CASASCIUS

Bitcoin was designed as a digital currency but that didn’t mean that it couldn’t be represented in analogue form. The fact that it took almost three years for this form to manifest suggests that the benefits of creating “touchable” Bitcoin weren’t immediately apparent. Once it became clear that bitcoins were worth something – and that that something would likely be worth a whole lot more in the future – the case for creating physical bitcoins crystallised.

The benefits of such an implementation were manifold. For one thing, it provided a means of gifting bitcoin to friends and family without obliging them to download a wallet and understand blockchain. They could simply receive a physical coin and worry about redeeming it later. It also provided an effective means of holding bitcoin without the temptation to sell it the moment the price pumped. In effect, the additional step that physical coins provided – the need to reveal the private key and import it into a wallet – incentivised holding.

Developed by software engineer Mike Caldwell, the Casascius physical bitcoins were created to form a “physical medium of exchange that can be entirely conveyed just by passing it to other persons.” Mike figured that aside from the novelty value of creating bitcoins that people could hold in their hands, the innovation would “foster greater understanding” of Bitcoin.

Developed by software engineer Mike Caldwell, the Casascius physical bitcoins were created to form a “physical medium of exchange that can be entirely conveyed just by passing it to other persons.” Mike figured that aside from the novelty value of creating bitcoins that people could hold in their hands, the innovation would “foster greater understanding” of Bitcoin.

As Caldwell later recounts, “Not having become familiar with coin collecting myself, my only purpose at the time was utilitarian: trying to communicate to a broader audience a new abstract concept that was unheard of at the time.  It's unusual that a basement-level hobby project takes on significance more than a decade later.”

He quickly realised that the key to making the coins collectable called for lavishing attention on their design. This called for more than merely wrapping the private key behind a tamper-proof seal: it had to come in a suitably high-end package. Mike achieved this by approaching a manufacturer of brass tokens of the sort used in arcades and car washes to produce custom coin blanks. The result was Casascius coins, emblazoned with the Latin motto Vires in Numeris – Strength in Numbers.

Bitcoin Gets Physical

Casascius coins were the first serious attempt at what we now call cold storage. The hologram sticker on each coin served as both a seal and an indicator of integrity. The public address was visible, allowing the holder to verify that the wallet still contained the coins, but any attempts at removing the sticker would leave it irreversibly marked as having been peeled.

While the system wasn’t entirely foolproof, it was suitably robust to ensure the Casascius coins were a roaring success. Mike Caldwell went to great lengths to reassure the Bitcoin community of the steps he’d taken to generate the keys offline with strong randomness including taking extreme precautions to prevent himself or anyone else from keeping copies.

Coins were issued in various denominations over the years including a 1 BTC brass coin, 10 BTC silver coin containing 1 troy ounce of silver, and a 25 BTC gold-plated coin. Ranging all the way from 0.1 BTC up to a now incredible 1,000 BTC, the coins proved phenomenally popular, with their legendary status rising in line with Bitcoin’s price.

As BTC continued to climb in value, observing the habits of Casascius holders became a spectator sport. The creation of a dashboard tracking coin redemptions has added a layer of game theory. It’s also proven that there were no backdoors associated with issuing the coins that might have allowed their creator to later access them.

The coins themselves have become collector’s items, not just due to their monetary value, but on account of their symbolism. Just six of the 1000 BTC gold coins were ever created, featuring a 1 troy ounce piece of pure gold. These are of course the most coveted Casascius coins of all and to this day just two of the six minted in late 2011 have been redeemed.

A total of 91,000 BTC was placed behind the holographic stickers of Casascius coins in the years they were in production. Production ceased in late 2013, by which time there was a risk of Mike’s enterprise falling afoul of money transmitter laws now that regulators were circling. By then, they’d served their purpose. Bitcoin cold storage had been normalised and thousands of Casascius owners had learned the value of holding. While many have since relinquished their grip after succumbing to the temptation to pop the private key, a fraction are still holding hard to their precious physical coins.