While the loftier dreams of science fiction are still irritatingly unrealized — we’ll all probably shuffle off our mortal coils without having ever known the benefits of jetpacks and hoverboards, alas — there’s at least one thing about our world circa 2013 that is brave and new, and that is Bitcoin. It’s gotten a lot of press over the past few months, migrating from the dark recesses of Reddit to the pages of the New York Times. Even the Government Accountability Office has taken note, issuing a report saying that income from Bitcoin transactions may be taxable. Bitcoin’s apologists claim it will change the way we think about money forever. Its critics claim it’s super-lame and will probably be worthless within a few years. Regardless of its future prospects, at least two congressmen, Justin Amash (R., Mich.) and Thomas Massie (R., Ky.), think it’s great. Also, you can use it to buy drugs on the Internet. And, as I recently learned, you can live a vaguely normal life using just Bitcoin (more on that in a second). What a world. But first, we should look at what the heck Bitcoin actually is.
What Bitcoin Is
Before explaining Bitcoin, a quick story. When I was a freshman in college, an astrophysicist visited my school to give a lecture on black holes. He used visual aids, slideshows, and fashionably self-deprecating geek humor to kill an hour telling me and a few hundred other liberal-arts-type undergrads all about the phenomenon. After the lecture wrapped, my friends and I looked around at one other, smiling in admiration and praising the interesting speech, until one girl broke in with a plaintive question:
#ad#“But what are they?”
That’s how I feel about Bitcoin. I don’t really know what it is. Justin Malkin (I’ll explain his role later) tells me that it’s not technically a currency but, rather, an Internet protocol. As what must be the sole member of the Millennial generation who didn’t learn to copy and paste until about age 13 or something, I, you should not be surprised to hear, have no idea what an “Internet protocol” is and almost certainly wouldn’t be able to explain it even if I did. So if you harbor any hopes about finding herein a clear and concise explanation of what Bitcoin, on an ontological level, actually “is,” you’re going to be pretty bummed out.
That said, here’s my “‘Bitcoin for Dummies’ for Dummies” version.
Bitcoin is an Internet-based currency that has never had any corresponding real-world guarantor of value. While dollars are created by printing presses, Bitcoins come into existence (or are “mined,” to use their users’ term) by a complex computer program written by an anonymous programmer. Users download the code, which is open-source (I don’t know what that means; google it, I guess) and available to anyone, and run it on their servers. It solves complex math problems and rewards users with Bitcoins. There will only ever be 21 million Bitcoins mined, so, theoretically (and that’s a “theoretically” for the record books), it’s inflation-proof. Bitcoin transactions are largely anonymous and (in my experience) a bit simpler than credit-card ones. From what I can tell, the main reason Bitcoin has any practical value is the existence of Silk Road, a website that lets users buy drugs and other illegal material online.
Quick Interpolation on Silk Road
The Silk Road website is a libertarian utopia of sorts. It’s the ultimate instantiation of free-market principles — a lawless, association-free Wild West that, despite the narc-ish efforts of Senator Chuck Schumer (D., N.Y.), lets users get whatever gives them their jollies without the pesky inconveniences of, say, finding a drug dealer, or having friends who can hook you up, or tracking down a grow light so you can do some at-home agriculture in your closet. I need to add here, for my parents’ sake, that I have never purchased anything from Silk Road, narcotics or otherwise. But my friend who has says that it’s a bit more expensive than traditional procurement methods. But hey, that’s the free market, and if you prefer to get your oxy in the mail and encased in discreet packaging instead of from a less-than-savory purveyor, the magic of capitalism has made that possible.
#page#To use Silk Road, you have to download an IP anonymizer (for instance, you can use the Tor browser, available here), and then you just go to the Silk Road website (this is the link I used to access it, but it changes regularly because of federal crackdowns) and set up an account. Users rate sellers, à la Amazon, so you reduce the chances of giving your street address to the DEA.
One of the most interesting aspects of Silk Road (as if there’s anything that’s not interesting about the Amazon of narcotics) is that there are some items you can’t buy there. For instance, you can’t get stolen passports, child pornography, credit-card numbers, etc. The theory, as I gather it, is that even anarcho-capitalists subscribe to moral law and that there’s an element of pride in the site’s ability to self-regulate, paltry though that self-regulation may be. (I mean, you can get meth there. METH.) It’s an oddly human impulse to claim moral high ground. In the sterilized, pixellated, intactile world of the Internet, it feels a little incongruous, but it’s kind of dear. Anyway, you pay for your drugs in Bitcoin.
#ad#A lot of Bitcoin aficionados will probably take issue with my next point here, but I’m pretty sure history will eventually be on my side. My theory is that Silk Road is Bitcoin’s gold standard. Bitcoin, from what I can tell, isn’t valuable because of idealistic Ron Paul supporters who feel it’s in their rational self-interest to invest in a monetary future unfettered by Washington; Bitcoin is valuable because you can use it to do something that you can’t use other forms of currency to do: buy drugs online. As long as Bitcoin is the best way to buy drugs online, and as long as there is a demand for Internet-acquired drugs, there will be a demand for Bitcoin.
That strikes me as the only practical guarantor of Bitcoin’s value, at least in the near term. Now, most Bitcoin transactions are perfectly legal and have nothing to do with websites named after Marco Polo–era transit routes. But I’m convinced (open to being persuaded otherwise, but still convinced) that Bitcoin’s most significant advantage over other currencies is inextricably linked to Silk Road or other Bitcoin-based black-market websites that I’m not aware of.
Back to Bitcoin
Anyway, my personal relationship with Bitcoin will probably seem pretty anticlimactic after all that, but here goes: Basically, the National Review powers that be decided that they wanted to know what it’s like to subsist solely on Bitcoin for a week, and that I was the person to tell them. So, without further ado, here is how I lived for seven consecutive days (a Tuesday through a Monday) without completing any monetary transactions using Federal Reserve notes.
The first step was actually getting my e-hands on some Bitcoin. I used Coinbase because it had a YouTube video explaining how it worked that was pretty. Coinbase is self-explanatory; you go to the website, give them all your bank information (that sounds ill advised, but my identity hasn’t been stolen yet, so I guess it’s safe to do), and then buy some Bitcoins. It takes about three days for the Bitcoins to show up in your account, and then you’re set.
The next step was finding ways to meet my basic human needs. I take the D.C. Metro to work every day, and you can’t pay your fare using Bitcoin (the Metro is the worst, I know), so I did the only thing a rational human being would do: meet a stranger on the Internet. I found a friend of a friend of a friend through Facebook — the aforementioned Justin Malkin — who met me at a Metro stop in Alexandria and bought me a Metro card using Federal Reserve notes. It took me way too long to pay him back for it because I couldn’t figure out how Coinbase worked, but I eventually got him the appropriate amount of Bitcoins by sending them to his receiving address.
#page#After rustling up a Metro card, I was able to launch into what will hereafter be referred to as “Bitcoin week” (a phrase I type with a shiver). Getting food wasn’t actually too bad, because there’s a website called Foodler that is basically like GrubHub or Seamless, except that you can pay for “FoodlerBucks” with Bitcoin and then order your food from there. Although it’s a little disconcerting to rely on a website called Foodler to keep your body and soul together, it worked out for me.
Another website I used was called, I kid you not, Pizza for Coins, and is pretty self-explanatory. And while the prospect of using Bitcoins to order Domino’s seems to confirm some unflattering preconceptions that many hold about the average Bitcoin user, the website appears to be fairly successful.
#ad#One problem was that I didn’t really find the prospect of ordering delivery for breakfast to be very practical, so I ended up just eating from the bottom half of a bag of Tostitos Hint of Lime tortilla chips for my morning meal about every day. (I didn’t have that much food left over from the previous week.) I also had some remnant gummy vitamins from my pre-Bitcoin life, so I supplemented with those. Journalism is very glamorous.
At one point during the week I had to get some things for my apartment at Target, which, incidentally, also doesn’t accept Bitcoin as a payment method. So I got an understanding friend from college to pay for my stuff, and I sent him Bitcoin reimbursement the next day.
The low point of my Bitcoin week was definitely the second-to-last day, a Monday, when it rained. I lose umbrellas like it’s my job. I’m almost to the point where I want to get one surgically attached to my forearm; also, if you ever find one in a D.C. cab, please let me know because there’s a good chance that it’s mine. Naturally, I lost my last umbrella right before Bitcoin week started. On Monday it rained, so I had to get soaked on the way to work because, though I probably could have found some kind soul on the Internet who would have mailed me an umbrella for Bitcoin, there was no way to get one in Columbia Heights at 8:30 a.m. This was not amusing.
Besides living on crappy delivery food and being powerless at the hands of the weather, the only serious inconvenience about living on Bitcoin was that no bars in D.C. take it. It’s theoretically possible that one or two do, but I looked really hard and couldn’t find them. I even called a bunch of the Capitol Hill alcohol purveyors — Bullfeathers, Tortilla Coast, Hawk ’n’ Dove, Capitol Lounge, Tune Inn, and 18th Amendment — and picked up on a consistent motif of bartenders’ not knowing what Bitcoin is. Their loss.
But thanks to the kindness of my friends, I didn’t have to teetotal for the entire week. One day I went to a libertarian happy hour in Clarendon, and as soon as people found out I wasn’t drinking because Whitlow’s on Wilson doesn’t accept cryptocurrency, I became highly familiar with the libertarian iteration of compassion. The main downside that night was that Whitlow’s is right by a Trader Joe’s, and there is nothing I can think of that’s more fun than having two to four drinks and then going to the grocery store. You find the best stuff in your pantry the next day. Sadly, Trader Joe’s doesn’t take Bitcoin either, so I had to miss out on that simple pleasure, and I was pretty down about it.
All in all, I would describe the Bitcoin Life as nasty and brutish (mostly because nobody should have to eat Tostitos for breakfast) but tolerable. I’m not hoping to get my salary in Bitcoin anytime soon, and I still don’t exactly know what it is, but until we get lightsabers and flux capacitors, Bitcoin will have to do.
— Betsy Woodruff is a William F. Buckley Fellow at the National Review Institute.