When it comes to bitcoin, many people are already familiar with the digital versions of this cryptocurrency, however, many do not know that physical bitcoins exist, nor how one may attain them. Knowing that physical bitcoins exist, the real question is: where can someone acquire them, and why would they want one?
Physical bitcoins are metal coins with the key code for a digital bitcoin wallet attached to the back. While their creation and use as an alternative to traditional currency are illegal, one can still legally own and obtain them through second-hand markets.
As one can see, physical bitcoins are not impossible to attain. Anyone with an active bitcoin wallet can acquire these physical copies of an old, but well-known and still popular cryptocurrency. This article will dive deeper into how you can attain a physical bitcoin yourself and the justifications behind purchasing one.
Where Can I Obtain Physical Bitcoins?
Sadly, there are virtually no companies that currently sell physical bitcoins. However, there are still several ways to obtain physical bitcoins that hold real value and bitcoins that are just flashy souvenirs.
Obtaining a real “physical bitcoin”
Physical bitcoins are all just coins with a sticker attached, not a currency in and of themselves. The sticker on the back (which will leave marks when removed as part of a simple but effective anti-tamper system) of these coins bears a key that, when used, will provide access to a predetermined amount of Bitcoins. While the companies that produce these have all gone under (the reason why is explored below), it is still possible to obtain these coins from third parties on secondhand sites like eBay.
It should be noted that many of the physical bitcoins being sold on sites like eBay have already been “unpeeled”, or been cashed in, meaning they no longer hold any value as a representation of real bitcoins. Many of these are still sold for $500 or more, however, as they are of significant value to various coin collectors and cryptocurrency enthusiasts. Be cautious if you do decide to buy one online: if a physical bitcoin has been unpeeled, it is only worth whatever you can fetch for it on the secondhand market. Some of these coins were created using precious metals, which does lend them some monetary value that goes beyond mere nostalgia.
Various different coin makers created unique-looking coins, so if you are in the market for one, there are a lot of different options to choose from that vary widely in style, feel, and size.
If you are intending to buy a non-redeemed physical bitcoin, you can still do so on places like eBay. These coins can be from the ever-famous and valuable Cascasius coin collection or from any number of companies that used to produce them, including Alitin Mint, BTCC Mint, Titan, Satori, and Denarium.
Some of these companies provide a real-time tracker of how much value is left in unopened coins that they have produced, which makes the existence of unopened coins verifiable, although one still must make sure that any coins they are buying haven’t been tampered with themselves just to be sure and take other precautions not to be scammed.
Many of these coins sell for much more than the Bitcoin value that is assigned to them. One already redeemed Casascius coin was sold for just under $2,000,000 in 2021. Another unredeemed 1 BTC value coin was sold for a whopping 4.5 BTC, which is a huge markup from its actual value in bitcoin.
Most of the value of these coins comes from rarity and collector’s value, which is to say they are not wise financial investments in and of themselves. Specific digital bitcoins themselves (such as the one used to buy a pizza in the first case of bitcoin being traded for a real-life item) can hold special value, which may also be a factor in the inflated price of these coins. Batch number, age, rarity, and precious metals can all influence the price of physical bitcoins.
If you want to create a physical bitcoin of your own (thus avoiding the insane price markups of previously made ones), it is always possible to use a 3d-printer and simply print out and attach a key to a physical bitcoin or bitcoin wallet on the back with a peelable sticker. If you decide to do so, make a note not to sell it to others though, as doing so would put you on very shaky legal ground. Refrain from trading it in exchange for money, services, or goods as well if you want to remain within the bounds of the law (more on that later).
Such coins are best kept to oneself or given as a gift to someone new to crypto. These coins make for a beautiful collector’s item and function as a type of cold wallet. Do note that if you lose your key and don’t have a backup physical device, you are at risk of losing access to the linked bitcoin wallet forever. So, make sure to keep your physical bitcoins in a safe and easy-to-remember place! Some digital bitcoin wallet services offer other levels of security that make the decision to create a physical bitcoin with a key on it safer and less risky.
Obtaining a Collector Bitcoin
Now that we have talked about obtaining physical bitcoins with real (or past real) value, it is time to talk about where you can find the less valuable but still beautiful collector bitcoins or souvenirs. Since they have no real monetary value of any sort, they are much easier to obtain and are made by a virtually endless number of different companies.
Some of the different places to obtain commemorative bitcoin souvenirs include:
- Amazon, which even has various chocolate bitcoins you can purchase.
- The Casascius coin website, which no longer sells real physical bitcoins but does offer souvenir ones.
- eBay sells a wide variety of different physical bitcoins both with or without a real value.
There is no end to the different choices one has when purchasing a pretend physical bitcoin. Of course, these can still come in varieties made with precious metals or better materials and manufacturing methods, so they do vary somewhat in price, but overall, they are much cheaper than even an already-used real physical bitcoins. These can make great gifts for cryptocurrency enthusiasts.
Why are Physical Bitcoins so Hard to Obtain?
Legal Considerations
In the strictest sense of the word, there is no such thing as a physical Bitcoin. Bitcoin, by definition, is a digital currency built around the blockchain protocol, in which there is a record of all exchanges of bitcoin and new bitcoins are generated through the solving of cryptographic puzzles.
Bitcoin was always intended to be a digital currency, which helps ensure that it can operate independently of any sort of central bank. It can be exchanged online for other cryptocurrencies and is technically (legally) considered a commodity rather than a true currency, which ensures that the online transactions made with it are considered legal within the bounds of U.S. law.
This was determined to be the case in 2015, when the U.S. Commodities Trading Future Commission (CFTC) defined Bitcoin and most cryptocurrencies like it as commodities, pursuant to the U.S. Commodity Exchange Act. This decision was made because:
- Bitcoin goes up or down in value based on supply and demand.
- There is no one producer or “centralized entity” that produces or manages bitcoin, which is not the case for traditional currencies like the U.S. dollar or any other number of examples.
However, note that the definition of Bitcoin (and Ether) as a commodity does not necessarily extend to every cryptocurrency currently available on many online markets. Congress has introduced a bill, namely that of S.4760 – Digital Commodities Consumer Protection Act of 2022, that will give jurisdiction to the Commodity Futures Trading Commission regarding the trading of digital commodities such as Bitcoin, which will codify this decision further and may introduce more changes.
Some other cryptocurrencies could be determined to be securities, which would place them under the direction of the U.S. Securities and Exchange Commission, which traditionally regulates things like stocks and bonds (securities).
However, for the time being, Bitcoin is a digital commodity and is free to continue existing in its current form as a result of this definition. Turning Bitcoin into a physical coin changes it into a real currency, and because that threatens the supremacy of the U.S. Dollar in the eyes of the U.S. government, doing so is generally considered illegal. That being said, many have attempted to make physical bitcoins, and nearly all have been met with failure.
Legal Precedents
To understand why it’s not worth it to attempt to make and distribute your own physical bitcoins, one must consider a few different examples.
The first of these is the story of Liberty Coins. The Liberty Dollar was a private currency system started by Bernard von NotHaus in 1998 in Indiana. The coins were created by NotHaus’s own company, which was initially named “National Organization for the Repeal of the Federal Reserve and the Internal Revenue Code” (NORFED), and then later renamed to Liberty Services. Liberty Dollars were each backed by a specific amount in weight of a precious metal, namely silver. One could exchange them for U.S. dollars, and the coins looked relatively similar to many previously and currently minted U.S. coins.
The federal government didn’t seem to take too kindly to Liberty Dollars, which shouldn’t come as a surprise. While Claudia Dickens of the U.S. Treasury Department’s Bureau of Engraving and Printing supposedly said that Liberty Dollars weren’t illegal because they didn’t claim to be legal tender, other government officials were more unkind.
After it was determined that Liberty Dollars are illegal under section 18 U.S.C § 486 of the U.S. criminal code, the FBI raided Liberty Services’ warehouse, seizing $7 million dollars worth of precious metal. Bernard von NotHaus was arrested, accused of being a domestic terrorist, and later convicted of several different federal crimes.
In short, the result of NotHaus’s conviction set a precedent for legal contests arising from the creation of physical currencies. Minting physical coins that can be exchanged for U.S. dollars or goods and services is illegal and will likely garner the attention of the F.B.I. or any number of other U.S. agencies and regulatory authorities.
The second story worth mentioning in this area is that of Casascius Bitcoins, which were the brainchild of a Utah resident named Mike Caldwell. These coins were physically stunning, and each came with a Bitcoin address and a “private key” to the digital location where said Bitcoins were being stored.
Each had a little sticker to peel off on the back, just like a gift card with a security code on the back you have to remove before using. These coins were (and still are) immensely popular, but Mike Caldwell has stopped selling versions of his coins that are attached to real digital bitcoins. The various coins available were tied to anywhere from 1 BTC to 1000 BTC. There are 2 unopened 1,000 BTC bars left in the world.
This is because the Financial Crimes Enforcement Network or FinCEN told Mike Caldwell that minting physical bitcoins made him the owner of a money transmitter business (just as businesses that issue money orders, traveler’s checks, or any other sort of money transfer service is a money transmitter). And to operate legally, a money transmitter business must be registered at the federal level and typically the state level too (an expensive process that varies significantly by state).
All of this requires a lot of complicated paperwork and is overall very difficult for a singular individual to do by themself. As a result, Mike Caldwell decided to stop selling physical bitcoins. Currently, he sells physical Bitcoin representations that hold numismatic value only.
After the golden years of 2013-2016 in which companies selling physical Bitcoins did very well, virtually every single physical bitcoin maker has been forced to close down due to either similar government regulations or a financial lack of viability. Some companies said that Bitcoin got too expensive too fast to make physical Bitcoins appealing to their intended market.
