I wanted to post briefly to share my suggestions for two-factor Casascius items.
Two-factor Casascius Coins are physical bitcoins that are protected by a passphrase that I, as the producer of the coin, do not know. On a two-factor item, although I can see the private key, it is encrypted and not usable for coin redemption without the passphrase. A two-factor coin reduces the trust footprint substantially: you need only trust that I have produced the item properly. An “intermediate code” is used to pass me just enough information to produce coins encrypted with your passphrase, without actually knowing the passphrase, and it works due to an interesting useful property of the elliptic curve mathematics under the hood of Bitcoin. Technical details on how this works are available for those interested.
The purpose of the passphrase is to protect your funds from only one person: me. It is OK to share the passphrase with others as long as there is no likelihood that they will publish it or share it with me. Knowing this, you might want to seriously consider making the passphrase part of the physical presentation of your coin.
To maximize secondary resale value of your coin, you’ll want to choose a passphrase that meets the following criteria:
- Is not a password you are using elsewhere. (You won’t want to transfer your coin if you’re giving away your gmail password with it)
- Is not a passphrase that is overly personalized. (Your item will be less desirable to others if the passphrase is “Happy Anniversary Leah”)
Here are some suggestions:
- A neutral random-looking string: “X3aZ23MvGwh”
- A phrase you made up that presents well with a physical Bitcoin: “A brilliant marriage of money’s future with money’s past.”
You may want to consider having the passphrase engraved on a metal plate (of the sort typically used on trophies) to embed in the presentation box with the coin.