The world has transformed extensively in the past decade, all thanks to rapid digital transformation and technological advancements. The introduction of Bitcoin also marked another step forward to leveraging the potential of technology. But this digital transformation is only a cup of tea for some, as many people are reluctant to get on board with this idea.
Blockchain was an ideal means to drive effective transformation and embrace the digital age. But only some could get comfortable with the fact that their assets would now be intangible and digital. These ideas soon paved the way for the creation of physical Bitcoin.
But what is physical Bitcoin? How do you use it, and what’s its fundamental value? Continue reading to find the answer to all these questions and more.
First Things First, What Is Physical Bitcoin?
By appearance, physical Bitcoin is very similar to its fiat counterpart. These coins are generally minted with expensive metals such as gold or silver. In addition, these coins usually have a logo printed on one side while the value is depicted on the other. Fortunately, these two are the only similarities between physical Bitcoin and conventional fiat currencies.
It is no secret that conventional fiat currencies are regulated by a centralized authority and have a particular value as printed on the currency. But physical Bitcoin worth is not decided by any centralized authority but from the private key on its back.
This private key will give you access to actual Bitcoins stored in your digital wallet. Of course, this value can be anything from 1 BTC to even 1000 BTC tokens depending on the people who have minted the coin in the first place.
Thus, physical Bitcoins are more or less like gift cards or banking cards, where the physical coin does not hold any value unless you know how and have the means to access it.
The same goes for your credit or debit cards which are only useful with the golden stipe or sufficient bank balance. So make sure you are well aware of the private key to determine the actual physical Bitcoin value you own.
Creation of Physical Bitcoins
Creating a physical Bitcoin is more complex than one might imagine. In most cases, these physical Bitcoins are created with a 3-D printer which is not something one can see in the case of conventional fiat currencies.
Since enthusiasts create these coins, they can give them whichever design they think looks best. In addition, some of these coins come with a coat of metals such as gold and silver, while some even have actual gold or silver.
The back of these coins features the private key needed for accessing the real Bitcoins in the blockchain. Holders will then need the private key for accessing their virtual BTC holding, which they can use as per their whims.
Another important characteristic is that each of these coins has a private key. This means even in case of tampering or damage, one can only access the BTC in that specific coin. This differs from a digital wallet, where one can access all digital assets with a private key.
Also, the private key in these coins is stored in a holographic sticker behind the coin, which further mitigates the risk of tampering or damage. However, whenever anyone peels off the sticker, it will leave an identifiable mark. So if you find the mark take it as a clue that your coin was tampered with.
When Was The First Physical Bitcoin Created?
Physical Bitcoins have been around for quite some time now. In fact, with each passing year, there were many new renditions of these coins with different values and materials while serving different purposes. Nonetheless, the first physical Bitcoin was created by Mike Caldwell in 2011, named the Casascious coin.
Given the increase in physical Bitcoin sales, Caldwell continued to mint several other coins. Starting with 0.5 and 1 BTC brass coins, he even went on to create a 1000 BTC gold-plated bar. Eventually, he created more than 27,000 physical Bitcoins by the end of 2013.
But things changed for Caldwell since then with the intervention of the Financial Crimes Enforcement Network (FinCEN), which is a branch of the Treasury Department. The authorities clarified that Caldwell was not authorized to create physical Bitcoins. Hence he would need authorization from centralized authorities to sell his coins.
Are Physical Bitcoins Worth More Than They Hold?
There are many interesting things about physical Bitcoins, but one of the most noteworthy things is their valuation. Of course, it makes sense to expect the worth of material and digital assets to be the same, but this is different here.
The relative collectibility and rarity of physical Bitcoins are often more worthy than they hold in physical terms. This becomes even more pervasive yet striking when a particular physical Bitcoin ‘Tarkov’ is no longer minted.
Take the example of Casascius here, a physical Bitcoin minted back in 2012. In September 2021, a peeled Casascius coin was listed on the online marketplace at a worth of $1,999.99.
The item was then sold to a private bidder, but the selling price remained a mystery. Nonetheless, it is logical to presume that the selling price was far lower than the listed price.
Similarly, in May 2022, an empty 1 BTC Casascius coin was again listed on eBay’s online marketplace for $595. But selling this was not a big deal since the listed price was more or less similar to the physical worth of the coin.
However, it is still not easy to understand why anyone would buy these physical Bitcoins for such prices while knowing they hold no significant value or utility.
Physical Bitcoins are weird investments that make very little sense financially. This becomes even more striking, considering why one would not simply buy a normal Bitcoin in the blockchain and amplify their returns.
Nonetheless, people are free to do as they will, and if investing in physical Bitcoins makes sense, it is a good enough reason to buy and store these assets in a physical Bitcoin wallet.