Is Blockchain Replacing the SIM Card?

The telecommunications industry has experienced more than its fair share of change, and by necessity has evolved extremely quickly. As computing and communications have merged, the industry has had to deal with debates about privacy and data ownership, and major companies have quickly morphed into the giants of today.

At the same time, the technology that powers telecommunications is rapidly changing, and old standards are being challenged. The SIM card, one of the staples of mobile phones, is facing obsolescence as digital solutions offer significant improvements. With the help of new concepts like blockchain, the smartphones of tomorrow may look familiar, but their technology will be a massive leap forward.

Key Takeaways

  • Companies are exploring blockchain technology in order to save their customers time and hassle with physical SIM cards by offering fully-digital eSIM options.
  • Blockchain is a relatively new technology, but one that is widely used and fairly secure.
  • Some customers still prefer the ease of switching out physical SIM cards between phones, especially when traveling.
  • eSIMS can be instantly assigned and downloaded once the carrier's terms and conditions are met and payment is processed.
  • Currently, SIMs are operating on technology that hasn't changed much since it was introduced in 1991.

Combining Communications Tech With Blockchain

The blockchain revolution continues to gather steam, and for good reason. Blockchain’s distributed ledger is a powerful system for democratically organizing the nodes—or users—on its network while rewarding them for lending processing power and other resources.

Blockchain’s decentralized ledger has laid the foundation for ideas that include a decentralized cloud storage network, self-sovereign banks, and transparent voting systems. More importantly, however, it could also radically change the way our smartphones operate.

Despite the bells and whistles that smartphones offer today, the technology that drives them is surprisingly outdated. Most smartphones still use the SIM (Subscriber Identity Module), a physical memory card that was first developed back in 1991. It holds the identity and cellular network details of each user, including their phone number, name, service provider, and other information.

SIMs are a relatively basic way to upgrade a phone as one simply removes the card and plugs it into a new device. Switching providers isn’t as easy and still requires customers to request a new SIM card be mailed to them or to drive to a brick-and-mortar store for a new SIM.

While other hardware-based storage tools upgraded to digital technology—much like video games went from cartridges to digital downloads—SIM technology remains essentially the same as it did when it was created. Now, its dominance is being challenged by eSIM technology, which was first deployed by Google. With blockchain’s help, it’s set to hit the wider market and make a larger splash.

eSIM Technology and Blockchain Create New Markets

The eSIM is essentially software that holds the same information as a regular SIM but on a digital module instead of a physical chip. Apple already deploys it in its Apple Watch and iPad products, which tout slimness and couldn’t afford to incorporate even the tiniest of memory cards.

Though the move was mostly intended to cut out cell service providers, Apple and Google first showed the efficacy of the eSIM model by selling their devices without a pre-loaded service provider. Customers could simply choose from any number of providers and data packages once connected to Wi-Fi, saving them precious time and effort.

Consumers also save money with eSIMs, which is a threat to service providers who charge installation fees and upsell relevant products in their branches. If centralized companies like Apple and Google can use eSIMs to disrupt this lucrative cash flow and simultaneously offer more flexibility for consumers, it’s easy to imagine what the technology can accomplish when combined with blockchain. Keepgo recognized the opportunity early and is putting the plan into motion.

Blockchain has no central database to exploit, which is one of the main reasons it is so secure.

Soon, devices with eSIMs will be able to connect to KeepGo’s distributed marketplace, where users can enjoy a bigger selection of data plans with greater transparency. Instead of purchasing the right to surf from a third party, users will be able to choose their provider in a decentralized network. The twist is that other users are the providers and share their data with others via KeepGo’s Decentralized Megabyte Exchange.

Similarly, blockchain-based services have started popping up looking to be the first to corner the emerging market. Dent Wireless, for instance, offers a service that lets users purchase mobile data directly on their mobile phones, as well as send data. QLink, another blockchain telecommunications pioneer, is building out its infrastructure to provide tools like wi-fi sharing, mobile data, and even enterprise-to-peer services.

Fighting for the Future

eSIM and blockchain are disruptive technologies, yet they face significant resistance from entrenched industry players. Even so, they’re finding their way into the world thanks to consumer-minded innovators and companies that see the value of changing with the times.

Despite the sometimes-slow progress, both technologies have long since secured their continued existence. The clock is ticking until eSIMs are the new status quo, and blockchain—itself pushing through various industry obstacles—will help them arrive precisely on time.

How Could Blockchain Replace a SIM Card?

Verizon acquired a blockchain patent used to create virtual SIM cards; it was issued in 2019 in order for the telecom giant to create SIM cards secured on the blockchain. As with other blockchain transactions, Verizon hopes to minimize security risks while simultaneously making transactions near-instantaneous. However, some users of eSIMs are finding that blockchain eSIMs make it very easy to switch carriers.

What Is a Digital SIM Card?

A digital SIM card is just what it sounds like, a SIM card that is produced and delivered digitally. This has many benefits for a consumer, the main one being that they would be able to purchase a new SIM card on the go, without the need to visit a physical store. The digital SIM would be delivered to their phone, and the transaction would be complete without waiting in lines or needing to replace a damaged physical SIM card.

Are eSIM Cards the Future?

eSIM cards could very well replace physical SIM cards. If a telecom company could assign SIM cards and charge a monthly service fee, they would. The upfront cost of a SIM has a lot to do with its packaging, and fewer SIM cards being shipped would lower overhead because eSIMs require no materials for creation other than computing power. However, some like the use of being able to drop their physical SIM into a different phone. This is especially useful if someone has two phones and one becomes damaged. As long as the SIM is fine, it only takes a minute to switch.

What Is a Blockchain Phone?

A blockchain phone is a phone that was developed to send every tiny piece of data through the blockchain. These phones were developed to cut out the mobile carrier and keep costs low with security high. As communications sway more towards apps running on data and less on traditional telecom networks, blockchain phones start to make a lot of sense.

The Bottom Line

eSIMs are not a new idea, but rolling them out to the general public via blockchain is relatively new. Telecom giants like Verizon, Telus, and Vodafone have all explored the potential of the disruptive technology but as of 2022, almost all phone users are still operating their lines on physical SIM cards.

Article Sources

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  1. Engadget. "It's time to embrace the eSIM."

  2. Telecoms Tech News. "How eSIM is disrupting the telecoms industry."

  3. The Motley Fool. "Apple Declares War on Top Telcos Over eSIM Tech."

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