Self-custodial cryptocurrency wallet Tangem has received a United States patent grant for its private key backup technology.
The United States Patent and Trademark Office (USPTO) issued a patent on Jan. 28 for Tangem’s backup tech of private keys, according to official records.
The patent is titled “Systems and methods for transferring secret data via an untrusted intermediary device” and describes a method of interacting with self-custodial wallets that is designed to help users deal with holding private keys or seed phrases.
The technology aims to enhance the security and usability of self-custodial wallets by enabling secure private key transfers between its wallet hardware and devices like smartphones.
Tangem’s reasons for transferring private keys
By definition, self-custody refers to storing crypto assets independently of any third party by entitling users with a private key or a string of characters that acts as a password to access the assets.
While allowing users full control over their assets, self-custody is prone to risks like private key theft or loss, a significant barrier to mass adoption.
An excerpt from Tangem’s USPTO patent issued on Jan. 28, 2025. Source: USPTO
Tangem’s private key backup tech aims to help users benefit from self-custody without dealing with the private key directly but rather through creating backup authentication devices.
The key features of Tangem’s patented tech include a seedless backup process, end-to-end encryption, trustless intermediary transfer and tamper-proof authentication. The tech implements cryptographic techniques such as Elliptic Curve Diffie-Hellman (ECDH), enabling private key exchange and key derivation functions.
Tangem’s private key transfer: How it works
Tangem’s backup tech involves a method of transmitting the private key as secret data between two trusted devices — such as a Tangem card or a ring — via an untrusted intermediary or a smartphone.
According to Tangem chief technology officer Andrey Lazutkin, the “untrusted intermediary” implies that its tech does not need to trust user devices like smartphones.
An excerpt from Tangem’s USPTO patent issued on Jan. 28, 2025. Source: USPTO
“The idea is that the card transmits the key to another card, and it absolutely does not matter what device is transporting it — a phone, which one, what firmware, what device, rooted or not, with viruses or not,” Lazutkin told Cointelegraph, adding:
“The main thing is that the key will be encrypted and goes to another card even through an untrusted device [...] No one in the middle can intercept these keys.”
Private key backups are no stranger to criticism
The idea of private key backups has the potential to simplify the self-custody process, but many in the community have been skeptical about similar developments in the past.
Ledger, a major provider of hardware self-custodial wallets, faced massive community backlash over its cloud-based private key recovery system introduced in 2023. The French hardware wallet provider still rolled out the tech in late 2023.
Related: Bitcoin self-custody shields users from institutional risks — Trezor
In late 2024, Tangem went under fire for exposing certain users’ private keys via emails due to a critical security vulnerability on its mobile app. Tangem subsequently acknowledged the issue, saying that the incident arose from a bug in the mobile app’s log processing, which had been “fully resolved.”
In line with a popular community slogan, “Not your keys, not your coins,” many Bitcoiners oppose trusting a private key to any entity other than the owner. Instead of relying on key encryption and transfer, some prefer to hold their seed phrases on physical backup solutions like fire-proof metal plates or more sophisticated backup methods such as Shamir Backup.
Magazine: BTC above $150K is ‘speculative fever,’ SAB 121 canceled, and more: Hodlers Digest, Jan. 19 – 25