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9th September 2023 > > IMF and Tangem.


A tale of two woes, proving we must fix the centralisation problem, and we must fix the decentralisation problem.

These two stories are connected, please bear with me.

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Market Wrap

Leveraged shorts continue to build, perhaps in anticipation of a so-called Death Cross (if you don’t know what that is, don’t bother to look it up), which is a key indicator telling us what has happened in the past, and only in the past. Its name is designed to strike fear into unsophisticated investors when it should have the opposite effect.

Occasional Series – BBC’s disinformation correspondent …

… lied on her CV.

Quote : “Everything else on my CV is true”.

Which kind of misses the point.

Truly, there is nowhere else for the BBC to go.

Curious Cryptos’ Commentary – IMF (International Monetary Fund)

Well, here’s a turn up for the books.

The IMF, whose policies have caused untold misery for those less fortunate than us who find themselves in less liberal and less wealthy countries than the UK for instance, has long been preaching the dangers of cryptos. Those in charge at the IMF rightly foresee the challenge to their centralised hegemony and remain fearful of it.

I get it. You must protect your own, even at the expense of everyone’s else’s happiness and well-being. I am just surprised that “your own” now encompasses civil servants and bureaucrats voraciously feeding from wealth-generating taxpayers, but we shall come back to that discussion another day.

It seems that the unstoppable nature of cryptos is finally beginning to be appreciated by the IMF apparatchiks.

The IMF and the FSB (Financial Stability Board) have stated in a paper that bans on crypto trading and mining will be costly and not an easy option. That’s a face-saving formula right there:

The paper recommends developing a regulatory structure around cryptos, though with the misguided objective of limiting crypto adoption.

One small victory at a time.

Curious Cryptos’ Commentary – Tangem Wallet (again)

We have looked at the Tangem Wallet on two occasions now:

For a quick recap, Tangem is trying to address the knotty problem of having to store private keys somewhere.

Initially excited by their product, I raised some concerns when I first used it. These were mostly addressed by Tangem, so I thought I would give it another go.

The USP is that you have either 2, or 3, cards that store your private key without you even knowing it. If you lose 1 of them, you have a back-up in place, which all sounds rather appealing.

The cards work with the Tangem app on your phone.

So, what happens if you lose your phone?

The Tangem website says this:

“In such cases, you don't lose access to your assets. You can use your card to access your wallet via any other mobile device. The phone itself doesn't store any assets you hold; it simply acts as a display by visualizing specific data for a particular user on screen. The storage of private keys and signing of transactions is done by your card. All you have to do is download the Tangem app on your new phone and scan the card.”

After querying Tangem on this apparent point of vulnerability (anyone finding your card can simply download the app) I was told that:

“ … each card in the pair will have protection with an access code.”

Which is all well and good, but with facial recognition so ubiquitous these days, who is going to remember the access code if they lose their phone?

I know, write it down somewhere …

I agree that someone finding that access code doesn’t know what to do with it (neither would 99% or more of people who stumble across a random 12- or 24-word phrase) but they would also need the card to take advantage of it.

So, yes on balance, Tangem does have security improvements, but we are still a long way from facilitating wholesale retail adoption.

But I had a nagging, gnawing, growing, doubt about the back-up situation.

So I ran a few scenarios through my head as thought experiments, and then tried a few out for real. Finally, I pretended I had lost my phone (delete the app and start again) and I pretended I had lost one or more cards (I just hid them under a piece of paper on my desk, for I am sucker for con-artists and shysters, but let’s leave my soon to be ex-wife out of this conversation).

I learnt two things quite quickly.

If you have forgotten your access code and lost your phone, you will need to reset that code on a new phone. This requires two cards - for which, by the way, you must remember to reset on both cards, which itself is a vulnerability.

But here’s a thing.

Let’s say you keep one card in your wallet and one stored safely at home, or buried in the garden, or in a bank vault. Whatever.

You go out for an evening, carrying – as always – your phone and your wallet.

Having both your wallet and phone nicked must be very annoying, disruptive, and make you somewhat antagonistic towards the feral scumbag who has preyed on your carelessness. In the heat of the moment you are not concerned about your crypto stash using Tangem.

Next day, your new phone turns up, you download the Tangem app, and you need to input or reset the code.

You haven’t written the code down, and neither do you have a second card to reset it.

Poof goes those cryptos into the ever-growing crypto wallet marked “lost”.

Tangem support is being very understanding with me when discussing this point.

The IMF is one of the most damning displays of how centralisation can go so terribly wrong.

The lack of centralised custodial solutions for cryptos demonstrates how decentralisation can go so terribly wrong.

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