You step inside Walmart and your shopping list is transformed into a personalized map, showing you the deals that'll appeal to you most. You pause in front of a concert poster on the street, pull out your phone, and you're greeted with an option to buy tickets with a single tap. You go to your local watering hole, have a round of drinks, and just leave, having paid—and tipped!—with Uber-like ease. Welcome to the world of iBeacon.

It sounds absurd, but it's true: Here we are in 2013, and one of the most exciting things going on in consumer technology is Bluetooth. Indeed, times have changed. This isn't the maddening, battery-leeching, why-won't-it-stay-paired protocol of yore. Today we have Bluetooth Low Energy which solves many of the technology's perennial problems with new protocols for ambient, continuous, low-power connectivity. It's quickly becoming big deal.

>It's a step closer to our gear existing in a truly intelligent ecosystem.

Why? Because it means we're finally at a place where gadgets can talk to each other wirelessly without demanding that we, the users, make the arrangements at every encounter (also a place where we don't have to sacrifice our batteries to do so). It means we're entering a world where our phones won't just be in continuous contact with satellites and cell towers—but also potentially with our laptops, our TVs, and the high-tech bangles on our wrists. It's a step closer to our gear existing in a truly intelligent ecosystem.

And yet, gadgets talking to other gadgets is only part of the allure. Even more novel is the promise of letting our devices talk to the world around us, whether we're in a bar, a bookstore, or a ballpark. That's precisely the future Apple is quietly laying the tracks for with a little-known iOS 7 feature called iBeacon.

Strictly speaking, iBeacon is a protocol that lets developers harness the latest Bluetooth Low Energy technology in their apps, but the term "iBeacon" has quickly been adopted for referring to physical things: the nodes in this new wireless network. Effectively, anything that has the latest version of Bluetooth can function as an iBeacon. In some cases, that can mean a smartphone. Google recently jumped on the Bluetooth LE train, baking it into Android 4.3. Apple has been building it into their devices since the iPhone 4, meaning that every iPhone from the last two years is essentially an iBeacon in itself.

Android 4.3 brings Bluetooth 4.0 support to Android devices. Photo by Ariel Zambelich/Wired

More exciting, though, are standalone iBeacons: low-cost gizmos that continually beam out a Bluetooth signal, running for up to a year on a small watch battery. These are the types of transmitters that will open the physical world to our digital devices. The barista at your local coffee shop may already know your face, but with an iBeacon stuck to its front window, that coffee shop will be able to know your smartphone, too.

Where does that leave us? We're already starting to see hints of the possibilities, and only a handful of them involve coupons.

1. Tying Digital Content to the Physical World

The most obvious application for iBeacon is tying digital information to physical places. When Apple first presented iBeacon to developers at their WWDC conference this summer, they used the example of an art museum. Instead of punching a three-digit number into a handheld tour guide, you could walk up to a painting, pull out your iPhone, and find additional information on the artwork right there waiting for you.

That's neat if you like art museums. But undergirding that use case are several of the things that make iBeacon and Bluetooth LE so powerful. For one, the technology can pinpoint you–indoors or out–with an astonishing degree of accuracy. Multiple beacons can triangulate your position at distances anywhere from 100 feet down to just a few inches, heralding a new era of digital experiences based on "microlocation." That ability to triangulate means museums won't need to stick beacons next to every painting, they'd just need to put a handful in every room.

The other aspect the museum example illustrates is the passive nature of iBeacon. The protocol is designed so that all the triangulating happens constantly and quietly in the background. When you pull out your phone, the right content is there waiting for you. This immediacy is one big advantage Bluetooth now has over clunky predecessors like NFC and QR codes.

>All the triangulating happens constantly and quietly in the background.

The potential for location-based content is huge, and it could take many forms. The Bar Kick pub in London is already taking a novel approach. Everyone sitting inside the bar will find the most recent digital editions of two popular magazines ready to read in their device's Newsstand app, free of charge. Yes, iBeacon could spell the end of paging through germy old issues of People magazine before your doctor's appointment.

It's easy to imagine other variations on the theme. Digital geocaches could let you drop animated GIFs at obscure hiding spots throughout your city. Intersections could become invisible tour stops augmented with local lore. Citi Field, home of the Mets, is already experimenting with embedded videos, dynamic hot dog coupons, and straight-to-your-seat navigation—the augmented ballpark of the future, all built on iBeacon.

2. Seamless Setup for All Your Gadgets

Giving devices real world awareness doesn't just herald new interactions. It could be used to smooth out old ones, too. Why type in a password when your person will suffice? Apple's already using the latest version of Bluetooth to eliminate one of the most singularly frustrating experiences in consumer technology today: typing in a Wi-Fi password with the Apple TV's finicky remote. The latest Apple TV software brought a fantastically clever workaround. You just tap your iPhone to the Apple TV itself, and it passes your Wi-Fi and iTunes credentials over and sets everything up instantaneously.

This admittedly is a narrow inconvenience, but the idea here is an important one. Using physical proximity to intelligently pass data between devices will make our lives easier in innumerable ways. In combination with new types of authentication like TouchID, constant device-to-device chatter is a vital step towards a future where your digital identity—all yours accounts, services, files and preferences—are tied inextricably to you, instead of being scattered around the cloud, hidden behind myriad logins.

That could mean something as simple as your car adjusting the seat and mirrors depending on whether you, your spouse, or your kid plunks down in the drivers seat. But it could be far more complex. Imagine this: You sit down at any computer in the world, put your thumb on your iPhone's fingerprint reader, and instantly that computer becomes your machine. Your desktop, your settings, your files. It's like Dropbox turned up to eleven. It's also something for which Apple holds a patent.

>The latest Apple TV software brought a fantastically clever workaround.

3. Retail 2.0

So far, the most frenzied activity surrounding iBeacon has been in the world of retail, where there's potential for shops big and small. At one end, you have big name retailers who are eager to push retail into the future with highly tailored digital experiences. Macy's is already installing iBeacons in their New York City and San Francisco stores with the help of an outfit called Shopkick. Walking into one of those locations will automatically surface the Shopkick app, which can make specialized offers to customers depending on where they are in the store. Apple flipped the switch on iBeacons in its own retail stores last week.

Estimote is one startup already pursuing the standalone iBeacon with an aim of transforming retail. Image: Estimote

That's just the beginning, though. Retailers are already talking about things like in-store navigation and dynamic pricing, all made possible by beacon-enhanced retail locations. For independent shops, iBeacon is a chance to jump into the smartphone era with one fell swoop. A $100 beacon is all it takes for even the mustiest book store to track customers, make recommendations, and offer discounts to customers' pockets.

The other area of activity here is in payments. Paypal's already showing off its own "Beacon," a USB device that will interface with the Paypal app to let users make totally hands-free transactions. The problem of digital wallets is a tricky one, but the technology is finally starting to make sense. Three years ago, the future of digital wallets rested entirely with NFC. Today it seems like Bluetooth is the one poised to finally bring mobile payments to the mainstream.

Apple flipped the switch on iBeacons in its retail stores last week.

Supercharged retail will likely be the first exposure many have to the powers of iBeacon. It's also in many ways one of its least exciting use cases. Apple's own implementation doesn't extend much beyond greeting you when you walk in the store and pinging you about upgrade availability when you pass by the iPhone section, both of which sound potentially more like interruptions than delightful touches of Apple magic. In other words, businesses will have to be careful not to inundate us with crap, lest they kill the future of retail before it arrives.

4. A New Level of Peer-to-Peer Smarts

More exciting than turbocharged coupons, however, are the new types of applications that Bluetooth LE could engender. Apps have long had access to location data via GPS, but pinging satellites is a big drain on precious battery life. Just consider how quickly your charge evaporates when you're using Google Maps. iBeacon gives applications a new way to orient themselves in the real world, continuously, without evaporating your charge (new geofencing APIs give apps other new, battery-friendly ways to track).

When you combine this with the fact that every recent iPhone—and many new Android devices—can function as iBeacons themselves, you can envision all sorts of exciting peer-to-peer interactions. Imagine a hook-up app like Tinder for the bar you're in, with Bluetooth facilitating the flirting before you even say hello. (Gross, I know, but is there any doubt that someone will get millions in VC funding for this?) More wholesomely, think of games that let you challenge people waiting at your airport gate. Or spontaneous messaging based on your real-world location—an update of the old anonymous AOL chat rooms organized not by topic but by wherever you happen to be standing.

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Some of these use cases can flourish today. There are already nearly 200 million iBeacons in the wild in the form of the phones in our pockets. A handful of startups are aggressively pursuing the standalone iBeacon; deployment will follow soon. These devices are already cheap, ranging anywhere from $40 to $100 a piece.

In a few years, they'll be considerably cheaper. They're currently small enough to house in paper weight-size enclosures; someday they could be small enough to sew into a jacket or build into the sole of a shoe. They can already survive for a year on a coin cell battery, but life expectancy could expand too. Earlier this year, Apple acquired a company called Passif, one of whose most valuable assets was a technology that charged low-power sensors ambiently using nothing more than the radio waves already saturating the air. Conceivably, Apple could someday sell their own dirt cheap iBeacons that charge themselves indefinitely.

This emerging, invisible infrastructure will give designers an entirely new technological frontier to explore. There are obstacles. Developers will have to deal with thorny privacy issues, for one, and corporations will have to resist the urge to bombard us with new hyper-localized notifications with our every step. But there's huge potential for Bluetooth LE and iBeacon. They represent a chance to teach our old gadgets some truly new tricks.