[Abraham Lincoln]

From a security standpoint option 1 is much, much safer. The idea of a physical wallet is that all the information needed to receive and spend coins is stored in an offline, physical manner. Extremely safe. (Although when casting the coins the private keys are accessible by the admins)

Option 2 has many risks. Servers can get hacked, disks can become corrupted, admins can go rogue, etc. You have to have full trust that when you want to claim your OMC the servers will still be there and that the private keys haven't been messed with. And the ability to see if a coin has been opened already can be exploited to scam users.

[The Scarabian]

I like option 1 a lot. It would also be cool to have the address on the face of the coin.

[Abraham Lincoln]

I like option 1 a lot. It would also be cool to have the address on the face of the coin.

Both options have the public key (receiving address) on the face of the coin.

The difference is in the way the private key (used for sending) is stored.

[The Scarabian]

Both options have the public key (receiving address) on the face of the coin.

The difference is in the way the public key (used for sending) is stored.

On your last sentence did you mean private key?

[Abraham Lincoln]

On your last sentence did you mean private key?

Yea, I did. My bad.

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Option 2 will have no admins being able to access it, on a RAID 10 drive array, with PCI-DSS compliant security and 512bit encryption only decryptable with a key on the coins inside.

Even if the admins don't have access they can still get access. You don't just encrypt a database and throw away the key. It's impossible, actually, if you want to still be able to access the data.