Casascius Coin

Casascius coins are physical metal coins, produced by American engineer Mike Caldwell from 2011, that each carry real bitcoin. Inside every funded coin is a slip printed with the private key for a bitcoin address, sealed under a tamper-evident hologram sticker. As long as the hologram is intact, the holder can be reasonably confident the bitcoin has not been taken. Peeling it off reveals the key and lets the owner move the coins on-chain, but leaves visible damage that shows the coin has been opened.

The coins, named after a word Caldwell made up for his online business, were among the first attempts to give Bitcoin a physical form. They were made in brass, silver and gold, in denominations including 1, 10, 25 and 100 BTC, with a very small number of high-value bars. Production of funded coins stopped at the end of 2013 after a letter from US regulators, and the surviving pieces are now sought after by collectors.

A Casascius coin is like a sealed envelope with the combination to a safe written inside, glued shut with a sticker that cannot be removed without tearing. The safe, in this case, is a bitcoin address on the public ledger, and anyone can check online how much is in it. Whoever holds the unopened envelope effectively owns what is in the safe, and can hand it to someone else just like a banknote.

Opening the sticker is the only way to get the bitcoin out. Once it is opened, the coin is still a nice piece of metal, but most of its special value is gone, because the bitcoin can be moved away. That is why many owners have never peeled theirs, and why unopened coins sell for more than their bitcoin content alone.

Caldwell, who lived in Utah, announced the coins on the Bitcointalk forum in 2011 and sold them to early enthusiasts, at first for little more than the bitcoin they contained. Later series improved the hologram design to make tampering harder. In late 2013, the Financial Crimes Enforcement Network (FinCEN) told Caldwell that, in its view, selling coins loaded with bitcoin could make him a money transmitter, a business that must register and follow anti-money laundering rules. Rather than take on that regulation, he stopped selling funded coins and limited himself to unfunded pieces. As the value of bitcoin rose, the coins went from novelty items to some of the most valuable objects in crypto collecting.

Each funded coin follows the same basic design:

• The key slip. A small card inside the coin carries a private key, printed in a compact format.
• The hologram. A holographic sticker covers the key and shows the first characters of the matching public address, so anyone can check the balance on a blockchain explorer.
• Tamper evidence. The hologram is designed to leave a pattern or void marks if lifted, signalling that the key may have been exposed.

Because the private key was created and loaded by Caldwell, buyers had to trust that he had not kept a copy. Collectors generally regard that trust as having held up, which is part of the coins' reputation.

Casascius coins trade at auctions and between private collectors. Their value depends on the amount of bitcoin inside, the series, the metal, the condition of the hologram and whether the coin is still sealed. Opened or "redeemed" coins are worth far less than sealed ones. From time to time, long-dormant addresses linked to Casascius coins become active as owners open them, which blockchain watchers notice because the addresses are publicly known. Fakes and tampered coins exist, so serious buyers rely on reputable dealers and on checking the public address and hologram details.

The coins are an early example of a bearer instrument for crypto, similar in spirit to a digital bearer asset or a cold storage paper wallet, and they showed how regulation could reach even a small hobby business. They carry real risks: physical theft, loss, damage to the key slip and the chance that the original key was compromised. They also show that the security of a crypto wallet depends on who created its keys. Later physical bitcoin products copied the idea, but none became as well known.