Gold - Incognito Debit Card

Thanks for your response. Honestly, I am not at all familiar with how a crypto-backed loan works, and I don’t need a loan at this point but instead looking for an alternative investing universe besides the stock market. Perhaps you can educate me on that topic if you care to do it. My problem now is to figure out how to buy (invest) in cryptos (any types) with fiat money and use it (convert it back to fiat) in the future if and when they appreciate in value without triggering any tax events. Do you know any way how that can be done? Thanks in advance.

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In the USA everything is a taxable event, also crypto-to-crypto, I’m from EU and here the situation is more permissive, especially in some countries where cryptocurrencies are still not well categorized. In this case the taxable event is only crypto to FIAT conversion and you are right, when spending with the card there is a taxable event.
If you request a crypto loan you can use the cash without paying taxes, but this is a loan so you have to return the capital paying the interests. For example some companies like Celsius don’t allow to pay the loan with the collateral itself, because this will be an exchange operation and it’s not their business. You can pay the loan but not with the collateral, so the exchange operation will be a taxable event for you (if the loan company doesn’t accept the payment with a currency that is different from the one you borrowed).
Also interests from staking, mining, etc are often taxable since they are an income…
It’s up to you to declare or not the things, obviously if you use a privacy coin or a privacy network like Incognito no one can track your operations and balances (and the crypto-crypto taxable events), but when you exit in the FIAT world you have only 2 options:

  • Exchange and pay taxes
  • FIAT Loan with crypto collateral

If you go to/from FIAT, you’ll have always “issues” like KYC/AML and taxes.
You could also exchange crypto P2P locally, but the premiums often are comparable to the taxes… If you don’t want to move to a different country, or do illegal things, there aren’t other options I think… Probably FIAT Loans with crypto collateral are the best option if you can expect gains from your trading operations.

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Wow… I think you did a great job answering my question, even though I still do not understand it 100% because I am still a newbie in the crypto world. However, thank you very much. I will ask again when the time comes to do any of the things that you mentioned… :grinning:

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Nexo.io - Allows you to get a crypto backed loan and pay with your collateral if you want. They don’t have a credit card available yet, but they have been promising one for a long time. I believe their APR 5.9%, I think they also recently introduced 10% interest on stablecoins.

In the U.S. crypto isn’t considered a currency, it’s considered property which brings it into a legal grey area. However currently they are trying to regulate it.
This means that you can get a loan backed by crypto for about half the value you collateralize. I believe stablecoins give you a higher percent then just half. On a lending platform like Nexo, your able to pay back the loan with your collateral, or with other crypto in your account. This is not considered a taxable event, because it is still a loan, but you do need KYC. You also don’t need any credit checks since the loan has it’s value collatoralized. I believe this works the same way with stocks. You don’t get taxed on the loan you get from putting up your stock for collateral (this is what rich business owners do) and technically you can pay back the loan by giving up the collateral.

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Thank you for your insight. As always, much appreciated!!

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@Gold look at this https://shop.tangem.com/

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@andrey well blow me down! Unless I am mistaken, this does allow exactly what we want as far as security and management goes! So now we need the nitty gritty inner working details! Fantastic find!

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I agree. Great find, @andrey! This makes the two-card idea–the cashless, and the cacheless–seem like more of a reality.

I’ll research the integration and see what we need to do.

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A couple clauses in Tangem’s terms of use:

3.5 Producer does not keep records of Cardholder’s personal data, the amount of Blockchain Asset stored on the Card, the Private Key, or the history of Card usage.

Sounds like no KYC, as no fiat is involved. This fits perfectly into Incognito’s overall mission.

d) The Cardholder shall treat the Card in the same manner as physical money (cash) and keep it safe. If the Card is lost, stolen or destroyed, control over the corresponding Blockchain Asset will be permanently lost.

Card users must be very careful to ensure the safety of their cards. Losing it would be just like losing a wallet full of money.

Nevertheless, the cards are pretty hardy. They are supposedly waterproof and usable even encased in ice. Bet the cards melt easily enough though. :stuck_out_tongue_winking_eye:

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I think the main thing to investigate is if the card uC can be compatible with the way Incognito is signing the transactions. I’m not a developer, but I remember the issues with XMR and Ledger, when they created the Ledger App (memory issues for examples)… Since the signing procedure is done inside the card, the uC of the card must have the needed integrated crypto primitives (AES, RSA…) and a sufficient amount of memory to sign the transaction successfully in a human time (seconds). The firmware of these cards can not be modified, so if a custom signing algo is needed, a new firmware must be developed, audited and certified in partnership with Tangem team. This could be potentially too expensive at this stage.
The specification of the Tangem card chip are:

  • Embedded EAL6+ SecurCore microchip from Samsung
  • Uses 3DES, AES, RSA, & ECC cryptography
  • Arm SecureCore SC000 Processor

The cited Samsung chip could be probably the S3D350A, that is the only one with integrated NFC at the moment… If a customized firmware is needed, these are the specifications about chip RAM and ROM

The first thing to do could be experiment with their development kit, they provide a general purpose card where you can choose the right signature algorithm: https://shop.tangem.com/products/tangem-developer-kit

At the moment, Tangem supports all major cryptocurrencies (BTC, ETH, XRP, BCH, LTC, BNB, EOS, XLM, TRX, ADA, XTZ, DUC, RBTC, MTX, XEM, DASH, NEO, ONT), smart-contract and trustline assets. This also includes non-fungible tokens.

If the signing procedure of Incognito is compatible with the above mentioned cryptocurrency, the cards can be used and is sufficient only the wallet integration using their SDK. If this is not the case, only Tangem can develop a new firmware with the required functionalities, the Firmware sources are not available to the community

Firmware

Smart-card technology dictates a “security through obscurity” approach. Disclosure of the source code within secure elements would render hardware wallets vulnerable. In order to prove that Tangem firmware has no backdoors or bugs that would lead to loss of funds, Tangem has employed a renowned independent security auditor, Kudelski Security. The results of the audit are here:

https://research.kudelskisecurity.com/2018/08/06/audit-of-tangems-smartcard-wallet-code/amp/

Independence

Tangem firmware works on a native microcontroller level and does not rely on non-transparent platforms, such as third-party implementations of JavaCard VM. There are also no mechanisms to remotely control or update the firmware after the card is manufactured.

Hope this helps to understand the next steps to do, if the team/community wants to leverage this solution. The Tangem card idea within the Incognito ecosystem is really great in my opinion, I like the idea of an hardware wallet that can be exchanged like banknotes. This could enable a new P2P way to exchange anonymous crypto assets.

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https://keycard.tech/
white labelling possible

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PBS… crypto´s card processor wirecard filled for bankruptcy … 2B missing

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Thinking about to produce own hard wallet card :slight_smile:

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A Tangem-like card is the best option I think, from a marketing and a technical perspectives. And it’s not so expensive.

Then there is also the possibility of integration with 3rd part hardware wallets. The more interesting are:

  1. Ledger wallets (most popular, probably easier integration)
  2. Coolwallet (card sized, BT)
  3. Hash Wallet (card sized, e-ink, fingerprint, BT&NFC, will be out next year)

The Hash Wallet is interesting: a card sized (and thin like a card) wallet with an e-ink display and a fingerprint reader. It has BT and NFC. The technology is interesting, maybe it could be used also for payments (with dedicated NFC POS, NFC smartphone) confirming the payment with a fingerprint (and the integrated display) without the needs of a wallet and/or our smartphone.
Here the reference:

The difficult part is always the integration on the firmware side…

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anddddddd… its gone!!!

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https://keycard.tech/

That’s unfortunate. At least it sounds like they have a plan to restore funds and services.

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thats why another option for fiat on/off ramp could be a DOUBLE DEPOSIT escrow exchange like https://happypsyduck.github.io/fiatdex-gateway/ (code is open source) running on the incognito wallet.

Double deposit escrow means BOTH buyer and seller must place collateral … you can watch a video demo of how it works here:

incognito wallet+fiat double deposit dex+keycard/tangem = private BANK/ nomad human ATM

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This is pretty interesting, but I guess I dont understand how you actually get fiat traded between parties. I looked at the white paper, and it just said:

The preferred method is some sort of irreversible cash transfer (not bank to bank as those tend to be reversible).

This seems like the really important part… how exactly would you do this, in a way that is simple, integrated and prevents KYC or AML?

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