See full bio 3 min read Bitcoins aren't just an abstract financial instrument living somewhere in the digital ether anymore. They're now a physical currency capable of taking a ride in your pocket or scratching off your lottery tickets. The physical Bitcoins, called Casascius Bitcoins and created by a guy in Utah named Mike Caldwell, are made of brass, with gold electroplating on the 25 Bitcoin denomination.

And, of course, they're tied to the peer-to-peer, open-source digital currency that's been exchanged on the Internet for a while now. That key can be used to redeem the value of the Bitcoins online, but the hologram sticker leaves a honeycomb mark when peeled back, so you'll know if your Bitcoins have been tampered with. The coins play a function similar to a gift card or certificate with a magnetic strip or bar code.

In other words, it provides a tangible means of carrying around the digital key that contains the actual value. There's just one problem--the physical Bitcoins may well be illegal. Before automatically crying foul, remember that PayPal uses dollars and other official currencies, and that things like various points and mileage programs and even gold and silver don't directly compete with the dollar, at least not yet. Because Bitcoins have been digital-only up until now, it's been easy to argue that they don't compete either.

The Bitcoin Wiki argues that the system is no different than bartering using chickens or some other commodity The problem is that Bitcoins have been used to purchase drugs and other illicit products, and that's drawn the ire of legislators in Washington who have threatened to go after Bitcoin.

Some coins are metal-plated, and some use pure silver or gold. The back of the coin is where its value lies; it contains the private key for the actual bitcoins. Holders can use this key to redeem the BTC online. Also, each coin has its individual private key. Therefore, even if someone steals or tampers with it, they will only be able to access the BTC in that specific coin. On the other hand, if this were a digital wallet, the entity would have access to all the cryptocurrency stored within it.

Also Read: How crypto ATMs work To further mitigate tampering, the private key is stored in a holographic sticker on the back of the coin. When the sticker is peeled, it leaves an identifiable mark. If there is a mark on your coin, you will know it was tampered with. The first physical bitcoin Physical representations of Bitcoin have existed for a long time now. Over the years, several different renditions have also cropped-up, each with different compositional material, values, and purposes.

However, it all started with the Casascious coin, created by Mike Caldwell in Caldwell minted a range of physical coins. He began with 0. By , Caldwell had minted roughly 27, coins. They informed him that minting physical bitcoins would qualify him as a money transmitter. Thus, he would have to register at a federal level if he wanted to continue selling the coins.

What are the coins worth? The answer to this question seems relatively simple — a physical bitcoin is worth the amount of BTC held in its private key. However, it is not as simple as that. Due to the rarity of the coins, the price is often more than the BTC stored in the digital wallet.

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