Nick Szabo, in his 2002 piece “Shelling Out: The Origins of Money,” analyzed proto-money types, which served as precursors to commodity money types. Proto-money had one thing in common with commodities and proof-of-work currencies: unforgeable costliness, whereby the cost and difficulty increased as new units entered the supply. For gold and silver, the difficulty and cost of increasing the metal’s supply come about through mining; for Bitcoin and Kaspa, it occurs through a difficulty adjustment.

However, what commodity and proof-of-work monies lack today are the wearable, symbolic, and decorative aspects of proto-money in the past. Proto-money was used not only to alleviate the double coincidence of wants, but also as decoration and reputation. In this sense, money was not separate from jewelry, gift-giving, or fashion. They were one and the same.

The Tangem Ring once again merges the properties of proto-money (offering a wearable self-custodial item) and commodity money (safekeeping one’s Bitcoin or Kaspa in a fashionable manner). KASmedia is excited to witness such a merge!

Recently, we caught up with Nikita Rybachuk, Manager of Business Development (BD) and Partnerships at Tangem, to learn more about their wallet technology, wearables, and collaborations with Kaspa. Below, you will find a summary and excerpts from that interview.

To learn more about cryptocurrency wallets that support Kaspa and a brief overview of the Tangem wallet, please see our Kaspa Wallet Guide.

Tangem‘s Beginnings

Tangem Wallet was the first cold storage wallet to support Kaspa, earning a special place within the Kaspa community. Like all cold storage solutions, the Tangem Wallet stores wallet seed phrases offline. However, it distinguishes itself by not requiring users to know their seed phrases, as they are securely stored within a certified secure element that utilizes NFC (Near-Field Communication) protocol to communicate with the phone the same protocol used in mobile payment services (Apple Pay, Google Pay). The Tangem cards act as physical, tangible keys to access the wallet, offering a level of security superior to seed phrases alone. The name “Tangem” is a portmanteau of “tangible” and “gem.”

The company was founded in 2017 and initially focused on business-to-business (B2B) ventures, collaborating with partners in the cryptocurrency space. One of their first major undertakings was creating a key card for the Xumm wallet, a non-custodial wallet that interacts directly with the XRP Ledger. By 2020, the Tangem team gained experience to launch their first direct-to-consumer (D2C) product, a series of mono-currency wallets called Tangem Note, similar to a prepaid Visa gift card. Users could purchase, for example, .01 BTC and gift it to their friends and family.

The idea was to onboard new users to the crypto space with something they were already familiar with, providing a product attractive beyond the crypto native community. There were later iterations where the purchaser could load whatever denomination they chose. These first iterations of the Tangem wallet allowed users to hold and use cryptocurrency off-chain without knowing the seed phrase. As Rybachuk explained,

"A banking card, for example, is straightforward and familiar. People use their banking cards all the time, and it doesn't have a screen, display, cables, or batteries, so they can't run out of charge. It's also always with you and available."

A New Cold Storage Vision

While most cold storage wallets require technical knowledge in cryptocurrency custody, the Tangem wallet is designed to provide a secure storage solution for non-technical, average smartphone users. The key cards can be activated and set up in a few minutes with a smartphone and a user-generated password. The first card generates a private key, which is then cloned onto the second and third cards. The cards require a password, so if a single card is lost, it cannot be accessed by anyone who does not know the password. This is similar to the two-key, two-factor identification concept, whereby a physical card is required to access the funds.

Users can reset the password when they possess two of the three cards. They can also deactivate this feature on one card if they carry both cards in the same place (e.g., while traveling or moving) and want to avoid having the password reset by a dishonest user if the cards are lost.

Rybachuk inadvertently called me out when he emphasized, "Let's be real, 99% of people just wrap this piece of paper around the Ledger - slap a rubber band on it and put it away in one place."

Rybachuk and I discussed how much has not changed in cryptocurrency storage since BIP 39  (Bitcoin Improvement Proposal 39) in 2013, which created the mnemonic code generation of seed phrases to secure crypto wallets. He then shared the following sentiment:

"If we want crypto to become more about money and less about computers — because it started as some computer-savvy or cypherpunk project — but now it's about big money, corporations, and alternative banking systems; if you want to compete with a banking system, you need to have a very, very simple solution that everybody can easily understand."

Rybachuk mentioned that the Tangem team is trying to transform the way the crypto community sees cold storage wallets from something that is less accessible, like a vault, to something that is more accessible for regular use. Rybachuk further explains this concept:

"The idea is that we can create a system that will be as safe as your cold wallet in a vault and still have something to make day-to-day transactions with. I think the solution that we propose fits both of these use cases, and the user doesn't have this compromise. So that's what I think really makes it beautiful. It's not a trade-off. It's easier and safer. We don't need this trade-off between safety and user-friendliness because seed phrases are arguably less safe and more complicated to handle. And it's still cheaper because we have this card that doesn't have a screen display, which is the most expensive part of any device. We have a sophisticated and cheap device that provides secure elements, being EAL6+ certified. We can use this to play around with materials for the new edition of Tangem Wallet. We have a good plastic thicker than the standard banking card, giving it this premium feel."

The Tangem Ring

Tangem is innovating and changing the cold storage space yet again with the announcement of its latest offering — the Tangem Ring. The Tangem Ring was first announced at the Cardano Summit in 2023, and as of July 17, 2024, it is available on the Tangem website for pre-order and expected to ship out in late September. The Ring is a stylish wearable device that works like a single Tangem card.

Rybachuk continued,

"Today, you can use your phone for your fiat payments. You have your Apple Pay or Google Pay so that you can use your phone for your fiat payments, and your [Tangem] Ring for your crypto payments. Then, you don't need to have a physical leather wallet. We are the first hard wallet provider to make a ring. It's still pretty affordable - 160 USD, so we're still in an inexpensive range. And when you think about it, people spend 160 USD on a regular leather wallet. From a technical point of view, the firmware point of view, it's just another card.

You still have a Ring and a card, or a Ring and two cards in one set, and in one backup system. If you buy a Ring, you have one or two cards in one wallet to share, for example, with your fiancé; one of you can have a ring, and the other one can have a card. Or you can wear the ring one day and exchange it for a card another day - it's a versatile system."

Kaspa’s Influence on Tangem

Rybachuk went on to describe the growth of the company and its relationship with Kaspa:

"We have had significant growth since the bear market. We added Kaspa in February 2023, so our partnership with Kaspa correlates with this major growth in our user base and communities.

I can say that the Kaspa community is an important part of our community.

It is one of the most successful co-brands and limited editions of our wallets ever, and that just shows that the Kaspa community is huge. It's growing rapidly, and we're moving together."

He further emphasized Kaspa's amazing community and mentioned that, given the number of community requests, they "had no choice but to integrate Kaspa."

In contrast to his kind words on the Kaspa community, we next discussed the uncertain regulatory conditions in certain places, especially in the US, and how this might hinder the tokenization of real-world assets. Rybachuk explained:

"It's 1% technical and 99% legal. If you want to link a token to a real-world asset, it's pretty easy to deploy a smart contract on any blockchain. But to make this legal link between this token and the asset that makes this link real and accepted in different jurisdictions, that's the whole project, basically."

His perspective was interesting about the regulatory environment related to Tangem when stating:

Our core business is still hardware wallets. It's not a regulated sector because it's essentially a data storage device that allows you to store your private keys. It's basically still a flash drive. We are smart card manufacturers, so most financial regulations don't apply to us."

Tangem’s Future Products and Kaspa Community

We later discussed the Tangem team's exciting upgrades and future offerings. They are thrilled to introduce staking within the application soon and expand fiat on and off ramps. Understanding the community's desire for a comprehensive platform, they are diligently working to provide all services in one place. Additionally, they are developing visual support for displaying NFTs in response to community requests.

One important thing to remember about the Tangem ring and cards is their exceptional durability. They have been rigorously tested to withstand extreme pressure and temperatures. You can find videos of several of these tests online. This is counterintuitive compared to most cold storage devices, which are ruined if accidentally left in a pocket and go through the washing machine.

Listening to Rybachuk speak, it became clear that much of Tangem's success and growth has been organic, driven by their collaboration and attentiveness to the crypto community. By innovating and delivering products that meet the community's needs, Tangem has thrived. Rybachuk emphasized the significant role that YouTube creators have played in this process. It's encouraging to hear that, even during a crypto bear market, companies like Tangem continue to innovate and develop the best solutions despite less favorable macro conditions.

As a final note in the interview, Rybachuk emphasized, "Kaspa is very important for us, representing a significant portion of our community." He pointed out that this is evident from the swap volume, as Kaspa is one of the top coins being swapped. It's reassuring to know that Tangem was the first cold storage solution available for Kaspa, and this mutually beneficial partnership shows no signs of slowing down.

*Please note that this is not a paid advertisement. We just appreciate what Tangem has done for the Kaspa community!