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iBeacon is based on Bluetooth low energy proximity sensing by transmitting a universally unique identifier picked up by a compatible app or operating system.
The identifier and several bytes sent with it can be used to determine the device's physical location, track customers, or trigger a location-based action on the device such as a check-in on social media or a push notification.
iBeacon can also be used with an application as an indoor positioning system, which helps smartphones determine their approximate location or context. With the help of an iBeacon, a smartphone's software can approximately find its relative location to an iBeacon in a store. Brick and mortar retail stores use the beacons for mobile commerce, offering customers special deals through mobile marketing, and can enable mobile payments through point of sale systems.
Another application is distributing messages at a specific Point of Interest, for example a store, a bus stop, a room or a more specific location like a piece of furniture or a vending machine. This is similar to previously used geopush technology based on GPS, but with a much reduced impact on battery life and better precision.