this post was submitted on 18 Jun 2023
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If you gonna use crypto, why even bother with physical coins?
It's either gonna have the same benefits and drawbacks of crypto or it's not going to be secure.
I'm not really talking about cryptocurrency. What I mean is that you could fit cryptographic electronics on a coin that would make counterfeiting impossible. I don't think that technology would fit on a flexible paper bill yet.
However, it is interesting to consider that you could integrate a national cryptocurrency with physical coins. The benefit would be that people could transact the physical coins without recording anything publicly. Also, the physical coins would also be instantly redeemable for digital currency.
I'm curious as to how this would work. Like you could just clone the data on the electronics and the copy would be virtually indistinguishable. Ofc you can also counterfeit our current currency, so it doesn't need to be perfect.
If you do the transactions digitally you can't counterfeit anything. You cannot send anything the blockchain agrees is not yours. But if you can just physically transact coins without recording anything you can always counterfeit and you will only notice once you redeem the coin, just how you will notice counterfeit bills if you try to deposit them.
The way it works is you would just do one transaction to a wallet on the chip in the coin when the coin is minted. The chip is designed so that you can never release the funds on its wallet without essentially destroying the chip. There is no way to simply duplicate the cryptographic data from one of these chips to another. There's a better explanation available on the OpenDime website.