Cryptocurrencies are a rapidly growing asset class, with a total market capitalization exceeding $2 trillion. And as crypto's mass adoption rate and popularity increase, so does the need for secure storage solutions.
Today's secure cryptocurrency storage options include a variety of solutions designed to protect user assets from theft. For example, hardware wallets are impervious to hacking attempts because they store private keys offline. Meanwhile, software (online) wallets use advanced encryption options that cater to a wide range of user needs but still have glaring disadvantages.
In this article, we discuss cryptocurrency's security challenges, hardware wallets, their advantages, and why the Tangem Wallet is the best crypto wallet for beginners.
Why secure wallets are important in the crypto landscape
One of the most difficult challenges in crypto investing is convincing investors that it is safe. Safety is critical because cryptocurrencies are bearer assets — self-custodial assets that can be traded with others without a centralized third party while being sufficiently liquid, fungible, and portable. There are additional challenges beginners might face, including:
- The learning curve for cryptocurrency can be steep.
- Most investment advisors and brokerages do not yet support cryptocurrency investing, forcing beginners to validate investment opportunities and manage assets independently.
- The volatile nature of the space may cause FOMO (fear of missing out) in opportunistic investors, leading them to relax their guard regarding trusting platforms and "helpful hands."
- As more decentralized applications(dApps) emerge, opportunities for bad actors to manipulate these protocols or exploit security flaws to siphon or steal funds increase.
According to a February 2023 report from Chainalysis, a crypto forensics firm that tracks illicit activity on blockchains, 2022 was the most successful year in crypto hacking history, with $3.8 billion stolen from cryptocurrency businesses.
Eight security risks posed by custodial crypto wallets
Although online wallets and crypto exchanges are convenient for managing digital assets, they pose significant security risks. From the threat of hacking and phishing attacks to regulatory compliance concerns, we outline the critical vulnerabilities beginners face with custodial wallets.
- Hacking attacks: Online platforms are vulnerable to cyberattacks and security breaches. If a wallet or exchange is compromised, users will lose funds stored in the exchange's hot wallet.
- Phishing attacks: Crypto users may become victims of phishing scams in which they unknowingly provide their login credentials or private keys to fraudulent websites or emails masquerading as legitimate platforms.
- Social engineering: Attackers may use social engineering techniques to trick users or employees into disclosing sensitive information such as passwords or private keys.
- Lack of transparency: Some hot wallet providers do not provide sufficient clarity about their operations, raising concerns about their security and legitimacy.
- Insider threats: Employees with insider access to the platform may abuse their privileges, potentially misappropriating "stored" customer funds.
- Risks of regulatory and compliance violations: Online wallet providers and crypto exchanges fall under various regulations, and noncompliance may result in legal issues or shutdowns. In such a scenario, customers must move elsewhere or risk losing their funds.
- Lack of control over private keys: Many online wallets and exchanges do not give users direct access to their private keys. Users face a total loss if the platform encounters a problem and abruptly shuts down.
- Software vulnerabilities: Hackers can gain unauthorized access by exploiting bugs or vulnerabilities in the platform's software. Service attacks can temporarily disrupt online platforms' services, potentially causing users inconvenience or financial loss.
Exchanges are also vulnerable to market risks such as price manipulation, flash crashes, and other types of market volatility, which can affect their operations. Therefore, we strongly recommend using hardware wallets for storing your crypto assets.
What are hardware wallets?
Hardware wallets include various devices, from a simple USB drive to intricately designed smart cards, outfitted with specialized security and accessibility features for storing cryptocurrency without internet access.
This type of wallet protects the user's assets by generating and storing the wallet's private keys offline. This means that the keys are not exposed to hackers or malware. In addition to security, hardware wallets also offer several other benefits, such as:
- Portability: Good hardware wallets are small and lightweight, so you can easily take them anywhere.
- Multi-currency support: Many hardware wallets support many cryptocurrencies so that you can store all your assets in one place.
- User-friendliness: The best hardware wallets must be easy to use, even for beginners.
Hardware wallets also have additional security features, including an access code or biometric authentication.
Some hardware wallets are unpopular due to their inconvenience, especially for day-to-day transactions, as they require you to plug them into a laptop or desktop computer before you can access your crypto.
But what if you want a hardware wallet that combines the simplicity and ease of use of software wallets and the fortress-like security of hardware wallets? Let's take a look at Tangem Wallet.
Tangem: a leader in crypto hardware wallets
Tangem unveiled a next-generation self-custodial hardware wallet model in which the user's private key backup is not on a seed phrase. Instead, the key is securely generated and stored on smart cards that come in sets of two or three cards. When you activate a Tangem wallet, the wallet's chip generates the private key inside.
If you lose one card, your assets remain safe because you have one or two other password-protected cards. You can make one card your primary crypto wallet, lock the second one in a box, and bury the third card in your backyard — it is as reliable and as tough as a Toyota Hilux truck.
Tangem has produced over 850,000 cards since 2018 and maintains a perfect 0 hack record in over 141 countries. Customers also benefit from a 3-minute setup time and the highest level of security for digital assets that exist today.
What is the Tangem Wallet?
The Tangem Wallet is a self-custodial (you have complete control over your private keys) wallet built on a powerful, certified chip developed in collaboration with Samsung Semiconductors. The wallet supports over 6000 cryptocurrencies.
With Tangem Wallet, you can store, buy, earn, transfer, and swap thousands of cryptocurrencies while enjoying access to DeFi, NFT, DeEX, and other services — all on one card with relative ease. Sounds too good to be true? Here's how it works
How Tangem Wallet works
There are two components at play in the Tangem Wallet. The first component is the hardware wallet device — a pack of two or three Tangem cards required to create one wallet. The second component is the Tangem mobile app, available on iOS and Android. Let's see how these two components work together.
Tangem cards
Tangem cards come in a set of two or three. They are plastic cards with an inbuilt secure chip that functions as a microcomputer. When the card is manufactured, the chip generates its own key pair: the Kcardpriv private key and the Kcardpub public key.
These keys are unique to each card and are not connected to the future user's wallet. They're only required so that the card can prove its authenticity and tell the app that Tangem manufactured it. The card's replacement warranty is 25 years, based on the minimum chip lifetime.
The Tangem app
Because human beings cannot independently communicate and interact with microchips on a plastic card, there is a need for an interface or means of communication. That's precisely what the Tangem app is for. The Tangem app shows the functionalities of the Tangem wallet, including what assets are stored, asset management (send and receive crypto), and much more. So, how does a credit card-shaped wallet connect with your mobile phone?
How Tangem cards and app interact
Both Tangem wallet components interact via Near-field communication (NFC). NFC is a wireless connectivity technology that allows devices to communicate when brought within a few centimeters of each other using magnetic field induction.
NFC is based on inductive coupling between two antennas on NFC-enabled devices — your smartphone and the Tangem cards — communicating in one or both directions.
Features of the Tangem Hardware Wallet
Tangem redefines the hardware wallet experience by providing unrivaled security, simplicity, and usability. Users can enjoy complete independence and autonomy while managing their assets with a single tap. Tangem Wallet lowers barriers for crypto newcomers while improving the custodial experience for advanced users.
Security
Here's an overview of the Tangem Wallet's security features:
- Anti-counterfeit protection: The Tangem app verifies the authenticity of both the chip and the firmware.
- EAL6+ level: The Tangem chip has the highest chip security standard available. It is protected from invasive and non-invasive attacks. Private keys are generated inside the chip during wallet activation. Nobody has access to your private key, and it cannot be revealed under any circumstances, not even the extinction of the human race.
- Audited firmware: An independent audit by Kudelski Security confirmed that Tangem firmware has no backdoors or other vulnerabilities. The firmware is not updatable, and it has no hidden algorithms.
- Open-source app: The Tangem app is open-source on GitHub and has been verified by the community. There are no backdoors, and anyone can recreate the app if necessary.
- Autonomy: Tangem doesn't collect personal data or run servers to conduct transactions on the blockchain. It's just your wallet, the app, and the blockchain.
- Smart backup system. The chip in the card generates a random private key that never gets exposed. The cards establish a secure connection with each other and transfer your encrypted private keys. The keys are stored on three cards with no other copies in space and time.
- Access code protection: Tangem cards are protected against unauthorized access and brute-force attacks by the user's access code or biometric authentication.
Reliability
Tangem Wallet is IP68 certified and has Maximum resistance to dust and water. The Tangem chip was developed in cooperation with Samsung Semiconductors, Inc. It has a 25-year replacement warranty based on the minimum chip lifetime. The wallet's chip can operate at peak performance between –25°C to +50°C. It is also protected against EMP, ESD, and X-rays in compliance with ISO 7816-1 standard.
Privacy
Tangem servers are not involved in your crypto operations in any way. All crypto operations go directly to public blockchain nodes or API services. Tangem doesn't collect user data like IPs, addresses, balances, transactions, etc. We also don't provide KYC services — your wallet, your business!
Simplicity
The Tangem wallet offers a remarkably user-friendly experience, combining cutting-edge technology with intuitive design. Its quick setup, easy interface, and seamless crypto management process make it an accessible choice for seasoned cryptocurrency enthusiasts and beginners.
- Portable: The Tangem Wallet is a small credit card-shaped device. It fits in the pouch where you usually keep your bank card, making it easy to carry anywhere. It uses NFC protocol: no need to have wires or batteries for charging.
- Durable: The wallet is made from a durable plastic that can withstand everyday wear and tear. It is a chip with an antenna with no points of vulnerability or elements prone to failure.
- Convenience: The Tangem wallet is easy to use and set up. Just tap the card on your phone, enter your passcode or face ID, and access your crypto. Wallet setup also takes 3 minutes.
- Multi-currency support: The Tangem wallet supports many cryptocurrencies, including Bitcoin, Ethereum, and Litecoin.
- User-friendly interface: The Tangem app has a user-friendly interface that makes it easy to use, even for beginners.
- Support: Tangem now offers 24/7 support.
Overall, the Tangem wallet is a secure and user-friendly choice for individuals and businesses looking to store their digital assets securely. If you are looking for a safe and user-friendly hardware wallet, the Tangem wallet is a good option.
How to get started with Tangem Wallet
For Tangem Wallet to work, you need a phone that supports NFC and the official Tangem app. You can get the Tangem app from the App Store and Google Play.
To set up your Tangem Wallet, follow these instructions:
- Open the Tangem app.
- Tap Scan and scan the card by bringing it close to your smartphone.
- Select Create Wallet and scan the card again.
The tangem card then generates the keys and creates the wallet. The wallet will then ask you to create a backup.
You can back up your keys to two other blank Tangem Wallet cards. Please note that you can either create a backup now or later.
If you add one backup card now, however, you won’t be able to add more backup cards later. To start the backup process:
- Select Back up now.
- Tap Add a backup card.
- Scan the second card by tapping it on your smartphone.
- Repeat the last backup process for the third card (if available).
- Tap Finalize the backup process.
To protect your Tangem cards, you must create an access code.
- Tap Continue and enter an access code.
The access code can be any word, phrase, or number.
You can set a unique access code for each card later.
- Select Continue.
- Re-enter your access code.
- Tap Submit.
- Scan all the cards one by one again.
Here is a video that shows you how to set up your Tangem Wallet
Why you need a hardware wallet
Tangem hardware wallets serve as versatile tools for safeguarding cryptocurrencies. This list highlights practical use cases, from securely storing assets long-term to facilitating offline transactions and ensuring protection against cyber threats.
- Making secure payments: Tangem has gotten certification from VISA for a payment solution. In the future, users can use their Tangem Wallet to make secure payments online or in person.
When you pay or sign transactions with your Tangem Wallet, your private keys never leave the device, so your cryptocurrency is always safe.
- Storing assets for the long term: The Tangem Wallet is a good choice for keeping your cryptocurrency for the long term. The wallet is secure and durable, so you can be sure your assets will be safe for years.
- Keeping your crypto portfolio private: The Tangem Wallet does not require creating an account or sharing your personal information. This means that you can keep your cryptocurrency portfolio confidential.
- Easy access to your cryptocurrency: The wallet’s simplicity makes it possible to send, receive, and store your cryptocurrency daily.
Comparing Hardware wallets: Tangem vs. other wallets
Let’s compare Tangem to other hardware wallets — we won’t mention them, but they’re pretty popular. We created Tangem Wallet using the best technology humanity has to offer, so our features are simply in a class of its own. Here’s a comparison table.
| Tangem | Other Hardware Wallets | |
|---|---|---|
| Setup time | 1-3 min | 20 min |
| Necessary equipment | Smartphone with NFC | Smartphone, PC, cable |
| Battery | None | Built-in |
| Backup option | Multiple cards + (optional seed phrase) | Seed phrase only |
| Non-extractable key | Yes | BIP39 |
| Hardware certification | EAL6+ | EAL5+ |
| Independent firmware audit | Yes (Kudelski Security) | No |
| Hardware components | Only secure element | Secure elements & non-certified parts |
| Anti-counterfeit protection | Firmware certificate/attestation | Anti-fake stickers |
| Water and dust protection | Full (IP68) | No |
| Access code protection | Yes | Yes |
| Access code recovery | Yes | No |
Conclusion
Cryptocurrencies are a new and exciting asset class that has the potential to revolutionize the way we store and transfer value. However, with this new technology comes new risks. One of the most significant risks remains online theft and cyber attacks. The only fool-proof security solution for storing your digital assets is a self-custodial hardware wallet. So, if you’re looking for a secure and easy-to-use hardware wallet, the Tangem wallet is a great option.