Bitcoin Physical Hardware Cash?
238 sats \ 11 comments \ @kilianbuhn 30 Aug 2022 bitcoin
What do you think about physical hardware coins denominated in Bitcoin?
They can exist in 2 forms:
  1. Trusted paper money
  2. Untrusted tamperproof seed money
Trusted paper money is easy to understand. It works exactly like nowadays coins and bills currency and users have to trust issuing bank that the real Bitcoin reserves actually do exist or at least sufficient fractional reserves do not get bankrunned.
Untrusted Tamperproof Seed Money would be physical hardware that contain 12 words inside it that is not visible from the outside. It is not exactly trustless since users still need to trust
  1. that the original making of the process did not compromise the wallet and its UTXOs
  2. that the tamperproof system did not fail
I did something in university about tamperproof embedded systems in university a few years ago - they exist in closed source hardware like cars/robots/iot etc as you can imagine. They exist in 3 forms:
  1. Tamper evident: If the coin has be compromised one can see that it has been opened
  2. Tamper proof: It is physically hard to open it -imagine massive stainless steel coating/shell or something here
  3. Tamper responsive: The device reacts to being tampered. In our case maybe an electric system that destroys the key if somebody else besides the issuing bank opens it.
None of these forms money have been satisfyingly achieved yet 😔🤟🏻
But if they have - would you use one of them? At least small quantities for every day small transactions as an alternative L2? Do you think it WILL happen even if you hate the idea?
write
preview
related posts
24 sats \ 3 replies \ @trevor 30 Aug 2022
Check out offline.cash/
reply
0 sats \ 2 replies \ @moneroshill 30 Aug 2022
Appears to be custodial unless the device stores a private key, thus defeating the purpose of bitcoin.
reply
0 sats \ 1 reply \ @trevor 30 Aug 2022
It does. Check the docs.
reply
12 sats \ 0 replies \ @moneroshill 30 Aug 2022
I don't see any docs on that page, but there was an FAQ at the very bottom of the page describing a useless multisig setup:
No. The Bitcoin is accessible through a multisig loaded by the first holder of the note. One key of the multisig, the “user key”, is generated by the first holder and stored in plaintext on the note. The second key, a “manufacturer key” is generated at the time of manufacture and stored, encrypted on the note.
The multisig requires both keys to access funds until the “Claim Before” date printed on the note at which point in time the multisig downgrades so that only the user key can claim the funds. Under no circumstance can the manufacturer key claim funds alone.
What they are describing is basically a personal wallet with extra steps. You cannot use these notes as money because you have no way to prove that you don't remember the seed after you give the note to them.
In order to make bitcoin into physical money, you have to transparently make a computer chip the custodian of the bitcoin (such that the current owner can use it to sign transactions, but not the previous owner). See my comment here: #64833
There is also the example of the casascius' coin setup: a trusted party funds an address imprinted on the inside of the coin and revealing the private key destroys the coin: https://en.bitcoin.it/wiki/Casascius_physical_bitcoins
reply
7 sats \ 1 reply \ @om 30 Aug 2022
If we agree that someone would use Fedimint then it is also reasonable to assume that some Fedimints would mint physical coins and/or notes. The problem, as always, is the government.
reply
10 sats \ 0 replies \ @tomlaies 30 Aug 2022
That's a good comparison. Both are in the middle of the trust<->trustless spectrum. Both with technologies that reduce needed trust. And both with rugpull-potential that is against the original spirit of Bitcoin.
reply
3 sats \ 0 replies \ @moneroshill 30 Aug 2022
I think it's possible if you have a chip (probably encased in some coin-like packaging with USB terminals) that:
  1. Contains a private key (that is programmed in via e-fuses), and signs arbitrary non-transaction messages to prove that it is associated with that key.
  2. Can sign a single transaction, but in doing so it stores the signature into permanent write-once-read-many memory (that is transparent to the owner), verifies the signature, and blows all the efuses storing the private key.
  3. Can be optically inspected, but is still reasonably difficult for an attacker to inspect the private key.
I think it is probably the most feasible L2, because it removes the need for network consensus entirely, and it is as easy to use as cash. It is basically a highly verifiable form of cash. It has decent privacy characteristics.
This would work with monero too, you would just want to publish the view key on the face of the "coin"
reply
0 sats \ 0 replies \ @tomlaies 30 Aug 2022
Trusted paper money denominated in Bitcoin is inevitable. Especially with fractional reserve banking. Humans are dumb, the possible profits from it a low hanging fruit. Capitalism will exploit this like water finds its way downhill.
reply
0 sats \ 2 replies \ @DarthCoin 30 Aug 2022
worthless I prefer just 12 words in my head, or just use opendimes.
reply
0 sats \ 1 reply \ @kilianbuhn OP 30 Aug 2022
Then step 2 in the float chart:
Do you think it WILL happen even if you hate the idea?
😉
reply
0 sats \ 0 replies \ @DarthCoin 30 Aug 2022
Why would somebody will spend money, time and resources, when can be used just 12 words, for free, instant accessible?
Your idea is not feasible and almost nobody will use it.
reply