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Monday, July 10, 2017

Could You Live 90 Days on Bitcoin?

Like most newlyweds, Austin and Beccy Craig were excited about returning home to Utah after their honeymoon and beginning their new life together.

Utah is known primarily for its annual Sundance Film Festival, its abundant Mormon population, and an affinity for Jell-O salad that even its residents don’t fully understand. But what is less known about the Beehive State is that it is often on the cutting edge of technological breakthroughs, and cryptocurrency has been no exception.

The newlyweds were about to spend the next three months living solely on Bitcoin.

In fact, the University of Utah was one of the first colleges to join ARPANET—an early form of the internet created exclusively for the Department of Defense— and served as a node in the network. Additionally, the state was one of the first to acquire the much sought after Google Fiber and has attracted tech companies like Adobe, as well as being the home of, one of the first major companies to accept Bitcoin on all purchases.

And while Utah is technologically savvy, the entire state still has a very simple hometown vibe. Its culture is rooted in tradition and its residents have been living a certain way their whole lives without any particular interest in seeing that change. It is for these reasons that this state offers such a compelling backdrop for a documentary on cryptocurrency.

The Bitcoin Frontier

Like most newlyweds, Austin and Beccy Craig were excited about returning home to Utah after their honeymoon and beginning their new life together. But unlike most couples who find their lives calming down after the chaos of wedding planning is over, the Craigs were about to embark on an adventure no one had ever attempted before: Beccy and Austin were going to spend the next three months living solely on Bitcoin.

The Life on Bitcoin Kickstarter launched in 2013, four years after the elusive Satoshi Nakamoto had published his treatise on Bitcoin and then walked away from the entire project and dissolved into anonymity. The timing of the film is also important, as it came right after Bitcoin had rallied and crashed and critics proclaimed that the currency was dead. But as Austin points out in an exclusive interview with FEE, “A lot of people were saying Bitcoin is dead, but it was ten times more valuable than before the rally started.” He continues, “I learned enough to know that this was a revolutionary technology… it was essentially a pandora’s box. There was no way to close it up and pretend it didn’t exist. Bitcoin wasn’t going away.”

And how did Beccy feel about Austin’s desire to be involved in a documentary about cryptocurrency? As Austin says, “To my great amazement, when I asked Beccy about it she was onboard.”

The rules of the Life on Bitcoin documentary were relatively simple: Bitcoin would be the only medium of exchange permitted for all financial transactions made by the couple for 90 days. All cash, credit, and debit cards were to be confiscated and phones, internet, and any other accounts not currently set up to accept payment with Bitcoin would be shut off as well.

The Craigs have become modern pioneers in the world of cryptocurrency.Each transaction made would also be limited to include only the buyer(s) and the seller, without a middleman exchanging US dollars for Bitcoin. For this experiment to really work and prove Bitcoin’s value as a form of real world currency, it would need to be as practical as possible.

Using a third party to exchange Bitcoin for USD, and then giving the USD to the seller would be a mere currency exchange rather than an actual transaction of money in exchange for goods or services. So an intermediary was only permitted for transactions after all other avenues had been attempted.

Since Utah is a tightknit community where its members care for each other often without being asked, there were also rules placed on the ability of family and friends to help out the couple. Unless the family or friends in question had legitimate commercial businesses, they would not be allowed to assist the Craigs. The only two exemptions to these rules were payroll taxes withheld from the couple’s paychecks, and of course medical emergencies.

To keep the experiment both interesting and applicable to the real world of Bitcoin transactions, the experiment was set to grow as the Craigs achieved success. If the couple proved that they were able to master the art of using Bitcoin to pay for food, rent, internet, and all other bills in Utah, then the limits would be pushed to include interstate travel and then international travel.

Thanks to Austin and Beccy the small town of Provo, Utah has now become a Bitcoin haven. 

Crypto Pioneers

Both Beccy and Austin come from a heritage filled with religious pioneers who escaped tyranny and oppression from the Federal government by packing up their wagons and trekking from the East Coast all the way to the mountainous desert of the Salt Lake Valley on foot. It is extremely appropriate then, that the Craigs have become modern pioneers in their own right, venturing out into the uncharted territory of cryptocurrency and escaping the centralized banking institutions and their government partnerships that have brought us such financial catastrophes as the Great Depression, the Savings and Loan Crisis, and the Housing Crisis of 2008.

But Beccy and Austin were not the first to attempt such a venture. Prior to the Craigs, Bitcoin adventurer, Senior Online Editor for Forbes and self-proclaimed privacy pragmatist Kashmir Hill decided to conduct a smaller scale experiment, using only Bitcoin for one week in San Francisco.

Many might assume that San Francisco would be a more successful venue for this cryptocurrency experiment than Provo, Utah. But at the time Hill conducted her experiment, there were just not enough individuals using Bitcoin as a means of everyday currency and its value in USD was extremely volatile. As Dan Kaminsky, a network security researcher and Chief Scientist at Whiteops Security points out in Life on Bitcoin, “You want people exchanging currency as fast as possible. The faster they can spin that money around, the more wealth the overall society has.” But in the absence of a local Bitcoin community, living off the cryptocurrency for a week was nearly impossible.

In the film, Hill explains having to move out of her apartment after failing to convince her landlord to accept the cryptocurrency as payment. Hill also speaks of losing five pounds from not being able to pay for food with Bitcoin.

But while San Francisco is what Hill refers to as a “tech mecca,” the small town of Provo has surpassed the silicon valley in becoming its own cryptocurrency haven thanks to the Craigs.

After successfully convincing their landlord to accept rent in Bitcoin, the next priority for the Craigs was finding wifi. Since Bitcoin transactions rely heavily on wifi in order to transfer funds, having fast internet, as well as smartphones, was essential.

Once this need was met, the couple moved on to finding a gas station and a grocery store that would take their digital money. After several attempts, the couple was finally able to meet their needs as well as convincing several local restaurants into joining their experiment and taking Bitcoin as payment. In addition to getting a traditional grocery store on board, they were also able to convince several local farmer’s market vendors to accept Bitcoin, as well as community supported agriculture (CSA) projects.

Bitcoin continues to build its own reputation and relevance in the face of critics. 

The only financial obstacle the Craigs were not able to remedy with Bitcoin was the parking ticket they got while filming the documentary. The judge, however, allowed them to postpone paying the fine until the documentary was completed.

These local victories were somewhat short-lived however, as Beccy and Austin would now have to move on to the next challenger: cross-country travel and international travel.

While the Craigs succeeded in completing both a road trip across the country and traveling abroad, it would have been almost impossible for them to do so without the support of other early Bitcoin adopters who were also using the currency whenever and wherever possible.

Whenever the Craigs found themselves in a bind as they traveled outside the state and the country, there were always members of the Bitcoin community who were more than willing to assist the couple with whatever they needed.

Even as Austin and Beccy found themselves without transportation in Singapore, a local Bitcoiner was able to come to their rescue and help, reiterating the important role communities play in the adoption and expansion of cryptocurrencies. After their international trip was completed, the couple had spent a total of 101 days living solely on Bitcoin.

What Happens Next?

When the internet was starting to become a household commodity in the mid to late 1990s, critics scoffed and brushed off this revolutionary technology as a fad. Even economist Paul Krugman wrote an article saying:

“The growth of the Internet will slow drastically… By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”

It should shock no one, then, that Krugman has also been an avid critic of bitcoin, lambasting those who are encouraged by its advent, even writing an article entitled, “Bitcoin is Evil.”  But while economists and central planners sit in their ivory towers condemning the use of a currency that, if successful, would diminish the need for the existence of central authority, Bitcoin has continued to build its own reputation and relevance and the Craigs have been major contributors to this cause.

While the Craigs have no regrets, they do admit that as of now Bitcoin is “not ready for primetime.” But this doesn’t mean that Bitcoin should simply be ignored in its infancy. In fact, without early adopters, the cryptocurrency would never have made it this far.

Sure, we may be years away from going to Starbucks and exchanging Bitcoin for our morning coffee, but that doesn’t mean Bitcoin has no relevance in our current world, nor does it take away from the impacts Bitcoin is already making.

In underbanked regions of the world, where banks are a luxury not afforded to the most impoverished, individuals are finally able to participate in the global economy of which they have been excluded for too long. Likewise, those sending money across borders to family members are now able to do so in Bitcoin to avoid costly service fees and currency exchange rates.

Bitcoin and other cryptocurrencies are changing the way individuals conduct financial transactions with each other. Governments have slowly taken our most precious rights to privacy away from us. Our bank accounts serve as self-incriminating logs of all our habits and vices, but the blockchain and cryptocurrencies are taking back the power by allowing individuals to make exchanges without government interference.

As Jeffrey Tucker says, “There is a chance that Bitcoin will give new life to the old-fashioned idea of the brotherhood of man from which nobody is excluded,” he continues, “This isn’t about people buying cool things on the internet; this is about the whole of humanity coming together and the great project of building prosperity.”

Reflecting on the experience, Austin tells FEE, “Even though we didn’t know if this would be possible, if we would really be able to live on Bitcoin we knew that even trying to do that, even the attempt would give us enough material to talk to a lot of people about Bitcoin.”

Without crypto pioneers like Beccy and Austin, Bitcoin would have never obtained the level of success it already has. It takes individuals, and the communities those individuals make up to change hearts and minds.

And as Austin says, “This movie is a bit of a trojan horse. People come to this to see the adventure of a young newlywed couple living on internet ‘funny money.’ But our goal, and my belief is that once people watch the movie, once the credits start rolling, they will understand the potential of Bitcoin and the implication of this technology that will be touching everyone’s life in the very near future.”

  • Brittany is a writer for the Pacific Legal Foundation. She is a co-host of “The Way The World Works,” a Tuttle Twins podcast for families.