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Bitcoin, Idealism, and Frugality

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Avatar for michellhilton
Written by   7
1 year ago

I guess I haven't talked much about my Bitcoin adventures. Nor idealism coming before common sense with finances.

Maybe one of you out there is young and idealistic. Your views around money follow suit. You don't really care about losing money, you just care about doing the right thing. Is that so bad?

Maybe it isn't the best idea. I hope I can talk some sense into you.

First experience with Bitcoin

I don't have the most consistent recollection of my journey with Bitcoin. But most likely, I heard about it at the second Slashdot posting.

I fired up one machine and mined three blocks in a week. It might have been on a laptop. I might have mined two blocks on another but lost it.

So for those of you doing the math at home, yes, 150BTC. That's well over a million dollars right now. To give you an idea of how early I got into Bitcoin, Bitcoin Faucets were giving you 10 BTC for free. They later dropped it to 5 BTC.

That 150BTC, do I have it still? No. No, I don't.

Getting back into Bitcoin

It was probably early 2011 and one of my coworkers told me that Bitcoin had hit $30! $30!!! I was ecstatic and got back into it. I eventually found someone selling a 2002 Suzuki SV-650S on for Bitcoin. He was up in Austin.

I was 19 back then. I had some experience with Austrian Economics and was convinced that fiat currencies would end. I thought Bitcoin would be the currency of the future. There were "sensationalist" claims that Bitcoin might one day hit $10,000. I knew these claims were probably right. I knew what I was holding on to. I also knew that I wanted to be a part of Bitcoin and helping get it off the ground. To me, I didn't care about Bitcoin trading simply as a speculation currency. I wanted to see it buying goods out in the real world.

A coworker of mine taught me how to ride a motorcycle and we drove up to Austin to buy the bike. Bitcoin had dropped to $9. I had to pay cash, check, and 150 Bitcoin. I had to convince the seller that I had a real job and my check wouldn't bounce. All of that totalled up to $2,200. But to my knowledge, I had bought the first motorcycle for Bitcoin. The guy selling it was really cool, too.

More losses

Some time after I turned 20 I had a mini retirement. Bitcoin was still around $9. I was fascinated with the idea of microlending and so I tried lending my Bitcoin out on some site. The returns were insane, like 10-20% in a couple weeks. But the default rate was probably 30%. It took me a while to realize that my money would inevitably return to 0. The scammers were quite impressive, including an Israel Concha of Corpus Christi, Texas who still owes me 50BTC.

If you're ever going to scam someone though, don't do it denominated in a speculative investment because $500 of fraud can become $500,000 over several years.

Bitcoin mining on an ASIC

I don't remember the timelines exactly, but I quit my retirement and got back to work. I was at Rackspace a second time. We had one customer who was spending about $15k a month mining Primecoin on 256MB servers. Our 256MB servers were amazing because they had access to 4 cores. If they weren't used, you got access to all of them. A bunch of us caught on to this and mined on our own employee discount accounts. They gave us $100 a month to play with (even for personal purposes) and another $500 a month if we got an OpenStack patch merged in. My Primecoin mining ended up going really well. I also got into Ripple very early on where they were handing it out. I knew it was some kind of scam back then, so I got my coins and held onto them.

Couple years later, I sold my free Ripple for a few thousand. Not a bad return on investment.

A coworker was selling his batch 2 Avalon ASIC. I think this thing was mining at something like 83GH/sec when overclocked. I had saved up 100BTC and paid this guy a bunch of my silver and the Bitcoin. All of the projections would be that I would pay it off. But he knew exactly when to sell. I clearly did not know when to buy.

I mined back 80BTC. Eventually had it colocated and after 80BTC it was no longer profitable to run. It only took a few months for that to happen.

Move to California

I somehow made it back up to 95BTC, I don't remember the details. Most likely I would have held onto it at that point. But, things changed for me. At work I was very unfairly turned down for a promotion. I also was still heartbroken over an ex at the time and she was still in the area and kind of a close friend who I could never get over. Shortly after being turned down for the promotion I was offered a job at a startup in San Francisco and decided to move out in September 2014. I always loathed the idea of moving to California, but the company and work seemed interesting.

I divided my funds into two wallets. I think one was a "savings" of 80BTC, and then a moving fund of 15BTC. Bitcoin was often hovering around $400 back then. I ended up burning through almost all of those funds for expenses and to help with moving (both to San Francisco, to Palo Alto, and then possibly moving away). The cost of living in California was absurdly high and my motorcycle purchases weren't the smartest. At one point, I did sell a motorcycle for 1BTC ($400~ at the time).

Bitcoin was going through the Big Block movement at the time. Core was strangling Bitcoin, refusing to raise the block size. Transaction fees were growing and the market wanted to make more transactions than could go through. No way it could beat out fiat with 2 transactions per second at most.

There were movements to signal for Big Blocks, including a mining service that would reinvest its earnings into buying hashing power to try and turn things over. I donated most of the Bitcoin I had (a few thousand dollars worth at the time) to that, hoping Bitcoin could keep going. In the end, the money was a waste and it would have probably been $40k or $50k these days. The "fix" was Bitcoin Cash and later Bitcoin SV forking off, which didn't come for a while later.

Move back to Texas

I finally left California and headed back to Texas. From this point on, my cryptocurrency story is the same. I don't have much. I did make a good prediction on Bitcoin Cash when TX fees were getting insane with Bitcoin. Probably one of my few. But nonetheless, very easily I could be holding on to well over a million dollars in crypto if I played my cards slightly differently. If I hadn't been turned down for that job (by a former teammember who was extremely lazy but promoted to that team), and/or been trying to get away from my ex, I could be retired right now.

I've looked over and over through old files trying to find some old wallet lying around. Some login on a website where I might have stashed 20BTC back when it was worth pennies or dollars. But no luck at all. And the thing is, I knew it was going to take off. I knew it was going to do well. I wanted to be a part of it. I looked for places to spend Bitcoin in the real world. Food trucks in Austin, a small venue at the Ferry Building in San Francisco. I took three coworkers out for icecream to a place with a "Bitcoin Accepted" sign and found out they didn't actually take Bitcoin. I've paid at a cafe in Fort Collins. I went to the first Texas Bitcoin Conference. I probably paid 0.2BTC for a 3D printed Portal Cube. I've lost plenty of Bitcoin to software bugs I had to fix, trying to improve payment handling.

And now, I'm back home with my parents. SporeStack isn't making a lot. I can't provide for anyone else, barely myself. I've gone over the things I've had and looked for the valuable things that aren't worth as much to me. At least I'm not in debt. My net worth is maybe $20k. I don't know what SporeStack is worth, though. I'm interviewing and trying to get back into corporate work. Eventually buy my way to freedom where I can live off my own land.

Obviously, it isn't always easy knowing I had well over a million dollars in hand if a few things had been different. That screenshot from Breadwallet is probably the worst reminder. All those transactions that were so little at one point turned out to be huge now. Heck, I bought a bed for Bitcoin when I moved to San Francisco. It was a single sized mattress but somehow added up to be way more than I should have spent. I was never in debt but I was stupid with money.

Where did I go wrong?

I'm glad that I got to be a part of Bitcoin in some notable way. But it really does seem delegated to speculation and online purchases. I'd love to see fiat toppled over with cryptocurrency and gold/silver taking its place. Yet it may not happen.

At some points, I was very frugal. Up till I was 20 or so, I saved most of what I earned. Then I spent more and more. Then I started to get frugal after leaving California. I actually liked the lifestyle. The guy who hired me on for Vagabond Workstation discouraged me from being frugal, though. He influenced me slowly over time that I should think at a grander scale. That I could be making millions. And maybe I could. Maybe some day I will.

But it was absolutely the wrong focus. For him, making money was easy. He was good at it. And he certainly earned his money. For me, I'm good at writing software and putting ideas together. Not necessarily at making money.

When I moved back to Texas I was paying $400 a month to a friend renting a room in his house. I wrote a "days to live" script that would help me track finances and tell me how many days I had left to go. I would do odd jobs. I painted, I worked on motorcycles, I wrote Fifty-Two, and I tried Postmates. Months before I was making 6 figures in California. But I was so much happier living a simpler life. Having way less. My expenses were so low that I could be quite free. I get that being frugal in a job you hate isn't any fun. But if you're doing something sort of interesting, it isn't so bad. My work on Vagabond Workstation came after that, but that point in my mind just sticks out for what it actually felt to be frugal.

Worthwhile investments

My boss wanted me to get a very nice XPS laptop for work. He paid for it. $2,600. I never pay that much for hardware, not even close. It was a piece of junk that ended up needing most of its parts replaced. The Dell service was extra to go on top of that as it needed more work after the factory warranty was over. And the laptop was so thin and tiny I didn't want to attempt it myself. And yeah, it was fast, the screen was nice. But the price wasn't justified at all.

A few years later I finally got around to selling it. Got me what, $600? Lost $2,000 in a few years. It was well taken care of. It had all the bugs worked out. And considering the extra service contract I had to get, might have lost closer to $2,300 or more. Not a smart investment at all.

It's kind of like buying a new car off the lot. Almost never a good idea. Not that all of my used vehicle purchases have been smart, though.

Earning money takes time and saving money takes time. In my experience, saving money is more interesting and takes less time. Saving money gives you things to do. Like buying a $50 laptop and fixing it with $50 worth of parts. Then in a few years I could maybe sell it for $75 if I had to. I recently replaced a camera setup that cost me about $1,000 back when I bought it and sold for $300~, with one I bought for $20. Now the $20 one wasn't that great, I did eventually replace it with a $60 one that's unlikely to lose much more value. Saving money also works when the market is down and when it's up.

Cell phones could be some of the worst. Some people pay a thousand dollars for something that is obscenely delicate and loses value rapidly. I'm now using a $35 (new) Nokia 105 dumb phone. I actually prefer it that way.

I find some work to be meaningful, other work not. But most of the end game seems to be more about increasing consumption and filling that demand. What if you lived with less? You can pay $100,000 for a cabin and land that can grow food on for the rest of your life. Or $300,000 for a comfy house without even a real fireplace, a tiny yard, and a draconian HOA for another $100 a month.

The joke of my life is that my skills have little to do with reality. What I should have done, before pursuing ideals, before pursuing businesses, is invest in getting myself set as soon as possible. I should have saved up and bought land I could live off of. I should have been saving for things that would let me spend less, not more.

Much of the time I am grateful that things did not work out for me how they could have. What would a million dollars bring me? What would ten million? Making 6 figures or near it as a single guy, you can do basically anything you want. I could eat expensive food at the Pearl. Buy most of what I wanted. Money wasn't really a concern. When I was 18 I started off making $50k a year. While that sounds amazing, it might have been better for me to start making a lot less and learn how to live if money isn't there.

I just hate the gimmicky items in life. The fragile cell phones that only work if they have a connection, the overpriced cameras, the shiny laptops, the "audiofile" $4,000+ speaker systems that you can't tell apart from $200 gear.

Even if you're making good money, what you should think about isn't saving but what you'd rather spend it on. Saving isn't fun, it's flat out boring. But if the idea of saving is buying the piece of land you've always wanted by not buying the things you sort of want, it's a lot easier. Especially if that land gets you away from snobby neighbors and office politics for the rest of your life.

Finally, this is what I have realized. That I should work some corporate job, whether or not I hate it. I should work it for long enough to buy land and enough equipment to be self sustaining. That I should work to the point where my land and my labor provides for my life. That if I want more than food and shelter, then I get a job. But not before.

True wealth is fertile soil, water, and sunshine. I hate to say it, but that's even more important than gold and silver. Which do feel lovely, but give you nothing. True wealth is family, friendship, freedom, and time.

I don't want to chase pipe dreams of ease and comfort. The more ease and comfort, the harder it is to escape the system. The 2 hour Amazon deliveries, Instacart, Uber, Lyft, etc. Just give you more excuses to stay a slave to a society that may one day kick you out or not be there at all.

I'm grateful for these frugal times in my life. I've also learned a lot from what I've read in Basic Economics. It just phrases what money is in a way that I actually understand. How markets work, etc. Understanding that helps me make good decisions. Without that, I'm just kind of stupid about it.

Ideals don't matter much if your own existence isn't taken care of. I'm not saying to compromise them excessively until then, but to start with the basics. Get to a point where you're free, then branch out. Don't be a workerslave. The most ideal thing you can do is be responsible for your own life and future.

And if you happen to have 100 Bitcoin 2.0, wait till it's worth something and buy something that will actually set you free, like good land. Don't spend it on the urban lifestyle. Laziness will never make you happy. It's just complacence.

Thanks for reading.

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Avatar for michellhilton
Written by   7
1 year ago
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He Michael, I have added your article to the 'Frugal' community. If you like, I also invited you as a moderator there. Feel free to submit 'Frugality' related posts in that community. Thank you!

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1 year ago

long article.. quite a reflection
'audiophile' : )

see my article if you'd be interested

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1 year ago