Physical Bitcoins- Intro, drawbacks, can they be banknote replacement?
By Kisscrypto.com on The Capital
Physical Bitcoins is a concept by crypto enthusiasts who admire Bitcoins being used in physical form like coin/banknotes. Currently, we use Bitcoins online or can store them in wallets. Physical Bitcoins go one step ahead and allow you to do transact in Hard cash form.
Physical bitcoin, while presently is a concept but it was a partial reality back in 2011’s end to mid- 2013 when such a system was created which is known as Casascius Bitcoins. Mike Cladwell from Utah, USA, made the physical Bitcoins out of brass with the electroplating gold on 25 Bitcoin denomination. Casascius Bitcoins held the value of a peer-to-peer open-source digital currency (BTC) with Private Key and public key both on the coin. Allowing users to trade physically in a currency which has been being transacted for a long period of time on the internet. Each physical coin has a unique address attached with it, and a redeemable “private key” that is placed under a hologram on the coin. The System was however short-lived and the sale was stopped after a warning by US treasury’s Branch FinCEN. It was a good attempt at Physical Bitcoins but for most of the part, it can be considered as Paper wallet.
How Can You Use Physical Bitcoins?
A physical coin exists in the real world that has a private key and a public key on it. These keys can be imported into a Bitcoin wallet so as to spend them. The Bitcoin network confirms whether the amount is present or not by searching on BTC blockchain, Then, you are able to spend the coins that are stored on that particular address. Thus, physical Bitcoins theoretically and practically can work.
This is how physical Bitcoin can be used to shop or transact in the real market.
Drawbacks and Can They Really Act As Banknote Replacement?
The banknotes are issued and printed by the national government, which are then circulated and used around the country. Bitcoin is a digital currency, which is not run by a singular entity. The physical Bitcoin acts similarly to a digital barter, gift card or a currency having a barcode or a magnetic strip.
Another point to consider is that the Bitcoin digital currency is not considered legal. Physical Bitcoin may also be rendered “illegal.”
Another important point is that the Bitcoin system is not different than the bartering system that uses a commodity or some chicken or an exchangeable item.
There is also a problem if Bitcoin is to be used as a banknote replacement. The Bitcoin had been vastly used for buying illicit products. These incidents have drawn the anger of the legislators across the world, who are not favoring Bitcoin much.
Another viable argument is that one cannot rely on the safety of private key in Physical Bitcoin, Private key written on paper is not the way for technical advancement, Securing private key must be highly efficient in such physical form.
In light of above drawbacks, Physical Bitcoins cannot be called as the banknote replacement, also remember that while value of Banknote is intact, the value of Bitcoin changes every moment.
Conclusion
Physical Bitcoin is a concept only for now. In the world that is moving forward to electronic transactions, incentive for physical bitcoin is less in developed countries. But considering that Cryptocurrencies are still in the early phase, it would be too early to speculate on the fate of anything related.
