Reusable physical coins using the bitcoin network
Draft - Beta version 0.1.1
Bell, Ido
January 2023 — Israel
Abstract
We propose an alternative to the known wallets, a reusable physical coin that uses the bitcoin network but functions like cash. The coin allows both electronic and physical transactions.
These physical coins contain the public and private keys, thus making bitcoin a true alternative to the payments ecosystem by slowly replacing fiat.
We know there is a plethora of wallets but we propose a way to keep custody of coins in the simplest possible way while being able to transmit those coins physically as well, without the need to broadcast the transaction.
This document assumes the reader understands how bitcoin works, how transactions are confirmed and how cryptography secures the whole network and the individual balances.
Introduction
The physical coins store the private key in its binary form in a 16 by 16 mesh that uses a close circuit that converts the associated private key to the corresponding public key where funds can be sent. All is done offline, and it is powered by solar energy (a small lithium battery can be installed if desired). In this first version (0.1) we use the legacy addresses of the type 1A1z… and each coin may contain whatever amount we desire, there are no denominations. It is both a cold wallet for storage and a functional wallet that allows sweeping the private key into any app to transact with any peer.
Traditional hardware wallets require the use of apps to interact with them and some make it very complex or even virtually impossible for the average user to safely store and use their coins.
Our proposal is an alternative to the existing universe of wallets for those who may see the physical delivery of coins as a plausible feature. We made the verification of funds so trivial that the average citizen can relate to cash easily.
Precedents
The Casascius coins are a very interesting precedent, but the process used to mint them implied trusting that the issuer did not store the corresponding private keys and that he used enough entropy to generate them. So far, it has been proved that he was honest, and his project will always be remembered as an important milestone in bitcoin’s adoption history.
Our proposal removes trust completely since the private key is not previously generated. Our reusable coin is a blank canvas at the very beginning and can be reset as many times as needed. If the coin has been already used previously a simple reset and corresponding generation of a new private key is very easy and intuitive. The general precautions when generating the private key must be followed, especially avoiding someone peeking at it during the process. Once generated it will be safe if the rest of the instructions are carefully followed.
Design
The fig x. shows a thin metal plate that consists of 256 holes that will let us create a binary private key using true randomness. The coin does not connect to the internet, the only way to verify they contain the appropriate private key for the public key — bitcoin address — is by following the instructions and sweeping the private key that will let the user verify that signing a transaction is possible.
To check the balance is enough to scan the QR generated by the coin itself (the public bitcoin address) using the integrated circuit shown in fig. x and connecting to some explorer or node who is able to reveal the balance or the outstanding unspent transaction outputs (UTXOs).
Verification
The crucial aspect of these coins is the ability to easily check the balance and that the coin itself contains the private key and there has been no tampering at all. In order to provide this level of security, we need to establish different levels of use.
User that is storing coins as savings (cold storage).
User that wants to receive them physically.
In this case, whoever receives the coin needs to verify not only that the address has the corresponding funds but also the associated private key to move them in case it is needed or for extra peace of mind in case there is suspicion that the previous owner may have had access to the private key. It is highly recommended to move to another address by sweeping the private key into a hot wallet and then resetting the coin to a fresh new address of your choice by following the instructions.
Other cases.