Mar 5, 2014 · 3 minutes

Startups are beginning to realize they can capitalize on the paranoia created by the government spy programs that Edward Snowden leaked. All they have to do is announce products meant to protect consumers from digital snooping.

Silent Circle seized this opportunity with Blackphone, an Android-powered smartphone that ships with secure communication services pre-installed. Now, FreedomPop is following its lead with the FreedomPop Privacy Phone, a modified Samsung Galaxy SII that encrypts its owner's calls and messages.

FreedomPop says it made the phone to "specifically protect Americans' privacy, thereby providing the peace and assurance knowing your data is not being compromised." It will also allow customers to pay for the phone and its $10-per-month service with bitcoin to "further ensure anonymity."

But how secure can any smartphone be, let alone a three-year-old device modified by a company that is only beginning to dabble in private communications?

No-one knows the extent to which the National Security Agency has compromised digital security measures. The Guardian redacted the names of specific tools when it reported on the NSA's attempts to weaken encryption standards in September, because "publishing one or two would do not do any real good and could affirmatively create the misleading impression that other (unnamed) compromised standards are solid," according to Glenn Greenwald.

Bitcoin might not be as private as many think, either. The Bitcoin Foundation warns that the cryptocurrency is not inherently anonymous:

Some effort is required to protect your privacy with Bitcoin. All Bitcoin transactions are stored publicly and permanently on the network, which means anyone can see the balance and transactions of any Bitcoin address. However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances. This is one reason why Bitcoin addresses should only be used once. Always remember that it is your responsibility to adopt good practices in order to protect your privacy.
That isn't to say that the FreedomPop Privacy Phone isn't more secure than mainstream smartphones, or that its owners might as well use their credit cards because Bitcoin isn't the technological wonder they thought it was. But it is dangerous to assume that encrypted communications or digital currencies provide total anonymity in a world where intelligence agencies are doing their damnedest to undermine digital security measures and spy on consumers.

Reactions from around the Web

Silent Circle's Phil Zimmermann tells ITProPortal that there is no such thing as an NSA-proof smartphone:

We have a bit of a problem with the press saying that the Blackphone will make you NSA-proof. If someone [at the Blackphone booth] tells you that it’ll protect you from the NSA, I’ll fire them.
Forrester analyst Fatemeh Khatibloo tells the Wall Street Journal that privacy-minded products are attracting attention and funding -- for now:
People are starting to believe that average citizens will pay a little bit of money to protect their data,' said Fatemeh Khatibloo, a Forrester senior analyst. That has attracted attention — and funding — from venture capitalists, she said.

But Ms. Khatibloo said it is unclear if these bets will pay off. 'No one has been able to find if these products are going to be sticky on a mass scale yet. TechCrunch notes the broad clientele these devices will appeal to:

Simply put, if you’re in the market for a phone to plan to help run a criminal enterprise or serially leak ill-gotten government secrets, this is probably the phone for you.
Pando weighs in

I wrote about the economic challenges facing the costly Blackphone in February -- it seems that FreedomPop's Privacy Phone won't have the same issue:

The ability to purchase an ostensibly secure, privacy-minded device will likely appeal to those concerned by government and corporate spying. The trick is to convince other consumers, many of whom are accustomed to such spying and unwilling to spend so much money on a smartphone, that Blackphone’s added features are worth the investment.
[images via wikimedia]