{"id":6591,"date":"2021-01-17T23:48:16","date_gmt":"2021-01-18T04:48:16","guid":{"rendered":"https:\/\/cointelegraph.com\/magazine\/?p=6591"},"modified":"2021-02-26T20:45:25","modified_gmt":"2021-02-27T01:45:25","slug":"bitcoin-gets-physical-art-or-digital-heresy","status":"publish","type":"post","link":"https:\/\/cointelegraph.com\/magazine\/2021\/01\/17\/bitcoin-gets-physical-art-or-digital-heresy","title":{"rendered":"Bitcoin gets physical: Art or digital heresy?"},"content":{"rendered":"

Since 2011, a group of enthusiasts and collectors have been obsessed with the physical manifestation of Bitcoin.\u00a0<\/strong><\/p>\n

On the face of it, physical Bitcoin seems like a contradiction to the key terms that define it, so a trustless, instantly transferable virtual currency becomes a real world coin that has all the disadvantages of Earth-bound cash. But there are numerous advantages too when it comes to privacy, storage and ease of use \u2014 and they look pretty cool too.<\/p>\n

\u201cA lot of people know about Bitcoin, but very few people actually own Bitcoin. Even fewer own physical Bitcoin,\u201d explains Bobby Lee, who has owned a 10 BTC coin since 2011 and designed and produced his own coins under the BTCC Mint brand until 2018. He added:<\/p>\n

“Physical Bitcoins are a rarity, they\u2019re sort of like Picasso and Van Gogh paintings were back in those days. Nobody realized how rare they were. I expect these physical Bitcoins will gain in popularity and appreciation by connoisseurs worldwide.\u201d<\/p><\/blockquote>\n

Physical Bitcoin typically comes in the form of metal coins, with the private key hidden behind a tamper proof holographic sticker Although highly prized by collectors, Lee said the coins are also practical too.<\/p>\n

\u201cThe reality is that it\u2019s impossible for me to send people Bitcoin if they\u2019re new to Bitcoin,\u201d he said, referring to digital Bitcoin\u2019s steep learning curve to set up wallets and seed phrases. \u201cPhysical Bitcoin, there\u2019s no permission needed, I just hand it to them. Recently my cousin got married in Toronto Canada, and I was able to give them some Bitcoin as a gift and they didn\u2019t need to set up a wallet, I just mailed it to them.\u201d<\/p>\n

A piece of history<\/h4>\n

For \u2018cryptonumist\u2019 Elias Ahonen, author of the Encyclopedia of Physical Bitcoins and Crypto-Currencies<\/a>, physical Bitcoin is also a marker of history. “These coins are the physical manifestation, or artefacts, of Bitcoin in every technical phase,” he says. “Anything that happened with miners from the early Bitcoin era we can’t really point to, but these physical coins we can and collectors find that personally meaningful and also something worth preserving.”<\/p>\n

Ahonen was a first year political science student at Wilfred Laurier University in Waterloo when he first became interested in Bitcoin.<\/p>\n

“I had just bought my first Bitcoin on an exchange and not being technically sound, I was convinced I was going to lose my private key to the wallet and get locked out of my Bitcoin,\u201d he said: \u201cSo I decided instead to buy the physical Bitcoins which held the private key inside of them.”<\/p>\n

This turned out to be a wise move as he did indeed lose access to his original wallet ,fortunately with less than 1 BTC in it. And of course it led to a whole new career as a Bitcoin historian and coin broker. “It’s taken me around the world on all kinds of adventures where I pick up half a million dollars\u2019 worth of coins at an airport coffee shop,” he said.<\/p>\n

\"Physical
Physical Bitcoin seems like a contradiction in terms. (Wikipedia)<\/figcaption><\/figure>\n

Multi billion dollar industry<\/h4>\n

Precise figures for the size of the industry are hard to come by, but almost $3.25 billion dollars worth of Bitcoin (at today’s prices) was minted under the original ‘Casascius’ coin brand between 2011 and 2013.\u00a0More than 1.5 billion worth <\/a>(or 44,000 BTC) remains unspent and out in the wild.<\/p>\n

One of the most valuable is the 1000 BTC coin, three of which remain unopened out of the five minted. “It\u2019s actually the most valuable coin in the world,” said Ahonen. Worth $35 million on face value alone today, it\u2019d fetch considerably more as an ultra-rare collectible. That puts it ahead of its nearest mainstream rival, the ‘Flowing Hair Silver\/Copper Dollar<\/a>‘ from 1794 which last sold for $10 Million in 2013.<\/p>\n

Right now you can snap up a 1 BTC Casascius coin from 2011 on eBay for $130,000<\/a>. If your budget doesn’t stretch that far, there’s a 0.5 BTC coin from 2013 that\u2019s a steal at only $30,000<\/a> – and there’s even an unfunded 1 BTC coin from BTCC Mint on sale for $4900. On Crypto De Change, they\u2019re offering a 1 BTC \u2018Titan One\u2019 silver coin for just $15,100 (sadly, when you try to buy it you just get a 404 error).<\/p>\n

\"Titan
This Titan One silver coin contains one BTC and is listed for $15K. Bargain! (cryptodechange.com)<\/figcaption><\/figure>\n

Dim dark days of 2011<\/h4>\n

Physical Bitcoin traces its history back to 2011 when Utah computer scientist and Bitcoin contributor Mike Caldwell<\/a> came up with the idea as an educational tool. “Bitcoin was very difficult to explain and in 2013 the average person simply could not get their head around it,” explains Ahonen, adding:<\/p>\n

“The idea was that by taking this physical coin, and actually putting the Bitcoin inside of it, you could make a demonstration and say, look here’s a Bitcoin, I’m giving to you and now that you have it, I don’t control it.\u201d<\/p>\n

Caldwell\u2019s first plan was to print out the private key to 1 BTC on a bit of paper, stick it in the middle of a washer, and seal both sides with tamper proof stickers. He quickly abandoned this in favour of something a little more high end, contracting a company that made brass tokens for amusement arcades to produce thousands of beautiful Casascius coins. They feature the Bitcoin logo, year and denomination, along with the slogan Vires In Numeris or ‘Strength in Numbers’.<\/p>\n

The coins became popular and Caldwell introduced 5, 10, and 25 BTC coins, followed by gold plated bars with 100, 500 and 1000 BTC. As Bitcoin’s price surged in 2013, smaller denominations below 1 BTC began to appear.<\/p>\n

\u201cCrypto enthusiasts would buy these physical Bitcoins from Casascius and give them to friends and family as gifts,\u201d recalls Lee, who\u2019s brother Charlie is the founder of Litecoin. \u201cAnd that\u2019s precisely what my brother did.”<\/p>\n

“That December (2011) he gifted me a 10 Bitcoin and paid about $50 for it. So it was relatively inexpensive. Obviously it\u2019s now worth $100,000.\u201d<\/p><\/blockquote>\n

By 2013 Caldwell had sealed 90,683.9 Bitcoin into metal coins \u2014 around half of which remain unspent in the form of 21,000 or so physical coins.<\/p>\n

“It was very much a hobby, I don’t think he ever made any money, or any significant amount of money selling those,\u201d says Ahonen. \u201cFrankly, he took a huge amount of personal risk by basically handling the private keys. He was actually concerned that someone would come and hurt him (to steal them).”<\/p>\n

\"Casascius
Casascius physical Bitcoins are the most highly prized.<\/figcaption><\/figure>\n

The Feds object<\/h4>\n

The whole exercise came to a shuddering halt in 2013 when the Financial Crimes Enforcement Network contacted Caldwell to accuse him of operating an illegal money transmitting business, and he was forced to wind it up.<\/p>\n

“It put a damper onto the physical Bitcoin thing,\u201d Ahonen said. \u201cThat\u2019s where the rise of these buyer funded coins really came from and also other larger companies that actually have money transmitter licenses.\u201d<\/p>\n

A raft of different manufacturers, from boutique artisans to big companies, sprang up in its wake, producing not only Bitcoin but also Litecoin, Dogecoin and Ethereum among others. They included bhCoin, Lealana, Microsoul, Nasty Mining, Recalescence Coins, Ravenbit, Alitin Mint, Cryptmint, Titan Bitcoin and Satori Coin. Ahonen detailed the works of 50 different outfits in his 286 page encyclopedia in 2015, and leveraged the contacts he made writing it to produce a new book called Blockland<\/a>.<\/p>\n

Bobby Lee\u2019s BTCC Mint
\n<\/b><\/b><\/h4>\n

The BTCC Mint was an offshoot of Lee\u2019s exchange, BTCC and produced some of the most sought after physical Bitcoin until the company changed hands in 2018. Lee designed the coins himself \u2014 \u201cI see myself as an artist having created BTCC Bitcoin\u201d \u2014\u00a0 with the first coins released in early 2016.<\/p>\n

“The idea was to take advantage of our BTCC Mining Pool, to mine fresh uncirculated coins into the physical Bitcoins. Over the three years we ran the BTCC Mint business, we minted over 8,700 BTC worth of physical Bitcoins.\u201d<\/p><\/blockquote>\n

Lee and a select group of highly trusted team members inserted the private keys into the coins by hand. He added:<\/p>\n

\u201cI handled the private keys with extreme caution, and have properly deleted all private key data, so naturally, there have been no reports of funds lost or stolen from any BTCC Mint products. I\u2019m most proud of that pristine track record.\u201d
\n<\/b>
\n<\/b>This touches upon one counterintuitive aspect of physical Bitcoin \u2014 it breaks the crypto commandment of: \u2018don\u2019t trust, verify\u2019. Ahonen points out that purchasers need to completely trust the manufacturer and everyone in the production process as it\u2019s impossible to tell if the coin even contains a private key, or if it does, if the manufacturer kept a copy.<\/p>\n

“Bitcoin comes from a specific type of philosophy, which is around not your keys, not your Bitcoin. It very much goes against the concept of trusting other people. But with any type of physical Bitcoin, you effectively are trusting the person created to not have the private key. So there is this implicit paradox.\u201d<\/p><\/blockquote>\n

Symbols of wealth<\/h4>\n

While BTCC Mint coins featured a Bitcoin logo and the slogan \u201cIn Crypto We Trust\u201d, other\u00a0 coins featured artwork that attempted to capture the philosophy behind cryptocurrency. “I would say that with some there’s a very stark, very clear symbolism, which is very philosophical,\u201d explains Ahonen. \u201cWith others, it will clearly be something more difficult to decipher and may be personal to the creator.”<\/p>\n