cloud-based host card emulation to store sensitive data and Google Wallet is now a core service in Android 4.4 KitKat.

As the system is cloud-based, Google Wallet can now be accessed from anywhere. It is not limited to NFC-enabled phones, users do not have to re-enter their credentials every time they use it, more credit cards can be added, and so on. Bitcoin developers could learn from this approach.

“There are plenty of bitcoin developers willing to put a lot of effort into creating the ‘killer app’ for wearables, but it will be a while before we see the new services in action.”

Google says it is focusing on improving user experience, making wallet payments seamless. Making money comes later, Google has to broaden the user base first.

Many bitcoin developers face a similar problem. Like Google Wallet, bitcoin is not a mainstream form of payment and much of their effort goes into making the services good rather than turning them into cash cows. Google’s approach offers a lot of possibilities for bitcoin developers, who can emulate it or use off-the-shelf Google technology to speed up and standardise development.

Biometric authentication on wearables and smartphones, smart watches that display QR codes, cold storage on wearable gear – all this is relevant to bitcoin developers and users too. In fact, bitcoiners could even out-innovate established players in the field of wearable payments. The industry was not quick to seize the opportunities offered by smartphones, big players just don’t tend to move as fast as small, lean, bitcoin outfits.

Wearable payments will not be a ‘killer app’ for bitcoin, and they won’t cause adoption to skyrocket overnight. However, wearables could give bitcoiners the opportunity to devise services that will offer something truly new, rather than simply emulate the credit card industry.

The only downside is that much of this work will have to be done by enthusiasts, as there is still little money to be made in this particular field.

Still, there are plenty of bitcoin developers willing to put a lot of effort into creating that ‘killer app’ for wearables, but it may be a while before we see the new services in action.