Bitcoin has grown immensely over the last decade, but some people still have reservations about investing in an asset that is completely digital.
Since many investors prefer to have their valuables in a tangible form, there have been attempts to bring Bitcoin into the physical realm. In this article, we’ll explain what physical Bitcoin is and highlight the different contexts in which this term is used.
Physical Bitcoin with embedded BTC value
There are “Physical Bitcoin” products which are usually metal coins imprinted with all the information necessary to access BTC coins on the Bitcoin blockchain. This information is typically hidden in a tamper-proof way. Physical Bitcoins are sold in various denominations representing different amounts of BTC.
There were several companies that made physical Bitcoin in the earlier years of Bitcoin, but physical BTC has fallen out of popularity recently. The most famous physical Bitcoin product was made by a company called Casascius.
Casascius Bitcoins have a private key imprinted on the coin, hidden by a hologram. This pattern changes to a honeycomb pattern if someone tries to tamper with it. On the outside of the coin, you can see the first 8 letters and numbers of the Bitcoin address linked to that coin.
Throughout Casascius's time on the market, the company produced different versions of these coins, in denominations of ₿0.1, ₿0.5, ₿1, ₿10, ₿25, ₿100, and ₿1,000. Casascius started in 2011, when Bitcoin was worth significantly less than it is today. At current prices, 1,000 BTC translates to a whopping $37.8 million.
Unfortunately for fans of physical BTC, Casascius decided to close shop after U.S. regulator FinCEN told the company that they would need to acquire a money transmitter business license if they wanted to continue their operations.
Examples of other companies that have made physical BTC coins included Ravenbit, Titan Bitcoin and Alitin Mint.
Today, users can purchase physical Bitcoin (albeit in a card shape and not a coin shape) from a company called Ballet. These cards are called “Pure Bitcoin” and come in denominations between 0.1 BTC and 0.005 BTC.
While such products have some aesthetic appeal, they are quite awkward to use and don’t provide any real benefits over just using a hardware crypto wallet.
In fact, physical Bitcoins with embedded BTC value are less safe than using a hardware crypto wallet, as the BTC value they contain can easily be accessed by a thief.
Meanwhile, a thief that stole your hardware wallet would need to guess your PIN number before they could access your coins, giving you time to recover your wallet with your seed phrase and send your coins to another wallet you control.
In addition, you have to trust that the manufacturer of the physical Bitcoin doesn’t actually have access to the private keys that are imprinted on the coins. This isn’t an issue with hardware crypto wallets, as they generate keys offline.
Decorative physical Bitcoin
Most “physical Bitcoin” that you’ll see selling online is actually decorative. These physical representations of Bitcoin are used as props in photoshoots and videos, or they can be used as home decoration.
Most often, these decorative physical Bitcoins are made out of a gold-colored metal and prominently feature the Bitcoin project’s logo. They’ll also usually have some text engraved around the edge of the coin.
Physical Bitcoin ETFs
Another context in which you might hear the phrase “physical Bitcoin” is in relation to physical Bitcoin ETFs (exchange-traded funds). These are ETFs that are backed by BTC coins held by the the ETF’s issuer. The use of the term “physical” is a bit confusing here, as the BTC held by physical Bitcoin ETFs is of course still completely digital.
An example of such a product is the Fidelity Physical Bitcoin ETP (FBTC), which trades on European stock exchanges. Currently, such products are not available in the United States. Physical Bitcoin ETFs are often contrasted with futures-based Bitcoin ETFs, which don’t actually hold any BTC, but instead hold Bitcoin futures contracts.
FAQs
Now, let’s quickly go through some of the most common questions users have on the topic of physical Bitcoin.
How much is a physical Bitcoin worth?
The worth of physical BTC products can vary significantly from product to product. Physical coins that have a BTC value embedded into them come in various denominations. In the early 2010s, when Bitcoin was not worth much, a company called Casascius sold a physical coin embedded with a whopping 1,000 BTC.
The worth of a physical Bitcoin also depends on its collectible appeal and the materials it’s made out of (some physical Bitcoins were made with precious metals).
How to check a physical Bitcoin?
Physical Bitcoins typically have a tamper-proof system that clearly indicates if someone had previously tried to access the confidential information that provides access to the Bitcoin wallet associated with the physical coin. If you’re buying physical Bitcoin, be very careful to ensure that you’re buying it from a reputable manufacturer or seller.
Can you physically buy Bitcoin?
Bitcoin is an entirely digital currency, but there do exist “physical Bitcoin” products that are usually sold as metal coins imprinted with the information necessary to access BTC on the Bitcoin blockchain. Such products were popular in the early years of Bitcoin, but aren’t very common today. If you want to buy Bitcoin with cash, your best bet is to use a Bitcoin ATM.
The bottom line
Physical Bitcoins are an interesting novelty, but not much more beyond that. As a form of cold storage, they are less convenient and secure than using hardware cryptocurrency wallets combined with a metal crypto wallet backup.
