Apple may be prepping to turn your iPhone into a crypto wallet
Apple is likely preparing to let iPhone owners turn their devices into hardware wallets that allow them to store and use bitcoin and other cryptocurrencies for mobile purchases of everything from a cup of coffee to clothing and groceries.
Unlike other announcements at the Worldwide Developers Conference (WWDC) last week, Apple's new CryptoKit for iOS 13, got little attention. But it will allow developers to easily create hashes for digital signatures and public and private keys that can be stored and managed by Apple's Secure Enclave. Those keys, which can represent cryptocurrencies, can then be exchanged by iPhone owners as a form of payment through an app.
Apple did not return a request for comment on CryptoKit and whether it is indeed part of a plan to introduce a cryptocurrency wallet.
If Apple is going down the cryptocurrency path, it would be following HTC and Samsung, who've announced their intention to create native cold storage wallets on their smartphones. HTC last year announced that its Exodus 1 smartphone would be able to natively store bitcoin or Ether cryptocurrencies and Samsung is making a big push for the same feature on its flagship Galaxy 10 phone, expected to arrive in February.
A new study from Juniper Research found that the number of people using digital wallets for all types of currencies is expected to increase from 2.3 billion this year to nearly 4 billion, or 50% of the world's population, by 2024. This, in turn, will push wallet transaction values up by more than 80% to more than $9 trillion a year. The study argued that increases would be driven by a greater volume of transactions conducted via stored credentials.
The report highlighted the challenge posed to NFC-based contactless wallets, such as Apple Pay and Samsung Pay, by the emergence of wallets based on QR codes. QR codes are already being used by merchants to access cryptocurrency wallets for payment.
At this point, Apple's CryptoKit doesn't include all of the cryptography algorithms, such as the secp256k1 signature algorithm, needed to complete Bitcoin transactions, according to David Huseby, a Security Maven at Hyperledger, the open-source blockchain project under the The Linux Foundation.
"However, the abstracted interface they created makes it easy to add other algorithms in the future," Huseby said via email. "It's the same strategy that Hyperledger Ursa has taken for making cryptographic algorithms 'pluggable.'"
Hyperledger Ursa is a cryptographic library, a repository developers can draw on to easily create a layer of encryption - private and public keys - to increase security for apps.
In the same way, according to Apple, CryptoKit will give iOS app developers a new framework for creating secure hashes for operations like message authentication and secure cryptographic keys.
Viktor Radchenko, founder of Trust Wallet, a cryptocurrency wallet that supports the storage of Ethereum-based tokens, tweeted that CryptoKit means users are just a few steps away from turning their iPhones into a hardware wallet.
Kyle Ellicott, chief labs officer for research firm ReadWrite Lab, agreed with Radchenko: CryptoKit means Apple's giving developers the ability to build blockchain or crypto-based apps - and it puts Apple in a unique position when it comes to hardware.
"They'll be able to provide a cold storage, or a more secure crypto wallet than anything else out there right now from a mobile phone standpoint," Ellicott said, referring to the existing biometrics capabilities on iPhones and iPads. "Look what else they talked about at WWDC. They announced the Goldman Sachs payments card and announced huge upgrades to Apple Wallet."
Apple business partners, including Starbucks and Whole Foods Market and other other retailers, have all announced programs to accept bitcoin other cryptocurrency for payments. A customer merely waves a QR code on their smartphone in front of a register scanner and payment is transferred to the retailer. The QR code, enabled by an app, represents digital currency in a customer's cryptocurrency wallet.
"People need to store [cryptocurrency] and they need to feel a level of comfort with that. Now with the Apple Wallet improving, and these partners using the technology..., the next step is to integrate the two," Ellicott said. "As consumers, we know how to use the wallet; we feel safe because the partners are using as well."
Apple's CryptoKit and Hyperledger Ursa both seek to improve software that uses cryptography by ensuring app developers don't have to understand the subtle details of using a particular cryptographic implementation. Ursa, however, includes advanced cryptography features such as zero-knowledge proofs for more privacy-oriented applications; Apple's CryptoKit does not, Huseby said.
Because CryptoKit enables a second layer of security through encryption for iOS applications with private and public keys, it can address other issues related to hardware hacking, such as SIM jacking - a malicious attack often used to assume control of a person's digital and financial lives.
"It's another layer of authentication and protection," Ellicott said. "That's why it's a bigger deal than Apple let onto. I don't think they wanted to make too big of a splash because a lot of it came down to them not wanting to seem like they were creating potentially their own cryptocurrency like Facebook. We don't know if they'll have an Apple Coin. It would make sense based on their other strategies.
"And, they don't want to be the ones creating the next Coinbase," Ellicott continued. "They want to empower Coinbase to leverage their technology to further integrate in the Apple ecosystem. That's my interpretation of what I saw."
Apple is a notoriously quiet company when it comes to talking about future products and services, but it has filed patents related to blockchain; to date, most of those that have been made public relate to ethical sourcing of materials for building devices, such as the iPhone, according to Ellicott.
For example, in February, Apple announced it was helping draft blockchain rules for the Responsible Business Alliance's Responsible Minerals Initiative (RMI). First reported by VentureBeat, Apple chaired the Alliance and served on the RMI steering committee during 2018.
Ellicott speculated that Cryptokit may be hiding other Apple blockchain patents that, as it's rolled out, will come to light.