The Opendime from Coinkite is a USB device on which you can put bitcoins to be portable and transferable in the physical world. It is a kind of hardware wallet for one-time use, which you have to physically damage to release the private key. As long as this has not happened, the private key remains secret. This way, you can give bitcoins to someone without an on-chain transaction and without having the private key at your disposal.
Coinkite’s Opendime is a particular device that is more innovative than its appearance suggests. It is a bare-looking USB stick with which you can create a bitcoin address where the private key is kept secret by the device. You can put some bitcoin on the bitcoin address, and then you can keep it or give it to someone else.
A special chip on the Opendime secures the private key. Only when you damage that chip, for example, with a thumbtack, does the operation of the Opendime change, and the private key is released. In the meantime, you can see which bitcoin address is linked to the Opendime. There are also ways to check the authenticity of the Opendime and verify that the device has a private key.
You can fill an Opendime with some bitcoin and give it to someone else or trade with someone without a transaction on the blockchain involved. This process is Just via sneakernet and just as anonymous as cash.
Applications
Opendimes are especially suitable for giving to someone else, for example, as a gift to someone who does not yet have a bitcoin wallet and also does not have the knowledge to set one up in a safe way. It is because they are stored about as securely on the Opendime as on a hardware wallet until the recipient is ready to take them off. In addition, unlike with a hardware wallet, with an Opendime, the recipient can be assured that the giver does not have a private key copy.
Opendimes are also tradable in the physical world. Since the counterparty can check the authenticity and the amount, you could sell an Opendime with bitcoin for regular money or exchange it for goods. A bit like you could do with a physical gold bar. However, an Opendime is lighter and less conspicuous, easier to check for authenticity, and the bitcoins may be easier for the recipient to exchange than a gold bar.
Privacy implications
The fact that Opendimes allow you to make a Bitcoin transaction in the physical world has implications for the privacy of everyone on the Bitcoin network. Opendime Bitcoin addresses look the same as any other Bitcoin address, so any Bitcoin address could, in principle, be an Opendime. With blockchain analysis, it is therefore not possible to determine with certainty whether bitcoins at a random bitcoin address have never changed hands because, in the case of an Opendime, this could have happened several times.
How does it work?
Opendimes are for sale via Coinkite and cost about €45 per three pieces. They look like a small printed circuit board with a USB connection. The bare appearance makes it easier to inspect the Opendime and keep costs as low as possible. Therefore, they are also packaged in a simple plastic bag with a single sheet of paper that points to an index.htm file on the Opendime for further instructions.
If you connect the Opendime to a computer and open the index.htm file with a browser, you will find a short step-by-step plan for installation and use. They tell you that you first have to copy some random files to the Opendime, which generates a private key. It is best to use several individual files, for example, self-made photos. If you want to know about bitcoin trading, then read more from here.
As soon as you have moved 256KB of data to the Opendime, a red light will start flashing, and the device will reset itself. If you remove and reconnect the Opendime, the light will flash green. The instructions in the index.htm file have been changed, and some new files have been added.
When you open index.htm again, you will now see a page with the generated bitcoin address of the Opendime on it, including a QR code. You can use both to put bitcoins on the Opendime. The first button takes you to Opendime’s block explorer, which shows you what information is on the blockchain about that bitcoin address: the balance, associated transactions, and so on. Opendime also links to other block explorers if you want to double-check.
With the button ‘Verify,’ you can have a message signed with the bitcoin wallet’s private keys via message signing to check whether the Opendime has the private keys. It works with the button automated via Opendime’s block explorer, but there are also options to show the signed message so that you can verify it with a wallet of your choice. It is also likely to prove that the Opendime is genuine and not counterfeit. However, that is a relatively technical process and more for advanced users.
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