“Physical crypto-currency is worthy of study because it is evidence of the notable technological and social progress relating to the continued development of a new system of value. The concept of a digital currency that is based on mathematical principles is simply revolutionary, and will in one way or another eventually reshape the world and society in which we live. These coins are the artifacts of that future.”
Physical Bitcoin represents a new way to understand money. It takes the image of national currency coins – their materials, denomination, images, text, and security features – and either adds digital value (funded coins) or depicts a representation of that digital value (unfunded coins). Participants in the physical Bitcoin community emphasize the coins’ digital features but, perhaps paradoxically, display the result in ‘conventional’ coin format. Funded physical Bitcoin are metal coins which contain the prefix of a public address and a private key (12). The public address is openly depicted on the coin or contained on a certificate while the private key is concealed behind a tamper-proof hologram (13) or, less often, by a sticker or, even more rarely, engraved on the side of the coin (14). If the hologram is opened, the private key can be swept into a wallet which transfers the crypto-currency from the coin’s public address to one provided by the wallet software. Producers use holograms to make counterfeiting more difficult and to prevent unscrupulous users from copying the private key then re-selling the coin. Private keys should be kept secret as their controller ‘owns’ the associated crypto-currency. The producers of unfunded coins often provide a public address and private key so that buyers can self-fund the public address should they wish.
The image above reveals how the private key is added and extracted from a coin. The first photograph shows the private key being inserted into a pit on the back of the coin. The second displays the completed coin with the private key concealed behind the sealed hologram. The third denotes the private key after the hologram has been removed. The fourth photograph indicates that the hologram has a considerably different appearance after it has been opened. This change is a security measure which reports that the private key has been accessed.
Physical bitcoins fall into various classes, which were defined as follows in the creation of the Encyclopedia of Physical Bitcoins and Crypto-Currencies:
Pre-Funded (PF) – the coin is directly funded by the manufacturer.
Buyer Funded (BF) – the buyer directly funds the coin before it is shipped.
Unfunded (UF) – shipped with a sealed private key but without loaded value.
Do It Yourself (DIY) – the owner can affix a private key and hologram.
Rounds (R) – the coin does not have the capacity to contain a private key.