So far we’ve been discussing about buying and selling bitcoins that are stored electronically in your wallet. They are secured by a digital private key which is encrypted by wallet software. Being completely digital, these coins are only available and managed online. Physical Bitcoins is a concept that allows us to hold a bitcoin in our hand by embedding the private key into a precious object. The objects openly display the public address that can be used to verify that the funds are in fact available. This makes it convenient to exchange Bitcoin, hand to hand, by not having to involve a software wallet. In addition, since the private key is never stored online, it makes hacking very difficult.
As a collector’s item, physical Bitcoins often have a numismatic value placed above the actual value of the electronic Bitcoin. In addition, the physical object is often a precious metal, such as gold or silver. The combined values of all these aspects are used in estimating the full value of a physical Bitcoin. You can always check marketplaces, such as eBay, to help price this value.
Before buying any physical bitcoins, make sure to do some background checks on the seller and the manufacturer of the object. They often provide information on how to ensure the validity of the item. Because the private key is often hidden, it’s important to be able to verify that it hasn’t been compromised.
Manufacturers have used tamper-evident holograms to protect the key. The hologram can show if there was an attempt to uncover the key. The public key can be used to check if the bitcoin has been spent. Make sure to check these two components before buying a physical bitcoin.