If you hadn’t already heard, near field communication (NFC) is the hot new technology that will soon be found on every smart phone. Essentially it’s an easy, secure way for phones and other devices in close proximity to send data back and forth. It’s perfect for transactions like exchanging money, sharing music files, or connecting to a printer. If you’re curious how it works, think of it as a mix between an EZ-pass and a magnetic key. If you use an Exxon Speedpass, a security badge to get into your office, or a credit card that lets you tap to pay, then you are already living with NFC devices in your life. But now that NFC technology is finding its way into our phones, like the Google Nexus S and possibly the next generation iPhone, the next wave of hot, new mobile applications will surely take advantage.

Google is a huge proponent of pushing NFC technology onto mobile devices. In the recent publication, Think Quarterly, Google went into great detail about what sort of functionality NFC would afford its users. Unlike bluetooth wireless technology, NFC requires a physical touch, which makes transactions much more secure and difficult to “listen in on.” This opens the door to let your phone hold all of the sensitive data in your life (like credit card accounts, government IDs, or medical records), while giving you the ability to access or share this data with a simple touch.

SMS – It used to be that a mobile phone only made phone calls. But when SMS technology entered the marketplace, suddenly people began communicating with short, text-based messages, an activity that has since become ubiquitous. You can see in the below graphs that the exponential growth of SMS based communications correlates with the adoption rate of Twitter, a service that limits your communications to be within the SMS limit of characters. Twitter, which now boasts over 200 million users, was one of the startups to thrive alongside the new SMS technology and the new user behavior it created.

GPS – In the fall of 2008, Apple launched the iPhone 3G and Google launched the G1 Android phone, both of which had GPS technology built in. Initially, the GPS functionality was only used in traditional ways, like mapping and navigation apps, but it didn’t take long for innovative ideas and new user behaviors to emerge. The early concept for Foursquare, called Dodgeball, initially launched with SMS but never took off because SMS wasn’t the right technology. But once mobile phones had GPS built in, Foursquare relaunched with the concept of “checking in” to locations with your phone, and has since changed the world of mobile apps. In line with the story of Twitter, Foursquare is now seeing the same exponential adoption rate that comes with using an emerging technology and creating a new user behavior.

With any new technology, it takes time for creatives and developers to figure out game changing ways to harness the power of the technology; and it even takes end users some time to become comfortable with new behavior. With this in mind, it’s hard to know how quickly NFC user adoption will catch fire and what new company will pioneer the technology with the next explosively popular mobile app. My prediction is that the first wave of apps will focus mostly on Business-to-Consumer payment interactions, eventually making the traditional wallet obsolete. When the second wave hits, I expect apps will begin to focus on new ways to interact socially, letting users and their phone become the central hub for data distribution (think Napster Mobile), contact exchange (think Bump 2.0), and multi-player gaming (think collaborative Angry Birds). At some point, when user trust increases and highly sensitive information gets regularly transmitted through NFC, an increased concern about security will likely arise. I expect that the second wave of apps will address this and provide authentication solutions and contingencies for when a phone gets misplaced or stolen.

We’re currently in the early adoption phase of the cycle, when very few people have phones with NFC technology and when there are very few channels with which to use it. But when the right big idea comes along, I expect to watch NFC catch fire and for the next Twitter or next Foursquare to emerge along side it.