Big Foot. The Abominable Snowman. The Loch Ness Monster.
What do all of these things have in common?
We’ve talked about them for centuries, and passed down stories about their likeness. Yet, no one has yet to see them in real life, at least that we can irrefutably verify.
If something must be physically tangible to be real, what does this say about cryptocurrency? Are there physical Bitcoins that we can actually spend or is it purely a digital asset? Let’s dive into the facts you need to know.
Mike Caldwell and Casascius Bitcoins
Let’s get straight to the point. Yes, there are physical Bitcoins that you can carry around in your wallet or keep in your coin jar in the closet. Each has its own price, and they’re available in a number of different alloys, including gold and silver. Today, most are silver though you can also find bronze and gold coins on the market, too.
The most popular types of physical Bitcoin are Casascius Bitcoins. A man named Mike Caldwell invented them back in 2011. For two years, he mined coins and bars in the physical world, taking them from the abstract realm and extending their use beyond digital currency.
The reason behind his plan? At that time, Bitcoin was fairly new and the concept was just too abstract for people to wrap their minds around. On the other hand, they could understand the logic that a physical coin contained intrinsic value.
If you’ve ever seen a physical rendering of a Bitcoin, Caldwell is the mastermind behind the visual. Before he came on the scene, Bitcoin was considered completely intangible. However, his vision didn’t move from brainstorm to reality overnight.
Before the metal coins came to fruition, Caldwell played around with a few different designs. At first, he meant to intended to print a private key for the coin on a small piece of paper. Then, he would affix that paper to a washer, sealing it shut on both sides with tamper-proof stickers.
Before long, however, he realized that while the ideal might work in theory, it didn’t look anywhere near as legitimate as an actual coin would be. Knowing this, Caldwell got in touch with a company that manufactured brass coins and tokens for game arcades across the country. He commissioned them to create a coin that contained the following features:
- The official Bitcoin logo
- The year of manufacture
- The BTC denomination
In addition, each coin also contained a shared slogan: Vires In Numeris, which is Latin for “Strength in Numbers”.
The Manufacturing and Redemption Process
The way it worked was simple: Investors would send Caldwell their personal Bitcoins over the internet. He would accept them and in return, send back metal coins via snail mail. Each coin would contain a corresponding digital key, hidden underneath a tamper-resistant holographic sticker attached to the face of the coin.
He never accepted any type of fiat currency, including U.S. dollars, as a form of payment. Once recipients got their Bitcoins back in the mail, they could keep them safe and keep that coveted digital key a secret.
The Beginning of the End
By 2013, Caldwell had created around 90,000 physical Bitcoins that equal around $82 million in total. For the most part, they are novelty items or general assets that avid collectors want to get their hands on. However, there was a practical use for their creation, too.
With physical Bitcoins, investors could keep their money close by, far away from any cybercriminals who may want to hack into their system and take them. In December 2013, however, the Financial Crimes Enforcement Network (FCEN), put Caldwell on notice. The agency claimed that he was performing money transmittal services, which he wasn’t qualified to do without completing a wide range of regulatory requirements.
In response, Caldwell stopped taking orders for Casascius Bitcoins. Throughout the ordeal, he maintained his innocence. Claiming that he only took a minimal $50 fee for each coin created, Caldwell explains that because very few entities were accepting Bitcoin at the time, they were simply created and mailed out as a collector’s item.
Identifying Physical Bitcoins
Caldwell officially closed his manufacturing operations at the end of 2013. However, the collection is still online, which continues to generate buzz and general interest around the topic. Sensing his success, other manufacturers have tried to join the ranks by producing their own versions of physical bitcoins.
Among others, these include:
While you can still purchase these coins online, nothing tops the allure and prestige of snagging a Casascius Bitcoin.
Even today, people are still scratching off that tamper-resistant strip off their physical Bitcoins and redeeming their value online. How can you be sure a physical Bitcoin is an original?
If you take the strip off a real Casascius Bitcoin to read the digital key, then you’ll notice a distinct honeycomb-shaped mark that remains on the coin. If the mark is missing or isn’t clearly visible, then the coin might have been tampered with.
Series 1 Through 3
Caldwell created three distinct series of physical Bitcoins. The series included three different types of coins, including:
- 0.1 BTC
- 0.5 BTC
- 1 BTC
- 5 BTC
- 25 BTC
- 100 BTC (gold-plated bar)
- 500 BTC (gold-plated bar)
- 1000 BTC (gold-plated bar)
Each series didn’t have all of the above BTC types. Instead, these were dispersed among the different categories. For instance, Series 1 contained 1, 5, 25, 100, 500, and 1000 BTC.
Caldwell added the smaller BTC values below 1 to his collection once the price of Bitcoin began to surge in 2013. This way, people could invest in physical Bitcoins responsibly without breaking the bank.
High-Value Casascius Bars
Among the various types of Casascius Bitcoins created, one of the most valuable would be a 100 BTC Casascius bar. Today, the digital value on that one bar alone would be close to $2 million. In December 2019, someone redeemed theirs for more than $700,000.
To date, nearly 80% of the series-one 100 BTC Casascius gold-plated bars have been redeemed. This percentage is known as the “peel rate”, so named because you have to physically peel the tape off the coin to reveal its value.
Yet, as you can see, there are still other, more valuable Casasciuis Bitcoins available. They simply haven’t been cashed in yet. In fact, nearly 21,000 of the original BTC are still active and only one series has been completely redeemed.
In all, Caldwell created 16 of the highest-value coins or 1000 BTC. To date, 14 of those have been redeemed. According to modern exchange rates, those would be valued at more than $19 million today!
Value Driving Factors
Why are physical Bitcoins so popular and highly valued? For one, they’re rare.
After 2013, there weren’t any more Casascius Bitcoins to purchase. Now, just like hard-to-find concert tickets, people who did manage to get their hands on these assets early on are in the driver’s seat. They’re able to charge a premium for the coins simply because they can.
Increasingly, they’re turning to public marketplaces like eBay to do so. It’s not uncommon to browse these sites and see physical Bitcoin on sale for hundreds of thousands of dollars. They’re commonly given as gifts and exchanged for special occasions, from weddings to birthdays.
Another aspect factoring into those eyebrow-raising prices? Government regulations have essentially cracked down on the physical Bitcoin realm, and curious investors are now required to browse secondary markets to curate their collections. One of the most well-known other manufacturers, Denarium, shut down its operations in 2020 following a five-year stint in the realm that began in 2015.
In all, Denarium created more than 15,000 physical coins, collectively worth more than $5 million. Like Casascius Bitcoins, you’ll only be able to find and purchase them on user-managed marketplaces, now. As of now, there are 603 Denarium that are active and unpeeled.
Apart from collecting, can you use physical Bitcoins for anything in the real world? The short answer is absolutely.
Increasingly, forward-thinking parents and grandparents are turning to these coins to supplement their inheritance planning. They’ll buy the coins online and put them straight into a safe deposit box, where they can grow in value without any manipulation.
For other investors, physical coins offer one important use above concrete cryptocurrency: They’re private. Unlike digital transactions that must be fully recorded on the blockchain, coins can be traded and exchanged extensively without any recordkeeping.
While this might be music to your ears, it’s a thorn in the side of the U.S. government. The ease at which physical coins can be shared makes them a prime way to pay for a range of unscrupulous activities, such as money laundering.
Are There Physical Bitcoins? Yes, But at a Price
Though physical cryptocurrency peaked more than seven years ago, savvy investors can still find the coins they want if they’re willing to pay the price.
Are there physical Bitcoins? Yes, but most are no longer in production. At least for the foreseeable future, it appears as though these coins will remain a collector’s mainstay and a novelty item. Unless you plan to invest them for a retirement or inheritance fund, it’s best to stick with the digital currency you’re already familiar with.
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