Solana’s Crypto-Native Phone is Genius, Bold, and (maybe) Doomed

Paul Fidika
4 min readJun 25, 2022

When I pay for an Uber on my iPhone, a bottom-sheet slides up, I press ‘confirm’, authenticate with my face, my payment completes in 3 seconds, and I’m on my way. This feels so natural, so intuitive, so sleek.

The problem with building a crypto-payment app like this is that it really needs to be built into the operating-system level. iOS, iPhone’s operating system, creates a confusing web of APIs between apps, and backgrounded-apps are treated like second-class citizens. Apple obviously creates its own operating systems, and it uses this privilege to make Apple Pay both ubiquitous across its 1 billion hardware devices, and also unassailable, in that it has a privileged monopolistic position, being built directly into the operating system layer. The developer APIs simply do not exist for another company to build a competitor to Apple Pay on iPhone, and even if it did, Apple’s policies would forbid it.

Apple and Google’s business model runs counter to opening up their app-store marketplaces, payment platforms, hardware, and operating systems to third-party competitors. In 2021 Apple probably took in around $23 billion in fees from Apple App Store sales, and they’ve worked hard to protect these fees in the eyes of congress and courtrooms. (I say “probably” because Apple doesn’t report the actual amount of money they’re making.)

Anatoly’s Bombshell

On June 23rd, Solana announced both a phone, and a mobile android SDK. Solana is building (1) private-key management directly into the hardware layer of their new phone, and (2) building a wallet API directly into the operating system.

Advantages this provides:

  • App-developers will now have a direct financial relationship with their users, without the platform taking huge fees or imposing restrictions.
  • Private-keys are now stored more securely. This eliminates janky hardware wallets, and makes private-key signing more accessible than it is in browser-extension wallets.
  • Apps don’t have to worry about being rugged by their platform, or complying with an arbitrary, changing TOS. (Remember when Google and Apple woke up one day and decided to ban Perler, one of the top social media apps, from their app store? Apple almost pulled Uber multiple times from its app store due to non-compliance with its privacy-terms.)
  • Users will have a better experience with crypto apps, with the wallet-handoff being handled at the operating-system level rather than using janky OS-redirect APIs.
  • Apps no longer have to compete directly against the platform they are building on top of. (Remember when Apple deliberately took billions off of Facebook’s ad revenue with a software update?)

This is exactly what crypto needs.

Doomed Future

Unfortunately, Solana’s Saga Phone is unlikely to have much impact. This is because:

  • Outside of a few million hardcore crypto fans, most people simply don’t care about crypto. All of the above-mentioned features and apps will be irrelevant to them. Their attention will focus on other attributes, such as camera-quality and price.
  • Apple’s reach is broad, both in hardware, software, and cloud services. In the 15 years since iPhone, Apple has become a master at locking in its users. It will be nearly impossible for iOS users to leave, even if they enjoy the features offered by a crypto phone.

The phone will likely sell only 1 million units at best in 2023 (probably less), which will greatly limit the reach of these devices. For myself, a diehard iPhone user who upgrades to the latest model every year, I’ll still use iPhone as my primary phone, while owning a Solana Saga phone for the occasional crypto-related task (I ordered one within hours of its announcement).

Still, I want to see something like Solana Saga succeed. What are the best steps forward to make this a success?

  1. Get other android devices to build private-key management into their phones, and include the Solana Mobile Stack SDK / wallet adapter into their android-operating system. (Samsung might.)
  2. Convince Facebook or Amazon to launch their own phones, with crypto as a feature. (Unlikely — this was already tried in 2013 and 2014 respectively, and both attempts failed).
  3. Force Apple to open up their operating-system to competing wallets, using lobbyists, regulators, and anti-trust lawsuits. (Unlikely.)
  4. Build on top of iOS and android the best we can within our limitations. (Not optimal, but still somewhat doable.)

In all honesty, Apple and Google are more likely to launch their own private blockchain before they’ll give up their app-store fees and allow another blockchain payment system to integrate into their OS-layer.

If anyone has any suggestions or ideas on how to move forward on this, or your thoughts on what the future will look like, please email me at paul@fidika.com, I’d love to hear your thoughts.

Side notes:

  • Apple Pay processed $90 billion in merchant transaction volume in 2021, but Apple only takes a 15-basis point fee, making Apple Pay revenue a rounding error for Apple. Additionally, Apple also has 6.7 million Apple Card users, although growth was anemic in 2021.

Sources:

https://www.cnbc.com/2022/01/10/apple-implies-it-generated-record-revenue-from-app-store-during-2021-.html#:~:text=Last%20year%2C%20CNBC%20analysis%20suggested,on%20a%2030%25%20commission%20rate.

https://www.inputmag.com/tech/hardly-any-iphone-owners-in-the-us-use-apple-pay

https://www.forbes.com/sites/ronshevlin/2022/06/10/cutting-through-the-apple-pay-later-hype-and-theres-a-lot-of-it/?sh=727aa08a2b07

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