For many years, owning digital assets in the cryptocurrency space necessitated the use of cold wallets and the reliance on a complex series of seed phrases. Typically, users received a 12 or 24-word seed phrase that they were instructed to write down and store securely, ensuring it would not be lost. While this method provides a high level of security, it has proven to be a significant barrier for less tech-savvy users who find the process daunting.
In a recent discussion, Ana Jacobson, brand campaigns lead at Tangem, highlighted the challenges posed by using seed phrases and emphasized the necessity of simplifying the user experience to foster broader adoption of cryptocurrency. Jacobson pointed out that the process of entering the crypto space has often felt overwhelming: “It was too hard for people to get into crypto. They had 12 or 24 words. Let’s narrow it down to just three units and they still can’t do it.” This sentiment was echoed by a variety of individuals, including one Uber driver who refrained from purchasing Bitcoin due to concerns about misplacing his seed phrase.
To address these issues, Tangem has developed a unique backup system that reimagines how users manage their crypto assets. Instead of relying on traditional seed phrases, the company stores the private key on a secure chip within a physical device, keeping it concealed from outside parties, including Tangem itself. Users can create up to three backup cards, each containing the key. Jacobson clarified, “It’s less that we’re eliminating seed phrases. It’s that we want to give people more functionality to have their own choices.”
The backup model is designed with redundancy in mind. If a user loses one card, they can use a backup for recovery. However, losing two cards prompts a reassessment of security practices, and losing all three means that no recovery options are available—emphasizing the commitment to true self-custody, which means there are no third-party recovery solutions.
Furthermore, Tangem is exploring the realm of wearable wallets, including a ring that also supports the inclusion of two backup cards for the private key. Despite the long-standing importance of seed phrases in cryptocurrency management, it is becoming increasingly clear that for the next wave of mainstream adoption, they cannot remain the primary method of self-custody if the industry hopes to invite new users into the fold.
