Veteran Crypto Enthusiast Otoh Shares Insights on Casascius Coins, Tax Havens, and Blockchain Buddies
Otoh, a pseudonymous early investor in Bitcoin, has likely lost more Bitcoin than many will ever own. Known as “on the other hand,” Otoh has rich insights on seizing opportunities and crafting one’s own luck in the cryptocurrency world.
Otoh will be a featured speaker at the upcoming Consensus festival in Austin, Texas, from May 29-31.
At Consensus 2024 in Austin, Texas, Otoh will share the stage with notable figures such as Litecoin creator Charlie Lee and BTCC and Ballet founder Bobby Lee. Otoh is renowned among early cryptocurrency enthusiasts for his substantial holdings of Casascius coins—physical bitcoins.
“I’ve never sold any. I’ve just been accumulating them as my form of cold storage,” Otoh said in an interview, discussing his recent auction of over 200 physical bitcoins through Heritage auctions, their first foray into cryptocurrency sales.
Casascius coins were introduced by Mike Caldwell, known as Casascius (an acronym for “call a spade a spade”), to facilitate Bitcoin transactions in person. These coins contain a Bitcoin private key embedded in a metal coin.
The production of these coins ceased in 2013 after the Financial Crimes Enforcement Network intervened, labeling Caldwell as an unlicensed money transmitter. Today, only about 90,000 Casascius coins remain in various denominations, although other manufacturers, including Bobby Lee, have created similar products.
Casascius coins have become coveted items among collectors and symbolize the tangible history of what is largely a digital currency. Some are so valuable that they must be declared at U.S. Customs upon entry into the country.
“It seemed like the right time to part with some of the physical coins,” Otoh commented. “I want others to appreciate and care for them.”
Bringing Bitcoin into the physical realm does come with risks akin to the simplicity of stealing cash from a wallet. Unfortunately, Otoh experienced this first-hand about a decade ago when a shipment of coins he received appeared tampered with, leading him to suspect theft.
The 55 BTC missing from his collection were worth around $20,000 at the time, a value that has since ballooned to approximately $3.5 million. “That’s a significant sum by any measure,” he noted. “I’m offering a $500,000 reward for their return. I have no interest in pressing charges against anyone who decides to return them,” he added.
In an interview ahead of the Consensus event, Otoh discussed his auction of these vintage physical bitcoins, early investments in other cryptocurrencies like Ethereum, and his strategy of diversifying wealth into global properties and residing in a tax haven in the British Channel Islands.
What will you be discussing at Consensus?
I’m participating in the panel on physical bitcoins, filling in for Mike Caldwell, the inventor of Casascius coins, who couldn’t attend. Bobby Lee and Charlie Lee invited me to step in because of my significant investment in these coins.
Do you remember buying your first coin?
Yes, vividly. I bought my first coin at the London Bitcoin Conference in 2012. I had been involved with Bitcoin since the summer of 2011. I remember meeting some privacy advocates at the conference who were selling physical bitcoins. I purchased 10 regular bitcoins and a 10-bitcoin unit piece for about $12 per bitcoin, including a premium.
Why did you choose the pseudonym Otoh?
It’s an acronym for “on the other hand.” I often consider different viewpoints, which I found fitting for the cryptocurrency space. Most users on the BitcoinTalk forum had nicknames, and this one just came to mind.
Any cherished memories from the early days of Bitcoin?
Fondly, I remember acquiring my first coin. It was an exciting time when people were still giving away free coins, though by then it was usually fractions of a coin. Traveling frequently between Europe and the U.S., Bitcoin made transferring money much easier.
Have you lost more bitcoins than most people own today?
Indeed, considering the stolen coins. Somewhere, there’s a lost or stolen stash worth millions.
What do you suspect happened to those coins?
I believe a rogue U.S. Postal Service employee tampered with the package. They might have mistaken the coins for more traditional valuable items like Gold or Silver Eagles. However, they may have kept or discarded them upon realizing what they were.
I’ve always hoped to recall if I misplaced them somewhere. But it doesn’t make sense; I keep all other assets meticulously itemized. A friend recalls receiving a tampered box, which strengthens my suspicion.
Any thoughts on the OTOH Collection of Physical Cryptocurrency?
After a decade, it felt right to sell. My physical coins had been my version of cold storage. With all my digital crypto sold, it was time to let others appreciate these physical tokens.
Do you think it’s better to invest in Bitcoin or physical property?
I believe in a balanced approach. Bitcoin offers high-risk, high-reward potential, while property serves as a hedge and a tangible security. If I were younger, I’d probably lean more towards crypto, but now I appreciate the stability of real estate and enjoy renovating properties.
Are you interested in other digital assets?
Yes. I was once the largest holder of litecoin (LTC) and played roles in other projects like Dash. I invested in Ethereum’s ICO, converting 100 bitcoins into about 10,000 Ethereum. Unfortunately, I sold them too soon. Now, I primarily hold Bitcoin.
Your views on Bitcoin as an investment?
Bitcoin is an exceptional investment, arguably the best-performing asset in history. It’s a trillion-dollar asset class and a great store of value. It was designed as a hedge against fiscal imprudence by central governments. Its ability to be transferred globally with minimal fees makes it a transformative innovation.
What significant purchases have you made with crypto?
I’ve mostly converted between fiat and crypto. I haven’t made many direct purchases with cryptocurrency.
Are capital gains taxes a concern with crypto transactions?
For many, yes. However, I reside in a tax haven without capital gains tax. I ensure I’m there when cashing out to avoid tax liabilities.
How do you handle the tax situation with your home in California?
Owning homes in various countries doesn’t make me a tax resident. I carefully track my days to avoid overstaying, ensuring I’m not liable for taxes and don’t conduct business there.
Which tax haven do you live in?
I reside on Sark, a small island in the British Channel Islands. It’s unique with almost no tax obligations, making it ideal for managing complex crypto to fiat transactions without intricate record-keeping.
Have you renounced your passport?
No, I still hold a U.K. passport. I could switch to a Guernsey passport, but it offers similar benefits. Passport nationality is less important than fiscal residency.
How would you describe your political views?
With age, I’ve become slightly more conservative but remain predominantly capitalist. While I was more anarchistic in the past, now I adapt to prevailing views without being overtly political.
Any final thoughts on the stolen Casascius coins?
I lost around 55 bitcoins worth roughly $3.5 million today, merely $13,000 at the time. I’m offering a $500,000 reward for their return without pressing any charges. The coins haven’t been moved or peeled, so they are likely still out there.
What are you most looking forward to at Consensus?
Meeting Bobby and Charlie Lee again, both instrumental in my crypto journey. I’m also excited about reconnecting with others from forums and the internet, fostering ideas that wouldn’t emerge while sitting behind a computer. It’s my first visit to Texas, adding to the excitement.
