We are going to hear a lot more about crypto security in the coming years as Facebook’s Libra gets your mom into crypto. But if your mother can fall for one of those Facebook scams, she can easily lose her Facebook piggy bank. So we’re going to walk you through the SafePal crypto wallet and see if it’s something your mom can use.
Let’s break this down into three parts:
- Should you get a hardware wallet?
- Will you find the SafePal secure or frustrating?
- And will you want to use it for everyday transactions?
For simplicity let’s imagine that you have two kinds of crypto. One that you would use and store in a wallet for everyday use—such as Facebook’s Libra—like you might use your fiat debit card. The other one is more like a savings account. You don’t need the currency in your crypto savings account right away and you would like to sock it away and hopefully let it grow in value.
Because people have different accounts, some users might only want a hardware wallet like SafePal to store their long-term crypto holdings. We’re also keeping in mind that this is SafePal version S1 V1.0.9 and they’re the first project backed by Binance Labs, so any problems we have with the wallet are likely to be upgraded in future versions.
In short, if you wish for something stronger than two-factor authentication to protect your accounts, you will like this wallet. If you get frustrated when Twitter makes you enter a four-digit code when you sign in on a new device, you’re probably not gonna like this.
(Disclosure: The folks at SafePal sent the Modern Consensus team a couple of hardware wallets. They’re nice and we’re a little nicer in this review than we were when Abra ruined Christmas.) They’re available on Amazon for $39.99, so not exactly breaking the fiat bank.
Should you get a hardware wallet?
First, our bias: a hardware wallet doesn’t reduce the stress of digital banking for us. We sleep easy on vacation knowing that if someone broke into our one-bedroom apartment while we’re on vacation, they’ll find nothing of value. WE like crypto for the same reason we like having an online bank account: Simple access, relatively high security.
However, if our bank gets robbed this week, we wouldn’t even check our bank balance. When a crypto bank gets robbed, though, people lose their account holdings. By SafePal’s estimate alone, “The cumulative lost caused by security problem[s] has exceeded $1.5 billion.” Much of that is from hackers who get lucky, like the one who went after our editor in chief’s measly $10 account. If hackers can compromise your email account, they can usually get into your exchange accounts—but not if you store your coins offline or have two-factor authentication using an offline source.
Unboxing the SafePal
The wallet comes in a pretty sexy box that would please the Beats-headphones crowd.
Getting started is pretty breezy, but not entirely intuitive. First we set up a mnemonic passphrase of 12- to 24-English words. It only took us three tries. If we ever have to recover this wallet, we will need to key in those 20 words one letter at a time. (Imagine using the search function on your TV one letter at a time for a 20 word phrase. No keyboard on the SafePal; our AppleTV has more buttons on it.)
There is also a 6- to12-digit PIN. See, at a fiat bank when money goes missing, it’s their problem. The onus is now on you and that’s about as pain-in-the-ass as it gets. We can secure your entire Bitcoin fortune just by memorizing a dozen digits.
When punching in this code, it scrambles the keypad on the display (3 is next to 6, etc). This is so that no one can keystroke log your SafePal. Very secure. But veyr aynnoning to uncsrbamle.
Now that it’s set up, we have a pretty little pocket pet that tells us how much money we have. But does this little money hungry tamagotchi work?
Is it cost effective?
Well…it goes like this: First just to do a test, we picked a sh*tcoin we had laying around in a wallet from the great 2017 days of making money out of server power. We initially tried BTT, the Tron-based TR-10 BitTorrent coin. We had 0.00000208 BTC (US $0.25) kicking around and figured, why not put that quarter in this slot machine and see if it comes out the other side? Last year that was could have been worth $6.25! Only SafePal doesn’t support any of the Tron-based coins, except the defunct fork of TRX Classic.
This is a bummer. If we could think of one reason to keep a hardware wallet, it’s that living in New York means that exchanges are constantly cutting us off from different coins because of our BitLicense laws. It would be great just to keep these in a hardware wallet and not have to worry about them. In that regard, the SafePal wallet could have been like that jar of miscellaneous foreign coins from your Junior Year Abroad—not super useful, but not a waste either.
Only a few months ago, the Bittrex and Binance exchanges notified customers that they might be taken out of the New York market. Right now, for example, we’re still locked out of selling any of my MaidSafe coin that we bought in 2017. If it moons, we’re gonna be pissed.
None of these transactions are direct, by the way. They all go through the blockchain. Thus, shoring up your accounts in the hardware wallet means paying the mining fees in every currency.
SafePal also isn’t compatible with Craig Wright’s BSV and a who’s-who of 2017’s faded glory—Tron, Iota, and EOS.
On the other hand, some PundiX (NPXS) that we got from Ian Balina started to work on SafePal. To make a transaction, we first had to withdraw more than NPXS 4462.0. That’s about $3.57 as of this writing. SafePal doesn’t take a transaction fee but to do this on the PundiX network, we spent $1.74 in fees. That’s half the transaction! It’s not their fault, but the “wallet” is not particularly suited for everyday transactions.
On their website, SafePal says that their wallet is better than lugging around “a heavy laptop” to make a transaction. And we get it. But since we can already do fiat banking on our phone with just our biometrics, is this crypto tamagotchi really worth carting around? It’s closer to having your own tiny bank than a handy wallet.
One thing we talk a lot about in crypto is that we’ll know it works when you don’t have to know how it works. Right now as we type this, our hard-earned PundiX is somewhere in their network. We have a withdrawal confirmation from one account. Will we get it? Who knows.
In SafePal, there is no “account.” Our phone can look up a QR code associated with our wallet here. They’re both sitting on our desk and neither can actually talk to the other. We can’t “log in” to this account wallet anywhere, the way we could with our bank or an exchange account like Coinbase. So we have no way of knowing what’s in process, cancelled, etc.
Just to make it interesting, let’s have a race. Using a completely separate exchange app on our secure crypto-phone, we can scan the SafePal’s QR code. Binance Coin (BNB) is doing pretty well these days, so we’ll send ourselves one of those for a BNB 0.001 fee. That’s about $0.03. Not steep, not perfect. We can send ourselves money for no fee at the bank. But, hey, in the name of tech-journalism we’ll add that to our $1.74 from before (which still hasn’t arrived).
Twenty minutes later, we can see on my phone that they both went through. The app displays a total value of my balances in USD, so that’s pretty cool. The problem is that all coins are not created equal. To send ourselves back the PundiX coins, we need to also have 0.000045 ether, worth about a penny. To fund that tiny piece of ether, we have to pay a network fee of .00021 ($0.07) that literally gets lost in the ether. So now we’ve spent $1.82 to shift our own money around. Is that a sustainable way to make transactions in our bank-less future?
If you really do want to jump on a mooning price, however, the extra security step might leave you doing the crypto version of fumbling to find the right key. We locked ourselves out of the system twice. Most of the top coins act like ETFs whose prices fluctuate for no good dang reason throughout the day and night.
We’d like to add just one more quick thing: though it’s marketed as such, SafePal isn’t exactly a pure hardware wallet. It generates random numbers as a key to a wallet that you set up in the app. But while the machine itself doesn’t hold your crypto in cold storage, it functions just the same—only you can’t just punch a few keys and check your balance on the device.
In the end, a hardware wallet is all about what it’s worth to you. SafePal is a very good and very affordable option. USB-stick type wallets are hackable, less reliable, and will probably disappear when USB does in a few years. The tin-foil hat crowd will like that they can charge the SafePal with a USB battery and keep it air-gapped from electronics. The HODL crowd will love SafePal and the app will let you have the fun part of crypto trading, which is watching prices go up.
Security is a matter of personal comfort, ritual and theater. Like a lot of things in finance, it’s a matter of how much you like to sleep at night. And for that reason, we will keep the SafePal until our PundiX Lambo gets here.