The Physical Bitcoin Market Not Available to US Citizens
BTCC is one of the most influential Bitcoin mints in the world. Based in China, the Bitcoin miner recently introduced a line of physical bitcoins, a product very popular early in Bitcoin’s existence but stymied by regulatory uncertainty.
The Mint line of products includes Bitcoin Chips, which are offered at an affordable price. There are also “Half”, “One” and “Five” denomination offerings. BTCC is also offering a gold plated One Bitcoin via an auction that ends soon. However, if you’re a US Citizens, good luck getting ahold of one. Physical bitcoin buyers and sellers must bear burdensome and expensive regulations in the US to operate.
CEO Bobby Lee takes the physical bitcoins business very seriously. “The security of Mint collectibles, specifically, the security of the private keys (printed and electronic), is very important to me and the integrity of this product and business,” says Lee in a Reddit AMA. “I take it very seriously, and have spent countless hours refining the process to ensure that those private keys don’t get leaked.”
A benefit of physical bitcoins is the tangible nature of the medium. This makes some investors feel better, and attracts many collector-prone Bitcoin believers.
BTCC Mint keys are generated on an offline computer, with a spinning hard drive that has full disk encryption. “They key files are never sent electronically over the network, and never copied onto any removable USB drives,” according to Mr. Lee. “Print them out once, and then deleted. Once printed out, the paper copies are always handled under my direct supervision.”
BTCC Mint products are not available in the US due to regulatory reasons, “as all of our products contains private keys which are all loaded with bitcoins.”
Despite an inability to tap a very lucrative market, Mr. Lee foresees creating Mint products for the long term. “I think physical bitcoins is a very important market for Bitcoin and digital currencies in general, as it makes the product tangible for everyday use, in daily conversations and interactions, and most importantly, it makes Bitcoin instantly accessible to literally everyone.”
Whether or not the Mint products continue to be sold depends on demand. Mr. Lee also evokes uncertainty over the regulation of these coins.
“Since our current line-up uses freshly mined coins, those are always of a limited supply,” says Mr. Lee. “We currently mine about 10%-12% of all bitcoins, so that’s the supply with have to work with.”
The focus for BTCC Mint has been on expanding the product line to offer fungible denominations in the physical bitcoins.
“Now, with the launch of Bitcoin Chips,” the CEO says, “we have finally completed both the high-end and low-end ranges of the products.”
“This may not be obvious, but with the current range, we are also targeting investors,” he says. “The idea is that Bitcoin investors (hoarders?) can choose to hold their Bitcoins in physical form, in these ‘cold wallet’ type physical bitcoins.”
We’re trying to make that more accessible, and cater to investors of all ranges, from owning a few Bitcoin Chips, to the larger units like the Five Bitcoin, and even the Bitcoin Blocks.”
Mr. Lee assures he has taken great precautions never to outsource the Mint process. He doesn’t even depend on others, he claims, for the entire process around the creation and handling of private keys. BTCC uses 3M polyester waterproof and tear-resistance paper that is waterproof.
“It’s not fireproof,” he admits, “but we do think this is the best solution out there. Obviously, I haven’t tried storing this paper for 50+ years and see what happens, but I have high confidence that the printing on it will hold up for many, many years.”
Mr. Lee confirms he has purchased many BTCC Mint products. “So I have a lot at stake also. :)”
To get around regulations, BTCC has considered shipping empty coins. There are namely two reasons BTCC does not do this.
“[L]oading of bitcoins via the coinbase transaction of the mining pool is actually a tricky business,” says Mr. Lee. “There are times, due to fast successive blocks, when the same address gets loaded twice. In that case, we would need to charge more upfront, and then issue a refund. (or need to charge a higher mark up fee.)”
The second reason: “I really want all of our physical bitcoins in the market to contain loaded bitcoins, so that all people at all time, know that they can trust a BTCC Mint coin they receive (as long as the hologram sticker is intact),” the CEO writes. “This is to improve dependability and trust in our products. That’s why it’s not feasible, in my mind, to selectively mine to certain addresses once we get buyer confirmation that the coin has been received.”