UPDATE: it appears Coinbase paper wallet private keys are in a proprietary format, so the procedure in this blog post doesn’t work. Try this instead–I just tested it, so I know it works!
Unless you live under a rock, you’ve heard of Bitcoin, the nascent virtual currency with many fascinating properties (skyrocketing value, decentralized, peer-to-peer, irrevocable, deflationary, etc). In other words, the Magic Internet Money. Certainly if you know me you’ve got an earful of it. Bitcoin is either another tulip mania, the currency of the future, or both.
But what good is a currency if nobody uses it? Way back in the early days of Bitcoin (2009), it was nigh impossible to trade for goods, services, and fiat currencies like dollars. Today, there are a few more places to spend Bitcoin, and trading for fiat currency is made easier with services like Coinbase.
So that’s good if you’ve already got some Bitcoin in a wallet. If you have a Casascius “physical Bitcoin”, you can still use Coinbase to trade it for U.S. dollars, but it’s a bit more work. Here’s a step-by-step guide.
- Obtain the private key.
- Carefully remove the hologram sticker from the back of the physical coin. A bunch of letters and numbers are printed on the back (example). Those letters and numbers comprise the “private key” for a Bitcoin wallet containing some amount of Bitcoin(s). Whomever possesses this private key may send any fraction (as little as 0.00000001) of the wallet value to another wallet.
- Convert the private key to the standard format. The private key on the hologram sticker is in mini private key format, and must be converted before it can be used. I’ll list a bunch of ways to convert it. In technical terms, “convert” means to compute the SHA-256 checksum of the mini private key. This will output a much longer number: a standard format Bitcoin wallet private key. Assume for these examples the mini private key is S6c56bnXQiBjk9mqSYE7ykVQ7NzrRy. You can and should use this for testing. The standard format key corresponding to that mini key is 4c7a9640c72dc2099f23715d0c8a0d8a35f8906e3cab61dd3f78b67bf887c9ab. Anyway, here are some ways to convert the key. The first way is fairly secure, especially if the computer is not connected to the Internet. The last way is probably the easiest.
- On Linux or Mac OS X, run echo -n S6c56bnXQiBjk9mqSYE7ykVQ7NzrRy | sha256sum .
- On Windows you should be able to do something similar if you have sha256sum.exe.
- Pretty much every programming language ever written includes something to easily compute a SHA-256 checksum. For example, with Python you would do import hashlib; hashlib.sha256(b'S6c56bnXQiBjk9mqSYE7ykVQ7NzrRy').hexdigest().
- In Chrome, hit F12 to bring up developer tools. Click “Console”. Type in SHA256("S6c56bnXQiBjk9mqSYE7ykVQ7NzrRy") and hit Enter.
- Sign up on Coinbase. Use this referral link and I’ll get $5 after you exchange 1 Bitcoin.
- Import your private key into coinbase. Navigate to “Account Settings” ? “Integrations” ? “Import A Paper Wallet“. Click “Enter private key manually”. Paste in your standard format private key from above.
- Sell your Bitcoin for USD. This part is pretty straightforward. Click on Buy/Sell to sell your Bitcoin and transfer the USD to your bank account.
Another idea: spend your Bitcoin!