Bitcoin, being a digital asset, has been a concern for many people since its launch. It was because many people still see value in keeping valuables locked away, even in this day and age when most information is stored safely on remote servers and virtual accounts. Due to this years-old habit and security perspective, some people were skeptical of cryptocurrency since it was not easily accessible, unlike paper currency. However, with the production of physical Bitcoin, those doubts and confusion may also be long gone for such people. But for those who were fond of this digital currency, physical coins may be an unexpected update in the cryptocurrency world.
Are you still unaware of the existence of physical Bitcoin? Let’s go ahead and explore it below in detail!
What are physical Bitcoins?
Physical Bitcoins are superficially comparable to their fiat currency counterparts. Typically, they are constructed from brass, silver, or even gold. They also include a logo on one side and a numerical value on the other. The similarities between the two entities end here.
Unlike centralized fiat currency, their value is determined by a private key written on its back. This key stores the currency’s actual value in a digital wallet, which could be 1 BTC or 100 BTC, depending on the coin’s creator.
Physical cryptocurrency is similar to bank cards or gift certificates. The paper or the card is devoid of value. Instead, access to the actual currency is granted via the magnetic strip on the front of the card or the authentication on the voucher. When it comes to physical Bitcoins, it is not the coin itself that is significant, but rather the private key printed on the back.
Production of physical Bitcoin
Most individuals who produce physical BTC use 3-D printers. The designs vary since they are not generated by a centralized body but by enthusiasts. Some coins are plated with metal, while others use pure silver or gold.
The value of this type of Bitcoin lies in its reverse, which carries the private key for the coins itself. The role of this key is to redeem them online. Additionally, each coin has its unique private key. Therefore, the BTC contained in that coin will be accessible even if it is stolen or tampered with. Alternatively, the entity would have access to all the stored cryptocurrency if this were a digital wallet.
The private key is housed under a holographic sticker on the coin’s reverse to prevent tampering. When the label is peeled, it leaves a distinguishable mark. If your coin has a mark, you will know it has been tampered with.
The first physical Bitcoin: Casascius
Casascius is one of the most well-known forms of physical cryptocurrency. Mike Caldwell, a Bitcoin user, began minting various physical currencies in 2011, including a 0.5 BTC token, a 1 BTC brass coin, and a 1,000 BTC gold-plated bar. To redeem their coins, buyers would remove a holographic sticker to expose a key. This procedure was known as depending.
The US government informed Caldwell in 2013 that he was breaking the law by minting coins. Therefore he was forced to close his firm in 2013. The US Financial Crimes Enforcement Network (FinCEN) stated that Caldwell was a de facto money transmitter and required federal registration. Instead, Caldwell, who had struck 27,938 coins, ceased striking loaded coins.
Despite the demise, Casascius coins are still valuable. CasasciusTracker indicated that the majority of tokens were still wrapped. There were 19,613 active coins as of 12 May 2022, compared to 8,325 that were redeemed. Even if we assume that every functional currency is worth 1 BTC, there is more than $540 million worth of Bitcoin on the tokens. In actuality, there are likely certainly far more.
Other physical Bitcoins
There are additional physical cryptos besides Casascius. For instance, Missouri’s Altin Mint manufactured two coins. One featured Adam Smith and had two BTC; the other had one BTC. In 2014, artist John B Andelin struck 600 coins of each type, which sold for 2.92 and 1.45 BTC. The physical item’s markup is remarkable, 46% for the more significant value token and 45% for the smaller one would add $170 to Bitcoin’s late 2014 value of $378.
What is physical Bitcoin worth?
Physical cryptocurrency is worth the amount of BTC in their private keys? Not quite. Due to coin rarity, the price is sometimes higher than the BTC in the wallet.
The coin’s substance affects its value. These coins are composed of different materials, i.e., gold, silver, or plastic. If the coin’s material is pricey, its price will rise. Gold coins are more expensive than metal-plated coins.
Collectability also matters. Materials, branding, and restricted supply make these coins uncommon and unique. An old coin is a rare collectible, mainly if few others survive. Its value is independent of the Bitcoins in the private key. People would buy it because it’s rare, like movie posters or fiat money.