Tuesday, 26 November 2013

Bitcoin and The Wild West: Interview with Austin Craig from Life On Bitcoin


THE BEGINNING

"Hi, we're Beccy and Austin! We're working on a documentary about bitcoin; have you heard of it? No? Bitcoin is the first decentralized digital currency. Just as email overtook paper mail, and Wikipedia has overtaken the paper encyclopedia, bitcoin is poised to overtake paper money. It's like cash for the digital age. For you as a merchant, it offers a lot of benefits. You'll never have to deal with charge backs, cancelled transactions, identity fraud, or even network downtime. With bitcoin, you can have total confidence in your payments, and stand the likelihood of your money growing over time, without any additional work on your part. Bitcoin will bring you new customers from the community, and show what a forward-thinking company you run. We'd love to show you how it all works. Do you have a smartphone with you?"

There must be hundreds of merchants across several continents who have heard that same bitcoin elevator pitch; the introductory spiel to the dozens of retailers, stallholders and service providers that newlyweds Austin and Beccy Craig used when trying to convince them to accept bitcoin.

It is now more than one hundred days since the couple embarked on an ambitious experiment to live their first months of married life only on bitcoin and it has taken them from their home town in Utah, USA across the States and into Europe, and Asia.


It is a journey that has seen them attend bitcoin meetups and conferences, appear in international media and even be interviewed on The Keiser Report. Some might say they have become the poster guys for bitcoin.

For those that wonder if they really did manage to purchase their every need using digital currency, the answer is emphatically, “yes.”
“We were committed personally and publically,” says Austin. “We were surprised how many of our friends and family thought we wouldn't be able to do it, that we'd break down somewhere and have to use dollars. That never happened. It was 100 per cent bitcoin, all the way through.”

They even succeeded in persuading their landlord to take bitcoin for their rent, albeit with him knowing he had do so or evict them, and eventually they found an insurance provider in Indiana who would give them cover.

It’s quite an achievement given the immaturity of the bitcoin ecosystem. With bitcoin’s volatility often regarded as a barrier to mainstream adoption, it is only the early adopters who have climbed on board and are mostly saving their virtual coins until that moment the market levels out and they can either start transacting with bitcoin or perhaps cash out a (hopefully) lucrative investment.

As such, the number of merchants accepting bitcoin, although in its thousands and rising, is relatively low. Despite an abundance of technology and digital companies taking the currency, it is harder to find a grocery store or petrol station. Living day to day on bitcoin was always going to be tough and at times, that is exactly how Austin and Beccy experienced it.   

When we finally managed to interview them (they are quite in demand these days!) they told us they are currently trawling through more than 200 hours of video footage, filmed over the course of their experiment. The goal is to turn it all into a documentary and then hit the film festivals.

They know they have busy times ahead but at least now they can comfort themselves with the knowledge their nearest shop will accept the currency in their pocket and filling up the car will not involve a two-hour round trip.

“Honestly, it’s a relief,” admits Austin. “Using bitcoin for our necessities was never impossible, but it was frequently difficult. Even simple transactions became more complicated. It's not that bitcoin itself is complicated, but the ecosystem isn't very developed.”

“Education,” he says was the most time-consuming aspect, and that is why they have their bitcoin explainer spiel down pat and how in their own way, they have helped grow the bitcoin ecosphere a little more by spreading the word and getting more vendors to accept bitcoin and helping them set up a wallet.


THE UPS AND DOWNS

Their bitcoin journey has had its ups and downs, both literally and metaphorically. The 100-day challenge saw bitcoin perform its notorious leaps and dives, plunging in value after the Silk Road bust. “It immediately dropped a lot, maybe 30 per cent,” Austin agrees. “But we didn't panic. We knew that bitcoin's strength wasn't because of an online black market, and figured it would recover quickly. Thankfully, it did. Within just a couple days, it had jumped back up. Within a week, it had surpassed its previous value.”

In fact the volatility in price ended up working in their favour. When they set out in August, the bitcoin price was hovering just above $100, yet just days after they finished, bitcoin rallied to over $300 and we are still watching that price climb now.

A funny thing happened as the value rose. We kept spending bitcoin, but the dollar value of our wallet tended to stay the same. It was like a bottomless wallet.” 
- Austin Craig

They reckon they spent less overall than they would have done if paying in dollars, mainly because there were fewer places to spend bitcoin. However, when they did manage to persuade a vendor to take bitcoin, they often paid them a little extra than the asking price to reassure them and sweeten the deal as “most merchants were careful dealing with a new and volatile currency, and some asked a premium over their regular price,” Austin says.
We paid somebody in Chicago half a bitcoin for two train passes,” he explains. “At the time, we were overpaying them just a little, to put their fears to rest about this currency they'd never heard of. But now, that half bitcoin is worth $400.”

The Craig’s adventure has also ingratiated them to members of the bitcoin community across the globe and helped them to establish a network of bitcoiners, who they could call upon in different parts of the world, including in the dead of night after a long flight to Singapore when all buses and trains had stopped running. “We'd hoped to use a car service, who had agreed to work with us during the experiment in Singapore to arrange rides. But we needed a local phone, which we didn't have, and couldn't secure using bitcoin at the airport,” says Austin, adding, “We ended up using the help desk to call a local bitcoiner we'd been in contact with. We woke him up and asked if he could give us a ride. We felt bad, because it was the middle of the night, he has a wife and kids and a day job, and we didn't want to inconvenience him so, but we didn't have other options. He was extremely kind, came and gave us a ride to the hotel without so much as a single complaint.”

The stress of that night did not end there after they discovered the hotel had no free wifi.”We found out they didn't offer breakfast or room service, and that wifi was an additional charge. We also weren't able to charge it back to the travel agency like we had at previous hotels. It was a scary and disheartening night. Nothing was working the way we'd planned, and we were very very tired,” says Austin.

It is clear they are extremely grateful for the support of the bitcoin community. “We literally couldn't have done this without the community. They not only helped us by crowdfunding the film, but they were helping all along the way, by pointing out services and merchants that we would have otherwise missed. They also kept us accountable,” Austin says.

Despite the occasional scary moment when they wondered where they would sleep, or how they would eat, they found they never starved and were able to purchase some items that genuinely took them by surprise.

“One of our favorite parts of the trip was when we met with a photographer and bitcoin enthusiast in Berlin,” says Austin. “Marcin Dzieniszewski of TinType Berlin does amazing tin-type portraits on glass plates. Think of US civil war era photography, and you'll know what I mean. 

“He messaged us on facebook and offered his photography services payable in bitcoin. It's something we never would have done otherwise, but was one of the most fun things we did in the whole three weeks, and now we'll have these wonderful portraits for years, maybe generations. Tintype photography will last centuries if kept properly.”


THE GLOBAL COMMUNITY

Meeting people such as Dzieniszewski and their friend in Singapore has given them a very positive impression of the bitcoin community with Austin stating it is “made up of people who really believe in bitcoin as a platform for global change.” He adds, “It can change not only their personal finances, but opens up a world of possibilities for new and better services and e-commerce. The people in the bitcoin community today are the ones that realize that we're only scratching the surface. And they're the ones with the itch to keep scratching.”

Their encounters within the community have also been diverse with Beccy finding a woman on a street stall willing to accept bitcoin for a henna tattoo and planning to buy traditional Polish slippers from a woman in Ottawa, in her 80s, who might be the oldest bitcoin merchant they have found.

From their small, hometown of Provo, in what they say is “conservative Utah,” to the more liberal Berlin neighbourhood of Kreuzberg, they have seen the way bitcoin is viewed and embraced around the world. Of Provo they say, “With a couple months talking to people about it, we have several businesses that gladly accept it now.

However there is still a long way to go before bitcoin can be considered mainstream. Austin agrees, saying, “The truth is, even the most bitcoin friendly communities are still very small. Kreuzberg in Berlin had more businesses accepting bitcoin than anywhere else we went, but not by that much. In every city we visited, the strength of the bitcoin community could be traced back to just a few people. It was the owner of one restaurant in Kreuzberg who had persuaded the other merchants to accept bitcoin. He single-handedly spread bitcoin to a couple dozen businesses in his area, just by talking about it. The same thing is happening in Singapore, New York, and everywhere else we've been.”



He mentions Alex, at KnC Miner, a bitcoin mining hardware firm, who are also sponsoring their film. With Alex’s help, they were able to persuade a restaurant to accept bitcoin and have their accommodation upgraded to a boutique hotel. “In 24 hours, we went from a cramped hotel room and nowhere to eat, to an excellent Swedish restaurant, and a 4 star boutique hotel. 

None of that would have happened without the enthusiasm that Alex encouraged,” notes Austin. It seems wherever in the world you go, bitcoin or not, a smile is sometimes the best sales pitch.

The global community also ensured they would not end up destitute and starving when they arrived in a new place. “We tried to coordinate with members of the bitcoin community in the places we'd be visiting. They helped us find places to stay and eat,” says Austin. Although, of course, once they stepped into “uncharted territory,” they were often greeted with raised eyebrows and questions.

They say Singapore, Kreuzberg and Stockholm are some of the most fascinating places they have visited. “Stockholm was beautiful, but had fewer merchants accepting bitcoin. We'd love to come back to these places to meet up with the bitcoin community, but also we'd like to be regular tourists. That was one drawback; it was hard to "see the sights" like we would have with Euros or dollars.”

However, they found the differences in attitude towards bitcoin were not so much between national or ethnic cultures, but between large companies and smaller companies. “The smaller companies, in the US, Europe, or Asia, were always easier to work with,” Austin says.

His point was proved when they struggled to buy a data plan for Austin’s cell phone and resulted in taking a two-hour return trip just to fill up their car in Salt Lake City.

He believes this is one area where there is a huge gap in the market. 

If any oil or cell phone executives are paying attention, I'm telling you now that there is a huge opportunity here to be a first mover in accepting bitcoin. You'll set yourself apart as tech-forward companies. You'll be light years ahead of the competition."
- Austin Craig 
THE FUTURE

 “I'm not sure any place is resisting bitcoin,” says Austin but he adds, “Probably the single greatest weakness is that, in order to really use bitcoin, you must have an Internet connection. That wasn't usually a problem in the US when we had our cell phones, but, a cell phone plan was one of the hardest things to secure using bitcoin. It was a real challenge once we left the US.”

They acknowledge that bitcoin is “still very new and it’ll be a while before it’s fully a household name and even longer till it’s widely understood.” Even in shops where they advertised that they accepted bitcoin, the couple often found they were the first to actually do a bitcoin transaction.

Retail services is another area, that Austin believes is ripe for growth. “There are huge opportunities for bitcoin entrepreneurs to build the services that we'll all be using, from e-commerce to point of sale devices to secure cloud solutions,” says Austin.  “It's like the Web was in 1995. All the basic technology is there, but it might be years before it's fully developed and the network is widely utilized and trusted. So far, though, the adoption of bitcoin has moved faster than I would have expected. Maybe it won't take so long.”

There have been other positive signs throughout their experiment. Apart from finding they were always just missing out on a bitcoin meetup or conference wherever they went, they were aware of “groups assembling all over the place.” Austin adds, “Everybody has their reasons for getting involved, and there are many. But the common trait we saw everywhere is that people believe in it's potential for positive change.”

"Bitcoin is just like the Wild West. People will build the infrastructure and services necessary to settle that land, and they'll make a fortune."
-Austin Craig

So, are Austin and Beccy convinced of bitcoin’s future? “I'm more convinced than ever that bitcoin, or rather crypto-currency in general, is here to stay,” says Austin. “It offers a faster, cheaper, more secure means of moving money.”

By way of example he refers to the recent blockchain transaction of $147 million. “It happened almost instantly, and cost them the equivalent of 37 cents. With any other system, that would have taken weeks and cost a fortune. Within a few years, eventually even the most conservative business owner will realize the benefits, and start using bitcoin. But to get there, a lot of work needs to be done.”

The couple themselves benefitted from the low transaction costs and ease of use, and see this as one of the big selling points going forward. “We never once had to think about exchanging currency in the various countries we went to. It didn't even cross our mind till we were done. We didn't pay any foreign transaction fees as you would with a credit card. We never had to rely on an ATM, or the associated fees there. We weren't carrying around large wads of local cash, so there wasn't the concern of being pick-pocketed, as can so easily happen to foreign tourists in large cities. Any of the normal concerns about money while traveling were just gone,” says Austin.

He also believes that the closure of the Silk Road is another positive for bitcoin. “The funny thing is, the bust of Silk Road probably sent the price of bitcoin higher than it ever would have before, because with the black market gone, bitcoin was more legitimized, and all the talk increased bitcoin's public profile.”

So what about their future, and is bitcoin going to play a bigger part of it? “Before starting this experiment, neither of us had ever used bitcoin. We'd only read about it. We thought bitcoin was an extremely promising technology, but wanted to find out where it is today. How usable is it right now

“We still use bitcoin when it makes sense, but it's nice to not have to use it when we're filling up with gas.”

For now, they are concentrating on their documentary and looking at doing follow-up interviews, creating graphics, writing an original music score and translating it into several languages. 

And having put bitcoin through its paces and gained an insight into the global community very few others have, they believe the way is open for the trailblazers. Austin says, “In the US, the West was settled by tough pioneers, heading out into a place of high opportunity and high risk. There is free land out there, if you can survive. Bitcoin is just like the Wild West. People will build the infrastructure and services necessary to settle that land, and they'll make a fortune... if they survive."


By Louise @ Bitscan

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