It’s certainly not unusual in the bitcoin and blockchain industry to see several companies coalesce around a new use case for the technology. However, what may be novel about the sudden focus on Wi-Fi is the size and ubiquity of the consumer pain point.
To date, startups such as the Boost VC-backed BitMesh and Wi-Fi services provider WIFI Metropolis are both developing concepts around the idea. The consensus? The popularity yet inaccessibility of Wi-Fi networks offers a compelling use case for bitcoin today, one that is more promising when compared to the costs consumers currently bear for data access at home and on-the-go.
“Wi-Fi is virtually everywhere,” explained WIFI Metropolis chief Wi-Fi explorer Reilly Smith. “If you walk around a dense area there’s going to be signals, none of which you can really connect to. I pay for data out of convenience because it’s such a hassle to deal with Wi-Fi.”
At the heart of both the BitMesh and WIFI Metropolis initiatives is the idea that it could become profitable for businesses and consumers to begin opening their Wi-Fi networks to the public.
As Smith told CoinDesk:
“For Wi-Fi, there’s free and expensive. There’s no micropayments middle ground.”
Adding merit to the idea is research from firms like Cisco, which has found that Wi-Fi is the “predominant access technology for mobile devices”. Due to its cost, paid-for options such as 4G remain unpopular with consumers, Deloitte concurred. Its research found 30% of consumers feel that paid data options like 4G are too expensive.
The case for bitcoin, more specifically, is that it enables low-cost micropayments, which proponents argue are too expensive via traditional payment services. Chris Smith, co-founder of BitMesh, for example, noted that his company has created micropayments channel tech to allow for transactions of a fraction of a cent for Wi-Fi use.
When implemented, Chris Smith foresees a future where a coffee shop may offer its service as a way to better monetize its Internet offerings without forcing people to purchase food or drink.
“A coffee shop sets up BitMesh, you try to connect to their Wi-Fi and they redirect you to BitMesh,” he said. “It turns on, asks you if the price is fair and you can pay by unit of time or per data unit, say 1¢ per megabyte. We create a micropayments channel so you can pay per megabyte, and you set the maximum amount you want to pay.”
First experiments
At present, both services are in the initial stages of rolling out the concepts.
WIFI Metropolis, which currently offers Wi-Fi services to enterprise partners such as St Pancras International station, recently added bitcoin to an app designed to serve as a crowdsourced resource for travelers looking for free Wi-Fi hotspots globally.
With the latter feature, it embarked on a campaign to incentivize new additions to the app while improving the quality of submissions. The success, Smith said, far outpaced a rewards initiative that leveraged Amazon rewards:
“When we integrated bitcoin, we added 60,000 hotspots and gave away about $7,000 worth of bitcoin.”
Bitcoin allowed WiFi Metropolis users to earn points by adding new hotspots to the map or otherwise integrating them to its network. The tech provided the promise of a universal reward, one that Smith argues eliminated the need to deal with country-specific differences in Amazon rewards, such as striking deals with local Amazon affiliates and integrating the APIs.
Still, bitcoin wasn’t a magic bullet solution. “There was a small pool of hackers trying to find every which way to … exploit and litter the app,” he said.
He suggested the problem was so bad the team discovered that one user was simply tagging any hotspot he could find while on a bus trip to Sacramento.
“About 30% of the hotspots that were being redeemed were just crap,” he added.
Building a network
Though WIFI Metropolis is arguably looking at more enterprise use cases, BitMesh is pursuing a more grassroots version of the concept.
As Chris Smith explained, BitMesh is built on wireless mesh networking, a type of self-contained computer network that has gained popularity in times when traditional Internet services have failed or proved prone to outages.
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“It was a technology developed by the military to make more robust, harder to take down computer networks,” he said. “In mesh networks, no one node is more important than the others, so if you take out a few nodes, you can’t destroy the network.”
Smith’s original idea was to create a network of local Internet users who would share the costs of service in an effort to be more economical. Still, he had trouble determining how he could incentivize the users in such a system. “In retrospect, it’s very obvious, you can incentivize it with it bitcoin,” he recalled.
BitMesh remains focused on the peer-to-peer nature of the currency. In its current, pre-release version, BitMesh doesn’t hold customer funds, but rather provides the technology that they can use to pay others in bitcoin for Wi-Fi services.
“We’re looking at it as a way to democratize Internet and get bitcoin in more people’s hands. We can sell a Raspberry Pi with a special image on it and now you’re collecting bitcoin from your neighbors in exchange for Internet,” he continued.
To appeal to users who have bitcoin today, BitMesh said it remains focused on being as open-source as it can be, though he suggested the company is considering offering licensing to larger institutions as it develops a revenue model.
BitMesh soon plans to open a private alpha that will allow a limited number of Internet users to begin opening their service to other users with the goal of honing the offering for the public.
An Airbnb solution
Despite the rocky start, Reilly Smith believes it won’t be difficult to get consumers to pay for Internet in smaller, known increments, thereby potentially removing the fear of a large unforeseen charge. This factor, he said, is leading WIFI Metropolis to continue to explore the idea of using bitcoin in its services.
“People sometimes just buy coffee to get Internet,” Smith explained. “Businesses are already using captive portals, buy something and you get a code that gets you on the Internet.”
Smith suggested that the blockchain could facilitate an Airbnb or Uber-like marketplace that serves as a clearinghouse between Wi-Fi owners and smartphone users who want to similarly gain access to shared services. Right now, however, he suggests two barriers exist to this kind of service.
First, the tech is still being developed – he projects six-to-eight months before it can be applied to a marketplace. Though, more importantly, he argues it’s currently not clear what consumers will want to pay for Wi-Fi, a service that has historically been expected for free.
Smith concluded:
“Wi-Fi is treated like a cheapest-to-deliver amenity. It’s just, can you connect or not? There’s no incentive structure to improve your experience at Starbucks. First, we have to derive value and make it user driven.”
WiFi visualization via Shutterstock