Cryptocurrencies have the potential to change the world for those who are either unbanked, unbankable, or just underbanked.
As great as it is though, cryptocurrency does have its inefficiencies. One of those inefficiencies is access in areas of the world where internet access is limited. But there may be a solution in SMS texting.
A service known as CoinText is doing something no one else has done before. They are making it possible to send and receive Bitcoin Cash using SMS texting. No internet access is required. Users do not need any special apps either. Anyone with a text-capable phone can trade cryptocurrency with text messages.1
Right now, the service is only available to Bitcoin Cash users, but we suspect that will change at some point in the future. Either CoinText will begin dealing in additional cryptocurrencies or other services will begin popping up to fill the space.
The idea of dealing in cryptocurrency via SMS texting is brilliant in its simplicity. Why no one has thought of it before remains a mystery. Nonetheless, it could revolutionize how cryptocurrency is traded all over the world. It appears especially attractive to Asia, where unbanked and underbanked consumers have a hard time conducting online business and cross-border transactions. SMS-based cryptocurrency transactions give them access to all sorts of things they currently struggle to access.
How it works
Transacting in bitcoin normally starts with procuring a wallet and buying some currency. Neither is difficult to do. You use your mobile device or computer to find a digital wallet online. You set up an account, buy some currency, and you are ready to go.
You then use your wallet to send and receive Bitcoin - or whatever cryptocurrency you prefer. But what if you do not have internet access? What if you don't want to setup an account with a wallet service or an exchange? You can use CoinText instead.
Using CoinText requires nothing but a mobile phone capable of SMS texting. Their website lists access numbers for your country. Then enter that phone number into your contacts. When you are ready to use Bitcoin Cash the first time, simply text the word 'RECEIVE' to that number. The CoinText system will create a unique digital token that becomes your permanent wallet address. The address remains tied to your cell phone number.
You can now send Bitcoin Cash to anyone else with a text-enabled phone. To do so, just text the word 'SEND' along with the amount and the recipient's number to your CoinText access number. The system will access the Bitcoin Cash blockchain to report the transaction while your recipient receives a text message letting him or her know that your payment has been received. That's all there is to it.
No accounts necessary
The most fascinating aspect to all of this is that users do not have to have an account. In fact, recipients don't even have to set up their own phones with CoinText to receive a payment. You can send a recipient some Bitcoin Cash and that person will get the money without having to do a thing. The money you send remains in a digital wallet associated with the recipient's cell phone number until that person decides to either spend or convert it.
Here's another exciting feature of CoinText: the service automatically displays Bitcoin Cash holdings in the equivalent fiat currency. If you are living in the U.S. for example, the system displays your Bitcoin Cash holdings in U.S. dollars so that you always know the fiat cash-equivalent of what you have. Sending money to Hong Kong or Japan would cause the system to display that amount in the recipient's native fiat currency.
Simple, fast, and easy
There's little doubt in that the CoinText service is simple, fast, and easy to use. It is so easy that it's being billed as the best thing to have happened to cryptocurrency since bitcoin was first introduced. Proponents of the service say using it is a terrific way to introduce people to cryptocurrency, people who would otherwise not have given it a second thought. Whether or not that is true remains to be seen.
What we do know is that the majority of the world has access to SMS texting - even in areas where direct internet access is patchy. This means the service makes cryptocurrency accessible to individuals who have previously been shut out due to unreliable internet connections.
Now you know why SMS texting could revolutionize cryptocurrency. SMS texting levels the playing field even more than it already is. The fact is that people do not even need smartphones in order to text. A 10-year-old flip phone with SMS texting capability can send and receive cryptocurrency just as easily as the most modern Android or iPhone device.
An SMS-based cryptocurrency platform is also ideal for merchants. Why? Because it allows for easy and direct transactions between customer and merchant without the need for any third-party payment processors. The two parties are all set as long as they both have SMS-enabled phones.
Imagine you operate a small bed and breakfast in Thailand. One of your guests asks for a personalized tour of the local area, which you are happy to provide. The guest decides to pay you a generous tip to thank you for providing the extra service. Great. But he has no cash.
Moreover, you cannot accept credit card payments on site because the remote nature of your location doesn't offer internet access. No problem. Your guest sends you a generous tip via text message. In less time than it takes to make a phone call, you have some Bitcoin Cash sitting in your SMS wallet.
SMS cryptocurrency limitations
To say we are excited about the possibility of sending and receiving cryptocurrency with nothing more than SMS texting is an understatement. However, the technology is limited in its current state. The entire concept, as a whole, has limitations as well. We assume that CoinText and any other SMS services that follow will eventually find ways to overcome the limitations.
The biggest limitation is the fact that CoinText is not available everywhere. First of all, it's the only service of its kind in existence right now. Second, it only offers access numbers in about two dozen countries. If you wanted to send or receive in a country without an access number, you would need to have an international texting plan as part of your phone service. However, CoinText is working on that and are expanding their service as quickly as possible.
Another limitation is found in the reality that a user's cell phone number is used to create a digital wallet. That wallet is forever associated with the number from which it is derived. This can create several problems. First, what happens if a user's cell phone number ever changes? That person either loses access to his or her wallet or must transfer cryptocurrency holdings to another wallet before changing numbers.
The second problem it creates is one for merchants. Let's say you were running an online casino that runs the MegaMoolah.com game and you accept Bitcoin, Bitcoin Cash, and a few other cryptocurrencies. In order to use an SMS-based service, you have to have a cell phone for your business. That's generally not a problem. However, all the cryptocurrency stored in your cell phone wallet is separate from the rest of your crypto holdings. You will find yourself constantly sending Bitcoin Cash from your cell phone wallet to your company's primary wallet in order to manage cash flow. Such a scenario would not be the end of the word, but it would certainly not be convenient either in the long run.
The service will get better
At this point we should mention that cryptocurrency was not perfect in its infancy. It has come a long way since bitcoin was first introduced. Likewise, service like CoinText will get better over time. The more developers understand how consumers use cryptocurrency on a regular basis, the more they will adapt their services to be more practical, usable, and accessible. There is little doubt that CoinText will look a lot different a few years from now.
In the meantime, we should not ignore just how revolutionary SMS-based cryptocurrency transactions are. One of the primary reasons for developing bitcoin in the first place was to create a financial system that would level the playing field across the world by eliminating government interference and central bank control. Bitcoin and the thousands of additional cryptocurrencies it has birthed have more than accomplished that goal. Now it is a matter of improving on what bitcoin started.
A system that allows sending and receiving cryptocurrency via text message eliminates yet another barrier to worldwide financial equity. That barrier, reliable internet access, will remain a barrier for the foreseeable future. There just isn't the will or the resources to take internet access to some remote parts of the world. SMS texting is an entirely different animal. Because it is available virtually everywhere on the planet, SMS texting makes the already accessible world of cryptocurrency even more accessible to more people.
1) CoinText. https://cointext.io/