Coin redemption – best practices

The private key to each Casascius Coin is located inside the coin. The hologram must be peeled off in order to see it. The hologram will be permanently damaged (by design) when peeled off. The 8-character code visible on the outside of the coin is not the private key. Casascius Coins have a 30-character alphanumeric code (22 characters for series 1 coins with the spelling error).

Best practices for redeeming Casascius Coins:

1 – Use your bitcoin client.

Most Bitcoin clients support redeeming private keys and Casascius Coins, but notably the reference client (“Satoshi client”) has no support for importing keys directly from Casascius Coins.  If you use the standard client, you’ll have to use another way to import them.

2 – PREFERRED: Use BlockChain.info’s web wallet.  

BlockChain.info offers a free web wallet that is easy to sign up without needing any personal information.  Even if you don’t use BlockChain.info as your regular wallet, you can create a temporary throwaway wallet just for the purpose of importing physical bitcoins and sending the BTC somewhere else.  I like using BlockChain.info’s web wallet for this purpose for several reasons: a) the imported coins are available for sending immediately, b) according to current transaction fee rules, the required transaction fee will virtually always be zero when resending out the coins, and c) your coins don’t get commingled with BlockChain.info’s or anybody else’s, i.e. the public blockchain will reflect a transaction showing your own coins sent to the address of your choice.

If you only want to send a portion of your physical bitcoin value and don’t want to leave the remainder in a web wallet, consider sending the remaining balance to a free paper wallet printed from bitaddress.org.  (A paper wallet is much like a physical bitcoin, except you can print unlimited paper wallets for free anytime you want.)

One minor caveat:  Be careful not to assume that once you have imported coins into BlockChain.info’s Web Wallet and see them as part of your balance, that it is safe to divulge your coin’s private key.  Those bitcoins are still spendable with the original private key up until the moment you actually send those bitcoins to a different address.  If that happens, the balance will disappear from your BlockChain.info web wallet.

EDIT: BlockChain.info has added a new Sweep button to alleviate this concern. I recommend using it, with only one exception: if you are about to spend the entire balance of the coin immediately, doing an Import instead of a Sweep will usually prevent you from having to pay a mandatory transaction fee.

3 – Use MtGox.

MtGox allows the import of private keys into your MtGox BTC wallet.  “Redeem Private Key” is listed as a deposit method.  It works much like you’d expect, but the following caveats apply.

a) MtGox is notorious for accepting bad input and giving a misleading error message if you make a typo.  If you make a mistake entering your private key, you would expect to see “Sorry, this is not a valid private key”, right?  Nope, what you’ll see is “Private address added to your virtual wallet with address [some-random-address-that’s-not-yours].  There was no coins in there, maybe you did a typo?”.  This confuses most people and causes them to write me and ask what’s wrong.  What’s wrong is the private key was mistyped, try it again.

b) Even when successful, you’ll have to wait 6 confirmations (~1 hour) to see the bitcoins in your account.

c) Sending the imported coins out of MtGox counts against your BTC withdraw limit – it’s treated exactly like a withdraw. Before using MtGox to redeem Casascius Coins, you should confirm that your account allows withdrawals and is not blocked by testing a very small withdrawal of an amount you can afford to lose. If withdrawals for your account are blocked, your BTC will be trapped within MtGox, until such a time, if ever, that your account becomes unblocked. Based on anecdotal reports in the Bitcoin forums, MtGox is not known for publicly informing people proactively when it blocks accounts – customers find out that they can deposit into, and trade with, blocked accounts – it’s just that when they try to withdraw bitcoins or other funds, they are unexpectedly denied. According to similar reports, MtGox frequently blocks the accounts of customers who indicate they are not involved in wrongdoing and who believe they have no reason to expect being blocked. If your account is blocked, you may not find out about your blockage until you attempt a withdrawal and are denied; avoid getting your coins stuck.

d) MtGox will remember your private key, and will automatically grab any coins it sees sent there in the future.  Their redemption screen will not tell you this.

MOST OFTEN CONFUSED CHARACTERS ON CASASCIUS COINS

  • Number 1 vs letter l – if present, it’s always the number 1 – and I have avoided using the number 1 in private keys for series 2 (2012) coins and later for this reason.
  • Letter Z vs number 2
  • Uppercase letter S versus lowercase letter s versus the number 5

I realize the print is small, but this is necessary to fit the number of characters needed to make the private key secure.  If you have difficulty seeing the letters, try the following:

  • Magnifying glass
  • Flatbed scanner (scan it at 300+ DPI, and then enlarge the scanned image)
  • Digital camera (take a picture and then enlarge it)

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