Given the electronic nature of digital currencies, physical bitcoins may seem to be a paradox - yet the market remains a thriving niche for collectors and enthusiasts.
Indeed, the purpose of owning physical bitcoins varies. While some use the coins to create a dialogue about cryptocurrency, others want to be able to hold and collect what they see as an actual piece of the technology's history.
But not all physical bitcoins are created equal, and none may be more prized among collectors than the creations of Kialara, a project that has set itself apart for intricate designs that may look more at home in an art gallery than on a computer desk.
Several entities, including the now-defunct Casascius coins, have been involved in the production of physical bitcoins over the years, but Kialara differs from other physical bitcoins in that the more common circular design is encased within a bar, bringing to mind the idea of a collector's case around a physical coin representation.
As a sign of its success, Kialara boasts high-profile fans including investor and Bloq co-founder Matthew Roszak, who noted that he sees physical bitcoins, in particular Kialara, as necessary conversation starters.
Roszak told CoinDesk:
"In trying to describe bitcoin to people, having some sort of physical representation really helps. People are very visual, and having such a beautiful piece of art to accompany the discussion about bitcoin adds a lot of value."
Roszak believes that the best way to educate someone about bitcoin is to give them something to actually experience, and this idea has inspired him to give out Maxfield Mellenbruch's work as a gift.
He has even presented the Kialara to a number of people within the tech world, including Virgin mogul and blockchain industry supporter Richard Branson.
Since the original Kialara, Mellenbruch has created several different variations to that first design, from the 2015 Kialara Labyrinth, which contains a maze of ball bearings, to the most recent series, the Kialara Signature Series.
The Signature Series features the bitcoin-inspired artwork of Ricky Allman and Julia Tourianski, seamlessly combining two-dimensional mediums with the sophisticated beauty of the physical Kialara. Each Kialara goes for $179.
Mellenbruch recently auctioned off Allman's original painting, 'Excavatorelevator 1'. The auction ended on 28th March, with the winning bid was $1,255.
Tourianski's 'Current' will follow on 1st April. The winner of the auction will also receive the Kialara version in wallet form -- Serial 01/500.
Creating a conversation
Mellenbruch's first 100 Kialaras quickly sold out, and word spread quickly as bitcoin enthusiasts were eager to own a piece of what many considered to be cryptocurrency history.
"I haven't had to market them at all," Mellenbruch said. For now, he is as busy as he wants to be.
But in addition to being a coveted collector's item within the bitcoin space, the Kialara also raises questions about both the necessity of trust and the value of artwork.
Notably, Kialaras are sold unfunded, and it is the buyer's decision whether or not to add bitcoins to the bar.
Funding a Kialara is similar to funding a paper wallet, with owners using the public key to transfer funds onto the bar. At this time, the only way to open a Kialara and use the balance is to completely destroy the work of art, thus discouraging anyone from actually doing so.
As it turns out, many collectors are choosing to leave their Kialaras unfunded, purchasing them strictly for the beauty of their engineering and design.
One Redditor purchased the Kialara with the initial idea of using it as a secure way to store his bitcoins. Yet, upon seeing the bar in person, he chose instead to leave it unfunded.
"The funny thing is that his crafting of these pieces is so fantastic that their splendor has overshadowed their utility. I dare say most people collecting them are, like me, doing so for their beauty and artistry and not in order to use them to store any bitcoin at all," he said.
He considers himself to be a collector, owning eight designs in total, and sees himself buying "at least one of every series" in the future.
Another Redditor recounted a similar experience:
"My original intent at purchase was to actually load it and keep it in my safe deposit box. That quickly changed when it arrived in the mail. These bars are pieces of art, and they deserve to be displayed as such."
"You can tell the piece requires a lot of planning and engineering," a third customer said.
Question of worth
For Mellenbruch, the future of the funded Kialaras is of greater interest to him due to the questions that the work raises concerning the valuation of art.
"When there's an auction of something like a Monet painting, a lot of people don't really understand how value is assigned to that art piece. With the funded Kialaras, I am seeing how art can appreciate beyond its aesthetic value or beyond its collectible value," he said.
When a user funds a Kialara, part of the value is built directly into the artwork, and no one is able to argue that particular aspect of the overall value composition. Whether the aesthetic value increases over time, the value of the piece would grow simply due to any rise in the bitcoin rate.
Trust is an essential component to the design of the Kialara, and in fact, it is a necessary one for the product to serve its purpose as a bitcoin storage device. For most of his designs, Mellenbruch personally created the private and public keys associated with the bar, requiring his customers to place trust in both the security of his creation process and his integrity.
While some customers have asked about the possibility of adding two-factor authentication to the bars, Mellenbruch has declined their requests, due to concerns about the secondary market for the collectibles.
"If someone wants to buy a funded Kialara on the secondary market, they can comfortably know that the only person to have handled the keys is me - not the seller."
If others were able to handle the private keys, a customer interested in purchasing a Kialara on the secondary market would have to trust that those with knowledge of those keys won't try to steal the bitcoins inside.
Yet not everyone desires two-factor authentication when it comes to the Kialara bars. According to the feedback that he has received, most of Mellenbruch's customers actually see the trust in him as one of the main features of the overall design.
"It goes against the decentralized nature of bitcoin, but it's a concept that I wanted to float out there," he said.
Role of trust
The trust element is a dynamic component of the piece that changes with each fluctuation in the value of bitcoin. If someone chooses to fund their Kialara, their trust in Mellenbruch must become greater as the price of bitcoin rises.
Should someone choose to sell their funded Kialara on the secondary market, they are also transferring their trust in Mellenbruch to the new owner.
Mellenbruch wants the brand to evolve, and with this evolution, he envisions changes to the element of trust that some customers place in him.
"I admittedly don't love all of the responsibility that comes with the creation and disposal of the keys, from the safety deposit box to the need for offline computers," he said.
However, Mellenbruch maintains that trust was necessary to realize his concept in his earlier pieces, adding:
"I think of the public and private keys as being a medium in the Kialara, along with steel, aluminum, and glass."
In store for the future
As interest in the Kialara continues, Mellenbruch is using a portion of his proceeds to commission Haven beehives. Haven is a network of functional beehive sculptures designed solely for the wellbeing and benefit of the bees, not for the harvesting of their products.
So far, two of the 16-foot sculptures he's commissioned have been completed, and they are scheduled to be installed this summer.
Going forward, Mellenbruch says he is interested in more collaborations, as well as getting some help with assembly.
"Some customers were requesting IKEA-style designs that they can assemble themselves. That's like a dream to me now."
Mellenbruch plans to launch an official Kialara website in the coming weeks.
Images courtesy of Kialara