Tangible bitcoins: history, opportunities and regulatory challenges

Bitcoins in tangible form, which can be exchanged for cash, are discussed not the first year. In 2010 Gavin Andresen (Gavin Andresen) created a thread in Bitcointalk, where they discussed possible ways to «print bitcoins, so he could function as paper money.»

Bitcoins in tangible form is sometimes true, but they carried a significant problem. Many manufacturers such bitcoin active a few years ago, have either disappeared or have recently showed no signs of life. Today, however, there are interesting variants of implementation of this idea, which is looming on the horizon, as well as those who are already working in the market of physical bitcoins.

Tangible bitcoins is a great opportunity for many reasons. In the first place because they can be exchanged confidentially and anonymously, leaving no trace, like cash. Of course, that is why regulators do not like this idea and they will do everything to stop the spread of bitcoins material. It is also worth noting that creating such bitcoins that will simultaneously have high security and high ease of use are quite difficult.

Paper wallets

In a perfect world, paper wallets (a type of cryptocurrency wallet, when keys are stored in printed form) can be used as a material of bitcoin. In fact, anyone can make a paper wallet, load it with any amount of BTC, print it and pass it to anyone. The recipient can easily check the balance before you accept printed bitcoin.

Of course, in the real world the chain will soon be broken. Since both public and private keys are well printed by using a paper wallet, the previous owner can devastate a paper wallet after returning the keys. It makes the very first recipient to immediately empty the wallet immediately after receiving funds, but then the transaction becomes no more sensitive than a regular bitcoin transaction between first and second (last) owner.

It is worth noting that this trusted chain will only work among people who really trust each other. For example, members of a private club can use paper wallets for bitcoin as the internal currency for goods and services exchanged in the club.

Almost got it

In practice, the material must have the bitcoin private keys (or equivalent), well protected from unauthorized access. One possibility is to use a scratch card, such as Crypto Scratch Cards (now discontinued).

One of the first attempts to develop the material of bitcoins, called Bitbills, was announced in may 2011. The project used the map by type of Bank, with a protective hologram and a QR code built into the card, which couldn’t be read if the card was compromised. The project was abandoned a few months after starting work.

Another possibility to implement the idea of material bitcoin is to bitcoins to make a physical copy of the public key available to everyone and a private key (or its equivalent), hidden inside or using flat seals.

This method was used by the company, subsequently ceased to work — Casascius Physical Bitcoins. It was closed in November 2013 after the Commission on investigation of financial crimes (FinCEN), announced developer Mike Caldwell (Mike Caldwell) that the minting of bitcoins material qualifies as a business providing monetary services and requiring the observance of stringent requirements.


However, not all bad. Now in space there are several companies, which, apparently, were able to learn from past mistakes and to solve most of the problems. Tangible bitcoins sold by the company Denarium, the headquarters of which is in Finland have the private key inside the coin and use the hologram as a forgery.

«The hologram has a window where part of the public address coins can be read to check the balance and download bitcoin on the coin,» — said on the website Denarium. Coins Denarium is available in two versions: one with a pre-defined amount, and the other with a «blank» version, which means are loaded by the user, sending them to coins. Because of the existing rules, US residents can only be sold empty of coins.

All coins Denarium, including pre-loaded, you can reload by sending bitcoins to the address the coins. Coin Denarium can be withdrawn from circulation «by opening a hologram sticker and importing the private key into the wallet of your choice», — stated in the user manual Denarium. «Please note that the open hologram sticker means that the coin has been spent. A hologram sticker can not be returned after opening, so it is impossible to remove without the intention to spend bitcoins».

Money on the flash drive

Another option for developing physical bitcoin project Opendime. He offers a tiny USB drive, the user will download the bitcoin and pass it on. This implementation resembles more lightweight hardware wallet than a paper wallet.

Unlike most other options, the private key attached to each Opendime, generated by the device during configuration by the user: it is not known to anyone, even to the first owner. Opendime can be sent multiple times to other users and verify. However, it may be withdrawn only by the last user, who needs to break the device to access the private key and import it to any bitcoin wallet.

The set of three Opendimes can be ordered for $ 37.5. We can say that this device is too complicated from a technical point of view for most users of bitcoin, and too expensive for small amounts of money (the device useless after removing the cryptocurrency). But still Opendime can certainly be used as a material of option is bitcoin.

Ingeniously simple

Another interesting idea that was discussed several times (e.g. here, here and here), is to «capture» the physical transfer of banknotes to the value in bitcoin. Bill (e.g. $ 1), having a serial number is assigned a value in bitcoin (say 0.1 BTC) – then it can be used as the physical media of bitcoin, and reliable measures to combat counterfeiting of automatically courtesy of the state.

This idea was presented in a recent recording
Twitter Antonopoulos Andreas (Andreas Antonopoulos). Cryptographer and bitcoin developed by Sergio Demian Lerner (Sergio Demian Lerner) responded: «Good idea: I suggested
it in 2013.»

Tying up funds in bitcoin with the serial number of the banknote in such a way to allow the past owner to redeem it, it is impossible to implement to protect the banknote from water and not to violate the principles of decentralization. However, it is possible, the Central operator can implement a similar scheme.

Solution Lerner’s easier:

«If we transfer some BTC to Neustrashimy output, which describes the bill (for example, country, name, and serial number), we could tie BTC to bill forever. At least for the time until people think that bill is these «destroyed» BTC,» he said. «To make the system work, all must agree that these BitBanknotes really support funds in BTC. But you can count on me: I would agree! Why not?»

Own project Lerner on the development of tangible bitcoin, dubbed «Firmcoin», it seems, fell asleep in the Lord. But it is likely that the new implementing untraceable electronic money based on strong cryptography and supported applications for smartphones with NFC, can re-emerge any time to pose a serious challenge to state monopolies and regulators.

Добавить комментарий