Having formed an integral part of our lives, smartphones have met a huge adoption rate in the global market. With over 6.9 billion smartphones in existence as of November 2023, they account for 85.7% of the world's population. For more than 60% of internet users worldwide, mobile phones are the primary gateway through which they access the web. While studies have suggested that people use their phones mainly for communication and entertainment, these devices are the enablers of the adoption of the digital economy, facilitating people’s interaction with e-commerce platforms, financial services or digital health features.

With smartphone usage expected to grow 2 to 3% year-on-year by 2025, companies that tap into the growing adoption trend of mobile devices can gain billions in revenue. To jump into this trend, many crypto projects are developing products that solve the problems posed by Web 2, with many players capitalizing on the mobile market. As people are becoming more aware of the flexibility Web 3 brings as an alternative to Web 2, Web 3 phones may be the future of the smartphone market.

What are Web 3 phones?

Also called blockchain phones, Web 3 smartphones are the superheroes of the mobile world because they leverage the promises of Web 3. They were designed to embody the principles of Web 3 technology, bringing decentralization, security, and user anonymity to people’s fingertips. Web 3 phones are completely user-centric, users will have control over who has access to their data and they will have access to a previously unimaginable number of entirely decentralized applications.

Although Web 3 phones may have different specifications depending on the manufacturer and operating system, they all focus on providing extra security and anonymity to users via blockchain technology. They use sophisticated encryption systems that prevent third parties from accessing user data while prioritizing dApps over centrally controlled applications like Facebook. Their ability to double as a secure crypto wallet is another great feature that sets Web 3 apart from the pack. Using them, users have the easy capability of integrating their phone’s crypto wallets with decentralized finance (DeFi) dApps, a feature that is not commonplace among normal smartphones.

Web 2 versus Web 3 phones

There is a very high chance that when you see a Web 3 phone for the first time, you may not have noticed it. Most of the Web 3 phones on the market have familiar build and touchscreen designs of Web 2 phones. Web 2 phones, which are the dominant devices that are heavily reliant on centralized software, come with their fair share of drawbacks. Users of Web 2 phones trust centralized corporations with their information, empowering them to control user data. This often leads to data breaches, privacy infringements, and security concerns. In addition, Web 2 phones were built to rely on the app stores, limiting users' access to mobile applications thereby impeding innovation.

Web 3 phones emerged to address all the concerns associated with Web 2 phones. Built solely on blockchain technology, they allow users to interact directly with decentralized networks, facilitating peer-to-peer transactions, seamless execution of smart contracts and verifiable digital identities. Let’s briefly break down these features before analyzing a few blockchain phones currently on the market:

a) Support for dApps

dApps utilize blockchain technology to offer innovative services in different sectors like gaming, finance, and socials. However, Web 2 phones have limited access to these dApps. With the support for dApps being part of the core functionality of Web 3 phones, users now have unlimited access to these decentralized digital tools.

b) Enhanced security and privacy

Blockchain phones were built with very strong encryption infrastructures to preclude the possibility of centralized entities having access to user data. If you own a Web 3 phone, you can have peace of mind that someone somewhere is not stalking you, selling your information for revenue-generation purposes or having unauthorized access to your data. Thanks to the decentralization associated with blockchain, people don’t need to submit much personal data to have access to dApps and DeFi. This is a level of privacy that was previously unattainable.

c) Seamless crypto wallet integration

Avid crypt users were one of the major target audiences for Web 3 phone manufacturers. They were built with cryptocurrency wallet integrations, allowing users to store, manage, and transact their digital assets without depending on third-party platforms. This may also incentivise non-crypto natives to explore new passive income opportunities like trading, asset lending, or staking.

d) Improved data ownership and control

Using Web 3 phones, users are in the driver's seat of their data. They have absolute control over what data to share, who has access to what, and even earn rewards from letting out a portion of their data. This enables greater control and ownership of one’s personal information, disarming the influence of big tech firms on people.

While the Web 3 phone market is still in the infant stage and often called a “niche” category, a few prominent brands are hitting the market already. We will explore just two:

Web 3 smartphone case study 1 (Solana Saga)

After the massive success achieved by the Solana blockchain, the team at Solana Labs decided that they could replicate their success to drive mass adoption of cryptocurrencies via mobile technology. Their first Web 3 production, Solana Saga, which was officially launched on May 8, uses Qualcomm Snapdragon 8+ Gen 1 processor to power a “Seed Vault” according to a product review on Decrypt. This Seed Vault serves the dual purpose of keeping the private key of users’ crypto wallet address and an extra layer of security. It also makes it seamless to interact with DeFi, NFTs, and gaming through the Solana dApp store.

With baked-in Web 3 functionalities, Solana Saga has a dominant place in the Web 3 mobile market. It is a powerful phone with secure wallet functionality which is intriguing to early crypto adopters, crypto die-hards and high-net-worth individuals. With admirable UX, Solana Saga feels way more intuitive while transacting NFTs and cryptos compared to Web 2-based wallet systems.

Man snapping with his Web3 phone. Image source: Decrypt

Web 3 smartphone case study 2 (Metavertu)

Already famous for rolling out deliberately luxurious devices, Vertu also joined the race to produce Web 3 phones. All Metavertu users have access to a cloud-based service named “Value” which allows them to create and store their in-phone crypto wallets securely. The phone also offers the option of directly minting NFTs via the phone camera without having to go through minting platforms. While Metavertu may only be intriguing to successful crypto investors because of the high-cost price, the phone is a big name in the Web 3 phones landscape.

Metavertu phone. Source is Vertu’s website

Challenges and limitations of Web 3 phones

As earlier hinted, Web 3 phones are still in their early stages and they bring a paradigm shift in how we interact with technology. This means there is a huge gap in user education about the potential and use cases of the devices. Without deliberate efforts to bridge this gap, Web 3 phones may face friction in the mobile market.

In addition, regulatory and legal frameworks of various regions in the world may stifle their adoption. Because of decentralized capabilities and potential use for smart contracts, governments and agencies may need to work closely in establishing clarity in the regulatory policies for their use by individuals and businesses. This will address the risks associated with bad actors utilizing the technology for fraud and malicious purposes.

Affordability is also a huge factor that may be challenging for blockchain phones. Because of the high costs of procuring them, it may be wishful thinking that they will gain considerable traction amidst the current inflation and financial crises storming the world generally. Although they offer exceptional functionalities, the current price points of Web 3 phones are spiky compared to dominant mobile brands like Samsung, Tecno, or Apple.

Web 3 smartphones: Future outlook

If anything, Web 3 smartphones are here to redefine the way we interact with the internet. They empower users, enhance security, and uphold the principles of blockchain technology. However, it is too early to say whether their emergence will impact crypto adoption. As the general adoption of blockchain technologies is currently relatively low, it may be too ambitious to think non-crypto consumers will gravitate towards Web 3 phones because of the decentralization and integrations with in-built wallets. Either way, it is a fact that Web 3 phones open a world of opportunities and protect the rights of its users within the digital landscape. As more firms are exploring ways of making Web 3 phones more affordable and enjoyable for users, everyone is waiting to see what Web 3 phones will turn out to be within the mobile market.