Physical Bitcoin: What It Is and How It Works
Physical Bitcoin may seem like a curious concept to those new to the cryptocurrency world. After all, Bitcoin is a digital asset, right? However, in 2011, Mike Caldwell introduced the idea of physical Bitcoins, essentially physical representations of the digital currency. Before this, Bitcoin was strictly a digital currency since its inception in 2009.
Caldwell is an early Bitcoin believer who jumped on the train before it became a frantic rush in subsequent years. There are threads of him on the BitcoinTalk forum where he used the pseudonym Casascius.
Understanding Physical Bitcoins
On September 6, 2011, Casascius posted a thread on BitcoinTalk where he addressed the reasons why he came up with the idea of physical Bitcoins. His major selling point was to improve the chances of Bitcoin becoming a successful currency.
Caldwell explained how he wished someone would come up with a better invention of physical Bitcoin in the future and how this invention is not lifelong work for him. His wish later came true because today, we have other physical forms of Bitcoin.
Caldwell’s physical Bitcoin looked just like traditional coins. Back in 2011, the cost of sending one Bitcoin was worth 1 Bitcoin. This was because after calculating the cost of production, it was worth 1.25 BTC. Therefore, with the postage cost, he set the total expense to be worth 1btc at the time.
The Make-up of Physical Bitcoin
The head of the coin had a hologram that housed the private key. The typical eight characters of the BTC address were embedded on each coin.
Back then, someone with the username ‘The Joint‘ on the Bitcoin forum expressed his thoughts about the innovation, saying- “These look awesome, but why would you buy this given the current state of the Bitcoin market/economy? This might be nice as an investment if there was a good indicator that your investment would give you any kind of return.”
When he wrote these words, 1 BTC was trading for $6.86.
Decent level of success in its short existence
To the amazement of Bitcoin onlookers at the time, Caldwell’s physical Bitcoins were successful as many people ordered them. This necessitated him to follow up on other denominations. His invention was initially limited to 1 Bitcoin, but with its success, he followed up with ten Bitcoin, 25 Bitcoin, 100 Bitcoin, and even 1,000 Bitcoin editions.
At Bitcoin’s peak, around November last year (2021), that holographic 1,000 BTC coin would have been worth around $68 million. Caldwell’s invention lasted until 2013, when he recorded about 28,000 Bitcoins in sales.
Other Physical Bitcoins
Casascius’ invention has inspired other tangible Bitcoin inventions. While BTC has remained a primarily digital currency, today, there are physical Bitcoins inspired by Casascius’ innovation. Those that exist today exist in the form of paper wallets, trinkets, and commemorative coins.
They are created by simply engraving or etching the public and private keys to a Bitcoin address on them. In today’s cryptosphere, anything can represent physical Bitcoin, as long as it has private and public keys printed on it, can hold any amount of the cryptocurrency.
