Coinkite’s Opendime is a USB device on which you can put bitcoins so that they are portable and transferable in the physical world. It is a kind of single-use hardware wallet, 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 access to the private key.
Above: Open dimes
Coinkite’s Opendime is a special 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.
The private key of the bitcoin address is secured by a special chip on the Opendime. Only when you damage that chip, for example with a pin, 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 and check how much is on it. There are also ways to check the authenticity of the Opendime and to verify that the device actually has the private key.
That doesn’t seem very special, but it is. With an Opendime, bitcoin becomes (transferable) portable in the physical world. You can fill an Opendime with some bitcoin and give it to someone else or trade with someone, without any transaction on the blockchain involved. Just via sneakernet ; as anonymous as cash.
Applications
Open dimes are especially suitable for giving to someone else. For example, as a gift to someone who does not yet have a bitcoin wallet and does not have the knowledge to set one up in a secure manner. They are stored on the Opendime about as securely as on a hardware wallet, until the recipient is ready to remove them. However, unlike a hardware wallet, with an Opendime, the recipient can rest assured that even the giver of the gift does not have a copy of the private key.
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 striking, easier to check for authenticity and the bitcoins are perhaps easier to exchange for the recipient than a gold bar.
Privacy Implications
The fact that Opendimes exist that allow you to make a Bitcoin transaction in the physical world has implications for the privacy of everyone on the Bitcoin network.
Bitcoin addresses from Opendimes look the same as any other bitcoin address, so in principle every bitcoin address could be an Opendime. In blockchain analysis it is therefore not possible to determine with certainty whether bitcoins on 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?
Open dimes are for sale via Coinkite and cost approximately ?? 45 per three pieces. They look like a small circuit board with a USB connection. The bare look is so that you can inspect the Opendime more easily and to keep costs as low as possible. They are therefore also packaged in a simple plastic bag with a single piece 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, on the basis of which a private key is generated. It is best to use several unique files for this, for example self-made photos.
As soon as you have moved 256KB of data to the Opendime, a red light starts flashing and the device resets itself. If you remove the Opendime and reconnect it, the light will flash green. The instructions in the index.htm file have now 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.
Below it are two buttons: Check balance and Verify . 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. Of course you can also manually copy and paste the bitcoin address in a block explorer of your choice.
With the ‘Verify’ button you can have a message signed with the private keys of the bitcoin wallet via message signing , to check whether the Opendime actually has the private keys. This works automatically with the button 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 possible to check whether the Opendime is genuine and not a counterfeit. However, that is a relatively technical process and more for advanced users.
