The hell year that is 2020 has wreaked havoc on life as we know it. But you know what it’s been good for? Bitcoin.
The cryptocurrency has been soaring, hitting a high of over $20,000 per coin this week. There is now more than $350 billion worth of Bitcoin in the world, an incredible appreciation for a virtual money that was worth basically nothing a decade ago.
It’s a great time to be a longtime owner of the currency, and a painful time to be a person who once spent 10.354 Bitcoin (including tip) on a dinner for strangers. Yes, that person is me.
Back in May 2013, I spent in one night what would be worth approximately $200,000 today on raw fish and shrimp tempura rolls for people I had just met. I was a reporter at Forbes magazine at the time covering technology and privacy. Bitcoin had come on my radar as a privacy-protective technology allowing people to make anonymous online purchases, kind of like paying cash in the real world. (Except it involves a huge public digital ledger that never goes away.)
The digital money was invented in 2009 by a mysterious math enthusiast who went by the pseudonym Satoshi Nakamoto. By 2013, the value of a single Bitcoin had climbed to over $100, thanks in part to its popularity on online black markets like the virtual drug bazaar Silk Road (which was obviously very illegal and was later shut down by the federal authorities).
Techies, entrepreneurs, investors and economists were starting to get excited about Bitcoin, so I decided to try to live on the currency for a week to find out how valuable it was in the real world.
I bought a bunch of Bitcoin for $136 dollars each on a site called Coinbase and tried to find ways to spend them. There weren’t many places that knew what Bitcoin was, much less accepted it for purchases, but because I lived in the tech mecca of San Francisco at the time, I did have a couple options, including a cupcake shop and a sushi restaurant called Sake Zone.
Still, the week living on Bitcoin was hard: I had to move out of my apartment into a hacker hotel that was still under construction. I lost five pounds, both because of the limited food options and because my only transportation options were walking or riding a bike that a friend rented to me for half a Bitcoin. And I was constantly caffeine deprived because I couldn’t find anywhere selling coffee for cryptocurrency.
On the last night of my experiment, a Monday, I decided to celebrate the week’s end by throwing a dinner at Sake Zone with my remaining crypto-stash. I extended an open invitation on Meetup and to a community of Bitcoin enthusiasts on Reddit.
I had called the restaurant’s owner, Yung Chen, beforehand to make sure it would be OK to do a group dinner and pay for it in Bitcoin. I had told him it would likely be 15 people or so.
But when I got to the tiny restaurant on Clement Street in the Richmond District, there were already two dozen people outside. Then more than 60. As I wrote at the time, it was “a wild cast of characters,” including “a Bitcoin speculator decked out in Google Glass,” economists, entrepreneurs making Bitcoin apps and games, and two founders of Burning Man.
A Forbes videographer named Taylor Soppe filmed it all, and I played anchor, looking exhausted.
At the end of the night, I paid the bill, which came to $957 (plus tip). I felt guilty at the time, making Yung Chen accept $1,000 worth of funny money because it was unclear to me whether Bitcoin should be worth anything at all.
My conclusion at the end of the experiment was that Bitcoin was an incredibly useful demonstration of how a secure, distributed, peer-to-peer ledger — the underlying technology of Bitcoin, called the blockchain — could work for keeping track of ownership online. You could use Bitcoin’s technology for car titles or housing deeds, transferring ownership of a car or house in seconds rather than the antiquated process of standing in lines forever at government agencies. But Bitcoin as a store of value? That seemed silly. I didn’t buy the arguments that Bitcoin was like gold.
Indeed, I wondered: Had I just cheated this restaurateur?
Fast forward to 2020. This month, with Bitcoin surging, I called Yung Chen to check in. He and his wife retired from the restaurant business a few years back, tired of the long hours, he said. They were able to thanks in part to their cryptocurrency earnings of about 41 Bitcoin in total.
In 2017, after they shut down Sake Zone and when Bitcoin was worth a few thousand dollars, Mr. Chen sold about a quarter of his Bitcoin. He now regrets that decision given how much the digital money has appreciated.
“I sold some. I feel so bad,” he said. “Now, I just keep it. I just put it there like stock and wait.”
“The Bitcoin has become one of the major saving assets in my portfolio,” he added. “It’s a lot. It’s close to like a half-million dollars in my account.”
Mr. Chen’s wife, 54, is fully retired, but Mr. Chen, 63, is still working, for the city of Oakland as a sidewalk inspector, a job he has had for almost two decades.
When I asked him why he had been an early believer in Bitcoin, he explained that he had experience in the tech sector. He emigrated from Hong Kong to California in 1984 to go to the University of California, Berkeley, and one of his early jobs was testing routers for telephone companies.
“I did a little bit of tech,” he said. “That’s why when they introduced Bitcoin to me, I thought ‘Why not? We can do that.’”
The people who introduced the Chens to Bitcoin were employees of the Internet Archive, a nonprofit based in a renovated church next door to Sake Zone.
The Internet Archive wants to archive, well, everything: The internet in general with the Wayback Machine, which hosts old versions of websites; books, much to the displeasure of the people who make money from them; old TV news; and on and on. The Archive had started accepting cryptocurrency donations years earlier, and had even started paying some employees partly in Bitcoin. Because many of them ate lunch at Sake Zone every day, they talked the Chens into accepting it.
“You need to know your neighbors,” Mr. Chen said. They tried to convince other merchants in the neighborhood, but didn’t get many other takers.
“At that time, the concept around Bitcoin was still fairly new. And most people don’t want to take a risk on that,” Mr. Chen said. But he had seen firsthand how quickly technology could change the world. He said he did “not really think of money. More like a new product that I would like to play around with.”
The Internet Archive helped the Chens set up a Bitcoin account and provided them with free Wi-Fi service so they could do the Bitcoin transactions.
“I tried to get the whole street going,” said Brewster Kahle, the director of the Internet Archive. He dreamed that Bitcoin would be the currency of the Web, and would help create a financial system that wasn’t controlled by governments and large corporations. He said that dream has died.
“It’s a speculator system now,” Mr. Kahle, 60, said. “It’s just gambling. It’s just like the stock market.”
I asked Mr. Chen about the night of the dinner and told him how guilty I felt at the time paying such a big bill with a money that most people didn’t know existed and that most people didn’t take seriously if they did.
“I didn’t worry about that,” he said. “Compared to our regular sales, it was a small amount.”
“At that time, Bitcoin wasn’t a big money,” he added. “Now it’s big money.”
Don’t I know it. Burp!