I’m guessing bluetooth.
What are the transfer speeds?
It would have to work on iPhones which are not jailbroken, although I’m still curious about how it could work better on jailbroken ones.
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The GameKit
GKSessionclass supports connecting to nearby instances of the same app using both Wi-Fi and Bluetooth. The choice of transport is completely automatic and hidden by the API. So you could use that to transfer data between nearby devices. I don’t know what the transfer speed is like though. Probably not very good.