Hear this person tell about his three years of living on Bitcoin

Olaf Carlson-Wee has been making a living in digital currencies since February 2013, when he became the first employee hired by bitcoin startup Coinbase.

The 26-year-old was paid in Bitcoin when he first started working for Coinbase. At the time, the price of each Bitcoin was about $20 to $30 (currently, the price of one Bitcoin is about $450 at press time). He said: "There are many people in the world who have never heard of Bitcoin, let alone understand it, so this provides a good opportunity for me to hoard Bitcoin and speculate on the price." Olaf said that he also tried to introduce what Bitcoin is to his friends or relatives around him, but it was difficult.

Olaf wrote his undergraduate thesis on Bitcoin.

Later, Olaf tried to negotiate with the company to set a fixed amount of Bitcoin as his salary, but the company did not agree. So he could only receive salary denominated in US dollars and then convert it into Bitcoin when settling the salary.

Olaf said:

"Why should I accept Bitcoin as my salary? Because it will change my mentality, I will gradually default to Bitcoin as the currency. As for US dollars, I will only exchange some when I need them. I use Bitcoin to pay rent, shop in stores that accept Bitcoin, and save in Bitcoin."

Olaf chose Bitcoin as the primary form of currency, explaining:

In my eyes, Bitcoin is a more democratic way to transfer monetary value because no one person can control it…. I feel like the internet will outlive any nation-state, so a short-lived nation-state-issued currency is less reliable than an internet currency.

Of course, Olaf admits that the journey was not as easy as it sounds, and it took him a lot of trouble. Here he tells us how he lived on Bitcoin for three years.

How do you pay for it?

My roommate pays my rent, and I pay him back in Bitcoin. My friends pay for my meals at restaurants, and I pay them in Bitcoin. However, Coinbase recently launched the Shift Bitcoin debit card, which allows you to use Bitcoin at any merchant that accepts credit cards, and the fees are actually charged to the user's Coinbase account. Merchants can't see us using Bitcoin. The Shift debit card converts your Bitcoin into US dollars and pays the merchant.

Their source is the Bitcoin supplier. At this time, the benefits of Bitcoin transactions are obvious. In fact, there are many geeks like me who live only on Bitcoin. As time goes by, more people will join in. This is a pure ecosystem. I accept Bitcoin as my salary, I use Bitcoin to pay for goods or services, and merchants need Bitcoin suppliers. The benefits of using Bitcoin transactions will become more and more obvious.

There are more and more merchants accepting Bitcoin. One big merchant is Overstock. This means I can buy a light bulb with Bitcoin. I'm a geek myself, so I buy a lot of high-end electronics, like VPNs [virtual private networks] or servers. These merchants are early adopters of Bitcoin because there is an overlap between their consumer base and the Bitcoin user base.

It's easy to buy things online with Bitcoin, but the hardest thing to buy is daily necessities like food and gas. So I have to convert part of my salary from Bitcoin to US dollars. But now I can use the Shift card, so I can sell less Bitcoin.

Why do you want Bitcoin as your salary so much?

At the end of 2012 and the beginning of 2013, I already felt that Bitcoin would rise sharply, but many people had not heard of it at that time, which was a good time to enter the market.

Now, you ask me why? Two reasons. One is speculation! I think Bitcoin technology will become more and more powerful, so the price of Bitcoin will rise, and of course I want to increase my purchasing power. But I won't sell my Bitcoins. I will keep them. I believe that one day I will live entirely on Bitcoin. There is a "default" behavior in the Bitcoin community, that is, when you think about selling your Bitcoins one day, but you won't do it at that time.

The second reason is ideology. I think Bitcoin gives me more control over my property. After the 2008 financial crisis in the United States and other countries, I think people have realized that the security of banks and legal currencies is not as good as they think, or that the money in bank accounts is fictitious and not real. For me, Bitcoin is more real. I know how to control it, its inflation rate, and how it is created.

When you want to pay your friends and roommates back for meals and room payments with Bitcoin, do they want it?

I have convinced all my friends to accept Bitcoin, but it was not an easy process. In 2011, 2012 and 2013, I convinced many people around me to accept Bitcoin. Now, they should have made a lot of profits from the price increase. I also made many people understand this technology, and they are optimistic about Bitcoin technology, so they believe it is a solid investment.

When I wrote my graduate thesis on Bitcoin, the price of one Bitcoin was $2, and so far, the only bad times to enter the market have been late 2013 and early 2014.

So during this time, a friend said to you, "I'll lend you $50, and now Bitcoin is only $20?

Yes! There may be a time when the bitcoins they have are only worth half of what they originally lent me, but there are also times when they are worth twice as much as they lent me the money.

Do you have a credit card, checking, or savings account?

some.

Do you have student loans?

some.

So you have a credit basis, and the banking system can still track your existence.

Yes, they know I exist, but it's not something I think about too much, to be honest.

You have three ways to pay Bitcoin: pay the merchant directly with Bitcoin; convert it to US dollars before paying; pay Bitcoin to your friends first and then ask them to pay for you. What is the proportion of each of the above three methods in your payment methods?

Because my rent is paid by my friends, 50%-60% of my payments to individuals are in Bitcoin. 20% is paid to merchants in Bitcoin, and 20% is converted to US dollars.

If you needed money for a vacation in the future, would you save in USD or in Bitcoin?

I try to save up a certain amount of Bitcoin. When I want to buy a plane ticket, I use Cheapair.com, which accepts Bitcoin, or I can use the Shift card.

On that day, it all depends on luck. If the price goes up, I can have a good vacation, otherwise, it will be bad.

How would you buy real estate?

I would buy it in USD. Although there are real estate services that use Bitcoin, it seems to only be 0.01% of the market size, so using it would limit my options.

Do you have a 401(k) or other retirement savings account? If so, would you invest your money in a Bitcoin financial investment vehicle like the GBTC?

I wouldn't. But if I had a tax-advantaged account, I would invest in regular mutual funds. At this point, of course, safety is the most important thing. Mutual funds are more stable.

Bank and investment accounts have designated beneficiaries. So how can you ensure your Bitcoin will stay with your loved ones?

To be honest, I haven’t thought this through yet. I could create a multi-signature wallet and write down instructions on how to unlock it in my will. But then I’d need a safe to store my will. [For more information on multi-signature, check out this guide.]

What is the tax situation for Bitcoin?

The tax situation can be complicated. Every time I spend Bitcoin it is a taxable event, just like when I buy and sell an asset. Bitcoin as an investment has short-term or long-term capital gains or losses.

I give my accountant the Coinbase report of my income. If they don't know what Bitcoin is, they'll say, 'You're a high-frequency trader. Because every trade has a capital gain or loss, it's like I'm trading the stock market every day.'

What do you do when you think Bitcoin is going to crash?

I have experienced this too many times. Every once in a while, someone will say that Bitcoin is going to burst, but in fact, each report is inaccurate.

For me, the most vivid memory was in 2011, when I was obsessed with Bitcoin and decided to write my thesis on Bitcoin. When I decided to write it, Wired published an article titled "The Rise and Fall of Bitcoin". I remember my professor said to me, 'Since Bitcoin is going to die, what are you going to write about? ' I replied, "Listen, I know Wired said Bitcoin is going to die, and I also know that the price of Bitcoin fell from $31 to $2, which is indeed the worst drop I have ever experienced, but I believe it will not die."

But thinking back on it now, I did have some doubts at that moment. Was it still meaningful for me to spend time and energy writing a research paper on Bitcoin?

What would make you voluntarily sell your Bitcoin?

The scariest thing for me is quantum computing, which allows people to abuse the core protocol.

But even so, I still won't sell my Bitcoin. Because Bitcoin is a software. It can be upgraded. If quantum computing makes a breakthrough one day, I will remind the Bitcoin community, miners, developers and users, to patch it quickly.

Has your Bitcoin wealth changed over time?

It has changed a lot! You can take a look at the price of Bitcoin from 2011 to the current price.

If you accept Bitcoin as salary, you have to accept the fact that the price goes up and down, like a roller coaster. I am still young, so I am not worried about long-term savings. I am willing to take a risk for what I believe in. Of course, I don’t recommend you to imitate me. If I had children and a mortgage to pay, I might not do this.

Have you noticed any changes in living on Bitcoin over time?

I think more people know about Bitcoin. I remember when I was in the early days of Coinbase, I said to people, "Hey, if you buy me a pizza, I'll give you Bitcoin," and most people were like, "Are you kidding me? What is Bitcoin?" Now, if I say that, they'll say I haven't opened a Coinbase account yet, but at least they know what I'm talking about.

Original article: http://www.forbes.com/sites/laurashin/2016/01/07/this-man-has-been-living-on-bitcoin-for-3-years/
By Laura Shin
Translator: printemps
Editor: printemps
Source (translation): Babbitt Information (http://www.8btc.com/this-man)