While ecological momentary assessment (EMA) is commonly used to study social contexts and social influence in the real world, EMA almost exclusively relies on participant self-report of present circumstances, including the proximity to influential peers. There is the potential for developing a proximity sensing approach that uses small Bluetooth beacons and smartphone-based detection and data collection to collect information about interactions between individuals passively in real time. This paper aims to describe the methods for evaluating the functionality and validity of a Bluetooth-based beacon and a smartphone app to identify when ≥2 individuals are physically proximal. We will recruit 20 participants aged 18 to 29 years with Android smartphones to complete a 3-week study during which beacon detection and self-report data will be collected using a smartphone app (MEI Research). Using an interviewer-administered social network interview, participants will identify up to 3 peers of the same age who are influential on health behavior (alcohol use in this study). These peers will be asked to carry a Bluetooth beacon (Kontakt asset tag) for the duration of the study; each beacon has a unique ID that, when detected, will be recorded by the app on the participant's phone. Participants will be prompted to respond to EMA surveys (signal-contingent reports) when a peer beacon encounter meets our criteria and randomly 3 times daily (random reports) and every morning (morning reports) to collect information about the presence of peers. In all reports, the individualized list of peers will be presented to participants, followed by questions about peer and participant behavior, including alcohol use. Data from multiple app data sets, including beacon encounter specifications, notification, and app logs, participant EMA self-reports and postparticipation interviews, and peer surveys, will be used to evaluate project goals. We will examine the functionality of the technology, including the stability of the app (eg, app crashes and issues opening the app), beacon-to-app detection (ie, does the app detect proximal beacons?), and beacon encounter notification when encounter criteria are met. The validity of the technology will be defined as the concordance between passive detection of peers via beacon-to-app communication and the participant's EMA report of peer presence. Disagreement between the beacon and self-report data (ie, false negatives and false positives) will be investigated in multiple ways (ie, to determine if the reason was technology-related or participant compliance-related) using encounter data and information collected from participants and peers. Participant recruitment began in February 2023, and enrollment was completed in December 2023. Results will be reported in 2025. This Bluetooth-based technology has important applications and clinical implications for various health behaviors, including the potential for just-in-time adaptive interventions that target high-risk behavior in real time. DERR1-10.2196/50241.