In May, smart banknote platform Tangem launched pilot sales of physical bitcoin notes at the Megafash Suntec City store in Singapore.
Tangem‘s smart card technology permits storing cryptocurrencies on physical plastic cards (Tangem notes) with a chip and NFC antenna inside. Tangem claims that this is “the first smart banknote for digital assets.” The security and reliability of Tangem technology, outlined in the Tangem FAQ, is audited by Swiss security company Kudelski Security.
Tangem, headquartered in the Swiss “Crypto Valley” near Zug, has offices in Singapore and R&D/manufacturing facilities in China, Taiwan, South Korea, Russia, and Israel.
The Tangem FAQ describes Tangem notes as the easiest and most secure way to acquire, secure, store, and transfer cryptocurrency. While making cryptocurrencies easier for consumers is certainly valuable, the real killer app of Tangem is:
“Tangem Notes enable off-chain physical transactions – just hand over the card: zero fee, immediate validation, no digital trace.”
In other words, Tangem notes are physical crypto cash: Users can give Tangem notes to other users, and no trace of the transaction is stored in a blockchain. Tangem notes can be used as untraceable electronic cash.
It’s important to remember that Tangem notes are like cash also in another sense: If you lose a Tangem note, the money is gone. If you leave a Tangem note unattended, it will be stolen just like cash, and there’s nothing you can do.
Untraceable crypto cash
The Tangem FAQ answers the question “How is Tangem Note different from Opendime?” with “Tangem Note is made to be easily usable by any consumer with or without prior experience in cryptocurrencies or technology.”
The Tangem smartphone apps – Tangem Access for Android and Tangem Lite for iPhone – can be used to validate the value and authenticity of Tangem Notes. The Android app permits extracting the funds to an external cryptocurrency wallet: “For safety, this requires you to hold your Android phone carefully against a Tangem Note for one or two minutes.” Presumably, this feature will be also made available for NFC-enabled iPhones.
While at this moment Tangem notes can be topped up, Tangem advises to never top up a Tangem note to a value above it’s denomination. In fact, Tangem notes are meant to be used in fixed denominations, like 0.01 or 0.05 BTC. Tangem notes are meant to be loaded by distributors and sold at retail locations. As of June 2018, this is limited to a handful of countries.
“A wider rollout is planned through 2018-2019 with vending machines, ATMs, and money exchangers offering them in parallel with more retail outlets,” notes the Tangem FAQ.
Tangem will soon begin recruiting distributors and offering a Distributor Kit. A “Pioneer Kit” with ten fully functional notes to be loaded by the user with their own Bitcoin is currently sold for $199.
So, the price of unloaded Tangem notes is similar to that of unloaded Opendime sticks, which are sold at $37.50 for a pack of three. These prices make both Tangem and Opendime practical only for relatively large amounts, say $500 or more.
Now, suppose one of the two companies, or a newcomer, finds a way to get the unit price down to, say, one dollar. This would make physical crypto cash practical for small routine transactions of less than $50, thus creating a cash equivalent for untraceable cryptocurrency transactions.
Whether this is good or bad, depends on one’s overall approach to economics and politics. I’m personally persuaded that the world needs, in the words of Kyle Torpey, “privacy-enhancing or censorship-resisting technologies, mainly for the purpose of removing the relevance of government-imposed regulations and restrictions.”
This is a call to developers: Please bring the fabrication costs of physical crypto cash down!
Picture from Tangem.
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