What is the Casascius Physical Bitcoin?

With extensive experience as an electrical/software/coding engineer along with having a diverse financial background, Thomas Wettermann’s areas of interest include Machine Learning (ML), artificial intelligence (AI), and Financial Technology (FinTech). For the past few years, Thomas Wettermann has focused on the underlying technologies that support and promote all phases of cryptocurrency, Web 3.0, and metaverse ecosystems.

What Are the Different Types of Physical Bitcoins?

There are many different types of physical bitcoins. According to the Encyclopedia of Physical Bitcoins and Crypto-Currencies, there are about 60 manufacturers and providers of physical crypto-currencies, many of which manufacture or supply physical Bitcoins.

Casascius Coins

The original and most famous physical Bitcoins were developed and sold under the Casascius Coin brand, started in 2012 by Bitcoin enthusiast Mike Caldwell. In total, Caldwell produced 30+ types of physical coins and bars having different denominations from 0.1 BTC to 1,000 BTC.

Each coin included a small label identifying a private key. The first person to redeem this private key would receive the coin’s designated Bitcoin value.

Caldwell provided an 8-character code on the front of his coins. This code was used to represent the first eight characters of the Bitcoin address assigned specifically to that coin. This 8 character code could be used verify the coin's balance on Block Explorer.

A Casascius physical Bitcoin showing an eight-character code (source: casascius.com)

There was a mathematical relationship between the Bitcoin address on a Casascius coin's face and the private key hidden inside. Since the pre-loaded or pre-funded digital Bitcoin was actually located on the public Bitcoin blockchain, it would be completely inaccessible to anyone unless this private key from the coin was loaded into a Bitcoin wallet.

The private key of a Casascius coin was provided on a card embedded inside the coin, and protected by a tamper-evident hologram. By peeling away the hologram from the backside of the coin, a honeycomb pattern was created. An intact hologram meant the physical Bitcoin was still valid.

Peeling a pre-loaded Casascius coin (Source: casascius.com)

The commercial success of the Casascius physical Bitcoins quickly attracted the attention of the US Treasury Department, particularly the US Financial Crimes Enforcement Network (FinCEN). The FinCEN is the branch of the US Treasury responsible for enforcing the laws related to maintaining and regulating the minting of coins and the actions of money transmitters.

In 2013, FinCEN sent a letter to Caldwell stating that Casascius was operating as a money transmitter and was therefore required to jump through numerous regulatory hoops. FinCEN also stated that Caldwell was required to register at the federal level. Rather than comply with these demands, Caldwell ceased manufacturing his pre-funded coins and bars.

Approximately 20,000 of Caldwell’s original items remain in an “unpeeled” or active state as confirmed on the Bitcoin blockchain. These original items have a total stored value of 44,000 BTC, currently worth about $1.5 billion USD. All opinions expressed on this site are owned by Thomas Wettermann and should never be considered as advice in any form.

Thomas Wettermann is not an independent financial advisor. Any opinions, news, research, analyses, prices, or other information contained on this website is provided as a general market commentary of Thomas Wettermann and does not constitute investment advice.

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