Tangem offers a fancy ring-shaped crypto custody device and argues against seed phrases. But what alternative does the hardware wallet firm suggest? Our observer discusses crypto custody practices with the team.
Tangem’s hardware wallets combine advanced security with a user-focused design that promotes easy access to users’ funds. In addition to their card-based wallets, Tangem has introduced ring-shaped wallets, providing users with a wearable option for on-the-go crypto access.
But are these options as secure as mainstream crypto wallets?
Tangem offers three solutions for crypto storage: two cards, three cards, or a ring with two cards.
The extra cards keep copies of keys and are used as a backup system: if one card is lost or stolen, access can be restored with a special code and the second card. If a user forgets the code too, and holds the three device combo, the access can be recovered only with the two extra cards present.
Duplicate key cards mean users do not have to store the 'seed phrase' separately. In this wallet design, the private key is stored inside the hardware, the owner never needs to know it.
Although the seed phrase is really the widely accepted standard in the crypto community, the Tangem team still finds this method risky and inconvenient as “humans are careless and energy-efficient (lazy).” The company advises the seedless option so that neither Tangem nor anyone else knows the keys and no copies exist in space and time outside the cards.
“We’ve chastised and campaigned against seed phrases since the inception of Tangem. Our opinion on their security has not changed—the disadvantages are obvious,” - the team states, citing Orwell: “If you want to keep a secret, you must also hide it from yourself.”
The team's point is that safekeeping a backup device with digital keys is easier than keeping a backup phrase, especially for newbies.
A critical part of the crypto hardware security process is how the keys are created.
Tangem provides three options for key generation:
(1) a seedless key generation, described above – when the key is generated securely upon activation of the card, and without any additional software.
Or, two methods with seed phrases:
(2) generating the key with the Tangem app – this is the only way users can access the seed phrase since Tangem hardware wallets do not have an input and output interface
(3) importing an existing seed phrase from another wallet.
Tangem uses advanced encryption technology to ensure that the keys travel safely between the key-generating devices and the backup cards.
On activation, new cards are authenticated using hardcoded key pairs generated in the device’s chip at the factory. Then, a safe Diffie-Hellman key exchange method is used to transfer the key from a mobile phone or a computer to the card or ring.
The Tangem-to-Tangem key transfer uses the same method and the firmware allows only one backup, ensuring the private key can’t be duplicated further after it is secured on all extra cards or the ring.
The security of the Tangem hardware is of the highest industry standard.
Each device uses a secure EAL6+ certified chip equipped with NFC antennas, developed in collaboration with Samsung, which protects against invasive and non-invasive attacks.
The team cites two independent audits that confirmed the reliability of its un-updatable firmware.
The devices are built to withstand environmental risks, including electromagnetic pulses, to ensure that stored assets remain protected in various conditions which is obviously important for the version without seed phrase.
There are various opinions on whether to use seed phrases or not.
Both options come with risks in one way or another, and neither is 100% right. A stored seed phrase can be lost, or a memorized one can be forgotten. The option without a seed phrase, on the other hand, adds a risk of hardware failure.
Today, seed phrases are considered a mandatory feature for crypto wallets. Tangem added this option for users even though 'no-screen' wallets require a phone or PC for creating a seed phrase, which exposes them to certain risks.
In the end, only the users themselves know what the best solution is. For some, Tangem's new ring could be a perfect fit.