Day 7
It's my last day of living on Bitcoin alone. It was not nearly as harrowing as the year before, when I lost five pounds and moved into a hostel. This year, my exhaustion on the last day comes from a week of late nights eating 17-course BTC-bought meals, going to exotic dance joints, and spending all day in the sun drinking wine. Bitcoin has gone mainstream in the past year, and so it is much easier, even luxurious (given the spike in its value), to live on it. And I spend far less time explaining what Bitcoin is to people, because they've heard about it before, even if the details of how it all works still elude them.
"Bitcoin has made this monumental leap from obscurity to daily mentions in the press," says Dan Held, a financial analyst-turned-Bitcoin entrepreneur who I am meeting for brunch this Sunday. "I used to read every article that came out about Bitcoin but now it's impossible."
My last day actually ends up being one of my most frustrating ones logistically. I am meeting Held at noon at Sake Zone, the BTC-accepting sushi restaurant where I treated 70 strangers to dinner at the end of Bitcoin week last year. When my Lyft pulls up to the Richmond neighborhood spot around the corner from the Internet Archive that pushed them to accept it, Dan Held was standing outside focused on his smartphone. It's closed for lunch on the weekends. There was nowhere nearby that accepted the coin, and not many appealing brunch options this Sunday. I wound up adding more Bitcoin to my Foodler account and laundering them into a take-away order at Melody Cafe, a Mediterranean place in the lower Mission. We hopped back in a Lyft paid for in Bitcoin via Gyft to get there. Melody was so kind as to allow us to eat our take-away in their restaurant. Living on Bitcoin requires creativity and some life hacks.
Held is a blonde, former Texas high school linebacker that had shown up at my Bitcoin blow-out the year before. During the dinner, he had excitedly shown me an app that he and a friend had just developed. Called Zeroblock, it was a market news aggregator app, and it became my favorite way to check the price of Bitcoin. I wasn't the only one. The app went on to have 30,000 downloads, and when the price of Bitcoin shot up in November, people were opening it 60,000 times a day in iOS. Early Bitcoin angel investor Roger Ver and Blockchain.info CEO Nic Cary emailed Held to say they really liked the app, and a few weeks later, at the end of November, told him they wanted to acqui-hire the company. Zeroblock became the second company, after gambling site Satoshi Dice, to be sold for Bitcoin. Held quit his job as an analyst for a small investment firm and joined Blockchain.info, a web-based Bitcoin wallet service that is the go-to site for Bitcoin charts, stats and transaction history. It is the search engine of Bitcoin, with 300 million page views per month, and the place where you can, for example, tag an address with an identity. Here's Blockchain's history of my transactions living on Bitcoin last year and the FBI wallet that's currently holding nearly 30,000 Bitcoin seized from Silk Road. (The FBI has evidently still not figured out what to do with them; I've heard rumors that they'll be privately auctioned off.)
Secret Money: Living on Bitcoin in the Real World, by Forbes staff writer Kashmir Hill, can be bought in Bitcoin or more traditional currencies.
"Our operating budget is funded through advertising sales," says Blockchain.info CEO Nic Cary. "We partner with leading Bitcoin companies that want to increase their brand awareness and drive traffic to their sites."
Held is now Blockchain's director of product. His salary is paid in Bitcoin, as are the salaries of Blockchain's other 15 employees. The company only deals in Bitcoin and doesn't have a bank account. It is nominally based in the UK, but it rents no office space. They pay for server space with Bitcoin. When its employees travel, they try to do so using Bitcoin, booking airplane tickets with Cheapair, for example. It's as decentralized as Bitcoin itself, with employees on four continents. Held works from home or from 20 Mission, a co-working space in my neighborhood that accepts Bitcoin. He does turn some of his Bitcoin into cash, exchanging it mainly through Slovenia-based Bitstamp, which has become the largest USD-Bitcoin exchange since Mt. Gox bit the Bitcoin bullet.
"I didn't expect everything to go this fast. It's been a rush," says Held. "It's nice when the price stabilizes and you can catch your breath. It's crazy when the price is surging, because your net worth is tripling and everyone is rushing in trying to develop new products and offer new services. It becomes really competitive."
Bitcoin has been hovering in the $450 zone for about a month. Held is one of those people who recognized Bitcoin's appeal at just the right moment. He'd moved from Texas to San Francisco in January of 2013 and started going to Bitcoin meet-ups at 20 Mission, where business-minded Bitcoin types were gathering regularly to talk about how to build companies and services to build infrastructure around the cryptocoin and make it easier for "normal" people to use it. During a weekend in Tahoe, Held and his friend Kevin Johnson, a developer, sketched out the idea for Zeroblock. A year later, they've sold their app and both have full-time jobs in the cryptocurrency space; Johnson is a developer at Ripple.
I ask Held about those early Bitcoin adopters who lament their crypo-indie band going mainstream and the sanitation of the once-radical currency that has come with it. The "dark side" of Bitcoin doesn't come up as often any more. When the government sent out a warning about Bitcoin this week, it was from the SEC and it contained a warning to people who have Bitcoin that they should be wary of fraudsters who seek to separate them from their now valuable money with high-risk investment schemes. No longer are U.S. lawmakers uniformly trying to crack down on Bitcoin, they are embracing it, with the Federal Election Committee approving Bitcoin for political donations (as long as the recipients immediately turn it into cash).
Internet-savvy Democrat Jared Polis of Colorado immediately started accepting them. for his Congressional campaign. He's raised $1,500 from 39 donors thus far, says his campaign manager. I make a $10/ .022 BTC donation to test the process. To do so, I need to give them my name, address, and occupation (to comply with campaign finance laws) -- that means my identity is now attached to the Bitcoin address from which I send the donation. So any donors will make it a little bit easier for the government to link them to all of their Bitcoin spending, especially if they're practicing poor Bitcoin privacy hygiene -- such as using the same address for every transaction. Bitcoin's integration into the identified purchase ecosystem both legitimizes the currency and threatens the anonymity features that first fueled its growth.
And of course, I log that political "purchase" in an Excel sheet, along with the value of Bitcoin at the time, and the value of that Bitcoin when I first got it. The $10 of Bitcoin I gave Polis was worth $2.75 when I bought it last year, so I will pay capital gains tax on the $7.25 increase, per IRS guidelines issued this year. I've had to do that for every purchase I've made this week.
There is still a contingent of techno-libertarians who want to retain the radical power of Bitcoin for secure, anonymous online transactions, such as Cody Wilson and Amir Taaki of Dark Wallet. As Wired so eloquently put it, Bitcoin straddles the line between transparency and privacy because all transaction are out in the open but anonymous. The prototype Dark Wallet -- which runs in Chrome -- changes that. Like other services, including Blockchain.info, it puts coins sent through it into a tumbler to make it harder to trace the flow of a Bitcoin transaction, and enables that by default, unlike Blockchain.info. But where it sets itself apart is by introducing "stealth addresses," a crypto-cloaking process that prevents even the person sending a payment from seeing where it goes on the blockchain, leading to what looks like a dead end. (I played around with the beta product and can say that it has a ways to go in usability before politicians will start railing against it.)
Bitcoin's immense popularity only pleases Held. He is not especially sympathetic to the early adopters who feel like their beloved currency has been co-opted by venture capitalists hoping to profit from it and government actors who want to prevent its being used for black markets.
"For the first time in history, you can have full control of your own money," says Held, referring to the ability in Bitcoin to store value digitally on your own computer and to send it through the network without an official intermediary, like a Paypal, Western Union or an American Express. "If you really believe in Bitcoin, you want to share it."
Value of Bitcoin as of this post’s writing: 1 BTC = $440 USD.
THE FULL SERIES
Day 1: Living On Bitcoin A Year Later: Will It Be Easier?
Day 2: Living On Bitcoin A Year Later: The Cryptocurrency’s Youngest Miner?
Day 3: Living On Bitcoin A Year Later: Eating Like A Crypto-King
Day 4: Living On Bitcoin A Year Later: Where Ross Ulbricht Went To Trade Bitcoins
Day 5: Living On Bitcoin A Year Later: Dropping Digital Dollars At A Strip Club
Day 6: Living On Bitcoin A Year Later: Touring Wine Country With Virtual Money
Day 7: Living On Bitcoin A Year Later: The All-Bitcoin Start-Up With No Bank Account
