Last year the Startup 21 announced that is working on the development of an integrated chip for phones or other devices that would undermine Bitcoin in the background.

The 21 BitShare can be embedded into a device connected to the Internet such as a chip standalone or integrated into an existing as a block of IP chips set to generate a continuous stream of digital currency for its use in a wide variety of applications.

However, this seems an ambitious plan, because the battery life and cost are two major concerns when it comes to phones. It is well known that to undermine bitcoin is needed a lot of energy, and these chips will have to compete with giant datacenters whose unique purpose is to canalize the electricity and energy towards the generation of bitcoins. Even then, the rewards are often small, and by a phone chip, it will probably be cents.

But the main idea of the company is to create services associated to the Bitcoin as payment platform, because the Bitcoin “undermined”, would be available so that the user can spend it on content online or paying for digital services. The same express company that is not focused in the mining industry as we know it today.

“we are less concerned with bitcoin as a financial instrument and more interested in bitcoin as a protocol .”

The concept of “embedded mining” which proposes 21, marks a very different approach from which we currently know about mining. Instead of trying to dominate the highly competitive business of bitcoin mining, 21 focuses on the future of the “Internet of things”, was that the interconnected devices will be, in the words of Mr. Srinivasan, capable of providing an “infinite flow of digital currency” to participate in micro transactions.

In theory, would facilitate a new form of trade, interconnection and access to the network that otherwise would be impossible in the traditional financial system.

21 also speculate that Bitshare chips could be used to generate a certain amount of revenue for device manufacturers.

“BitShare chip can be configured to support a variety of different revenue shares for the mined bitcoin. For example, one could build an internet-connected device that shared some portion of mined bitcoin between the user, the retailer, the handset maker, and the carrier — thereby reducing costs and/or increasing margins throughout the entire supply chain.”

What would make that the end-user would benefit by reducing the cost of the hardware. This may be enough to make devices more affordable cost-effective in low-income regions.

Sources: WSJ, 21

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