Pundi X’s Blockchain Phone – Will It Disrupt the Telecom Industry?

If you follow blockchain news, you may have already encountered hype around an upcoming decentralized phone called XPhone. Pundi X– the blockchain company behind the project– started building excitement around XPhone last week with a flurry of blog posts and demonstration videos. XPhone seems ready to make its official debut sometime in the second quarter of next year.

The question now is: will XPhone really make Verizon, T Mobile, AT&T and other smartphone service providers obsolete, or is this entire project some kind of an elaborate hoax or public relations stunt?

Read on to learn everything there is to know about XPhone so far.

What Is XPhone?

XPhone is a decentralized phone that’s currently in development. The main feature that has generated buzz around the phone is that it will work without a traditional mobile carrier. However, it’s apparently also backward-compatible with ordinary telecommunications networks.

The Function X website states that XPhone does come with the option to use a SIM card. This gives users the ability to flip between its native blockchain network and traditional telecom networks at will:

“XPhone blockchain mode will run on the blockchain, hence it does not rely on traditional telco. The traditional mode on XPhone runs on telco network.”

In addition to making phone calls, XPhone users will be able to download and use apps, send text messages and transmit data back and forth across the network.

The Function X blockchain

Function X is the blockchain that XPhone will run on. The Function X ecosystem consists of these core components:

  1. An Android-compatible operating system called Function X OS.
  2. A distributed file storage system called Function X IPFS.
  3. FXTP, a decentralized data exchange protocol.
  4. An open platform for DApps called Function X Docker.
  5. The Function X blockchain itself.

Android integration

Pundi X says that Function X OS will be backward compatible with standard Android apps. This compatibility will be a benefit to Android developers because it means that they can use the knowledge they have to bring their existing apps into the Function X app ecosystem.

What all this means for prospective XPhone users is that if Function X OS is as compatible as advertised, the Function X Docker will quickly fill up with a wide selection of apps once it’s released.

Decentralized interconnectivity

The Function X ecosystem is essentially a mobile-centric, decentralized version of the world wide web.

Every device that connects to the Function X network has its own address. This address allows XPhone users to publish publicly-accessible text, images and other content directly to their phones.

Instead of the typical “http://xxx.xxx” format that’s used on the web, XPhone users will type in “fxtp://xxx.xxx” to access content on other peoples’ phones

In addition to posting public content, Function X addresses can be used to place private calls or send texts and emails. Pundi X says that the fact that this information will flow through an encrypted blockchain network means that the Function X network will be more secure and anonymous than the centralized networks most people rely on today.

According to this Pundi X blog post:

“The transmission of data runs on a complex exchange of public and private key data and encryption but it can guarantee communication without interception and gives users direct access to the data shared by others. Any info that is sent or transacted over the Function X Blockchain will also be recorded on the chain.”

More Blockchain Hype, or a Truly Revolutionary Phone?

Pundi X’s leaders lack telecommunications experience, but the company has raised millions of dollars in a very short amount of time. The company claims that half of its employees are involved in research and development.

In addition, various videos and images of the XPhone seem to indicate that it’s a legitimate device and not just more blockchain vaporware and empty promises.

This video shows how to make a phone call using XPhone’s blockchain:

Another demonstration video shows how text messaging works on XPhone:

This clip shows how the XPhone can post publicly accessible content to the Function X blockchain:

The Function X website contains the following claim about Pundi X’s production capabilities:

“Our Shenzhen office sits in the heart of the world factory allowing us to visit, monitor and churn our hardware at high speed. Our team are well-versed in hardware including decade-long production line knowledge, and we have a high level of control over production line.”

This image seems to back up the above statement:

Source: Pundix

According to the Function X website, Pundi X will only ship a few thousand XPhones in the second quarter of 2019. The FAQ page suggests that future phones that are compatible with Function X will be built by other smartphone manufacturers and that open source licenses will facilitate widespread adoption.

“We share the same philosophy as Google whereby we build our version of Google Phone which is shipped in limited quantity because we want to focus on developing the best Function X ecosystem for phone manufacturers. We do not see ourselves as a phone manufacturer, but as an ecosystem provider for the manufacturers.”

Pundi X: Background and History

If you live in the US or Europe, you may not recognize the Pundi X brand name. The blockchain company is based in Singapore, but it also has offices in Jakarta, London, São Paulo, Seoul, Tokyo and Shenzhen.

According to the official Pundi X website, the company was founded in 2016 and now has 150 employees.

Pundi X’s most well-known offering is a cryptocurrency Point-of-Sale device for retailers called XPOS. The company claims that it is now mass producing XPOS and will sell “minimum 100,000 units” by February 2021.

Before Pundi X pivoted to focus on XPOS, the company’s main focus was software. Pundi X debuted an Indonesian mobile payments app called Pundi-Pundi in 2007. The app was designed to bridge the gap between the fiat finance world and cryptocurrency while also providing Indonesia’s unbanked with more ways to send and receive money. In July of this year, Pundi X sold Pundi-Pundi to a Jakarta-based e-payments company called E2Pay.

This year-old clip from Pundi X’s YouTube channel provides a real-life look at how the app works in stores:

Pundi X’s success with Pundi-Pundi and excitement around XPOS translated into a wildly successful Initial Coin Offering. Pundi X reported that it raised more than $35 million in less than 90 minutes after it launched its ICO in January.

In September, Bitcoin.com reported that Pundi X had begun selling XPOS in Nigeria. The company made headlines again in October, when the government of Dubai announced that it was partnering with Pundi X to release a new cryptocurrency payment system.

Pundi X was one of several blockchain companies that were negatively affected by the massive Coinrail hack that took place last June. Though the hack wasn’t Pundi X’s fault, the company’s NPXS coin dropped in value following the theft, according to CoinDesk.

Pundi X’s Core Leaders

  • Zac Cheah – Co-founder, CEO. Cheah is a programmer with a background in browser and mobile games. He founded Wozlla– a game production and distribution company– in 2013. Before that, he interned and Google and served as the Chief Standards Officer at Opera Software.
  • Pitt Huang – Co-founder, CTO. Like his partner Cheah, Huang is a young serial entrepreneur with a technical background. He’s been involved in several Chinese internet startups. Before co-founding Pundi X, Huang was the CEO of a Chinese app development company called Dingzai.
  • Constantin Papadimitriou – President. Papadimitriou is the founder and CEO of E2Pay– the same e-payments company that bought and rebranded Pundi-Pundi in July. In 2000, Papadimitriou founded an Indonesian eBanking service provider called Infinetworks.
  • Danny Lim – CFO. Before moving over to Pundi X, Lim was the VP of Sales and Marketing at Cheah’s game development company Wozlla. He worked at Lenovo as a Financial Analyst in the early 2010s.
  • David Ben Kay – Chief Legal Council. Kay is a lawyer with an academic background and an interest in decentralization. He was Microsoft China’s “Piracy Czar” and he taught investment law at China’s Central University of Finance and Education. In addition, Kay is a member of Ethereum’s governing board.
  • Vic Tham – Chief Investment Officer. Tham was the CEO of Bank of America Merrill Lynch’s Asia Pacific branch before joining Pundi X. He’s in charge of driving investments and managing funds for Pundi X’s new blockchain project.

The Pundi X community

The Pundi X subreddit is small, but engaged. One reason for this may be that Pundi X executives routinely record video interviews and other content. In addition, their social media managers interact with the community on a regular basis and collect feedback.

One Pundi X investor created a Reddit thread to ask the company if it would consider creating some kind of a tracker that would display XPOS units were currently in use. A social media manager from Pundi X posted the following response:

“Hi guys, passed this thread along to the PundiX team. Hope to get some feedback from them and get back to you.”

The Pundi X blog publishes monthly reports. These reports give “Pundians” insight on what the company is up to on a week-to-week basis.

Unanswered Questions

How much will XPhone cost– and how much will its users have to pay in mining fees when they use the Function X blockchain to make a call? Moreover, how will XPhone users connect to the Function X blockchain without WiFi? Will they have to use a centralized phone service when not in range? How many retailers are actually using XPOS– and where’s the proof to back up the company’s numbers?

These kinds of obvious questions have remained unanswered thus far.

There is only a small amount of information about the XPhone on the Function X website, and the Pundi X white paper doesn’t even mention XPhone at all.

Final Thoughts

Though it isn’t obvious yet if phones like XPhone will disrupt the telecommunications industry, one fact seems clear: the XPhone seems to be more than just another scam or a publicity stunt. Pundi X not only has a working prototype for their upcoming phone, but they also seem to have the resources they need to bring at least a few thousand of them to market.

It is somewhat strange, however, that Pundi X has only recently started to get the word out about XPhone. What little information that there is is not very comprehensive. If you weren’t aware of the company’s other products, it may seem as though they came out of nowhere with an almost unbelievably innovative phone. However, that impression isn’t accurate.

Though the Pundi X brand is not yet widely known in the US and Europe, the company has been involved with blockchain since 2016. The government of Dubai and business owners in Indonesia, Nigeria and elsewhere are now using Pundi X’s XPOS terminal to process crypto transactions. Revenues generated by that and other previous projects may have helped Pundi X get ahead of the game.

Astoundingly, there doesn’t seem to be any other product like the XPhone in development right now. Pundi X raised $40 million during its ICO. That funding may be the reason why they were the first company to bring a phone like XPhone to the market. Google co-founder Sergey Brin admitted to CNBC that his company “failed to be on the bleeding edge” of blockchain development. Other big-name companies may be in the same boat.

One potential problem for Pundi X going forward is that none of its corporate leaders have telecom industry experience. Another issue could be that bugs, speed issues and other technical problems could hinder XPhone’s success. But if the final version of XPhone does everything that the prototype can do now, those concerns may not matter in the long term– especially if more Android phone manufacturers begin creating Function X-compatible devices.


Alex Munkachy

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