Living On Bitcoin A Year Later: Where Ross Ulbricht Went To Trade Bitcoins

May 9 2014, 4:12pm CDT | by

Day 4

The Bitcoin community is a techno-tribe, especially its core: those who adopted the cryptocurrency in the period from 2008 to 2011, before its value surged into three figures and then four, and lots of people rushed in, their eyes lit by money signs. The early adopters were a small group of people who loved a very weird thing; oftentimes under those circumstances, everybody knows everybody else. That is especially true for Bitcoin lovers who live in the same city. So it should have been no surprise to me that when I set out to find members of the early Bitcoin tribe in San Francisco at a cryptocurrency trading Meet-up, they would tell me that Ross Ulbricht — the alleged head of the Silk Road who was arrested at a library in the city this fall — used to come to their gatherings, offering to sell lots of Bitcoin at a cheap discount.

But I’m jumping ahead. I start my fourth day of ‘Living on Bitcoin Redux’ with plans to work from home. I skip breakfast and order lunch with my Bitcoin Foodler bucks; the Indian restaurant has no idea that I paid for my lassi and curry with Bitcoin because Foodler has acted as an intermediary, taking my Bitcoin and paying the restaurant in normal dollars.

I need to get my mom a gift for Mother’s Day, so I head to Overstock.com which started taking Bitcoin earlier this year. I pick out some plum-colored sheets and head to check-out. Even though I’m paying in Bitcoin, Overstock still insists on collecting my email address and billing address. One of the advantages of using Bitcoin online should be not having to hand over the personal information that’s usually needed to make sure an online transaction isn’t fraudulent. It’s like paying cash online. But after the order goes through, and I shoot them some Bitcoin, I’m thankful I have them my real details, because I ordered the wrong size sheets, and I need to be able to sign in with a confirmed email address to correct the mistake. I get on an online chat and a woman named Diane tells me I just need to cancel the order and that the charge to my credit card will disappear in 3-5 days. But I paid in Bitcoin, I explain. She pauses for a very long time, and then tells me that Coinbase, the Bitcoin processing vendor they use, will send me a refund. “Your refund will be issued through Coinbase using the email address listed on your Overstock.com account,” she says. Good thing I used a real email address. I’m reimbursed within 20 minutes of realizing my mistake, and minutes after I cancel the order. I’m pleasantly surprised that I make out on the reimbursement; I get .0005 BTC over what I paid, or about 22 cents. Apparently, I benefited from a Bitcoin to dollar price fluctuation, though that makes me realize I could have also been reimbursed less if it fluctuated the other way.

Around 6:15 p.m. on the grey, rainy night, I order up a Lyft thanks to $40 worth of Bitcoin-paid Gyft mobile gift cards I’ve ordered for the service. A mother of two drives me to the Metreon, a movie theater with a food court attached. This is the meeting spot for a cryptocurrency trading Meet-up that’s been happening every Thursday night since the 4th of July of last year. This particular meet-up is called the “Buttonwood” group, named after the software program used by Bitcoin traders who meet up at Satoshi Square in New York. And that program’s name was inspired by the Buttonwood Agreement made by a bunch of New York stockbrokers in the late 1700s – struck under a buttonwood tree at 68 Wall Street — that gave birth to the New York Stock Exchange. It’s “the quickest, most private way to buy the internet’s most successful digital currency: in-person and face-to-face,” wrote Wired in a piece about Buttonwood last year.

The Meet-up page says they’ll be “between the Asian noodles restaurants and the movie theater. Just holler out “Buttonwood” if you need to find us.” It runs from 7 p.m. to 9 p.m., but by 7:05, I’m not seeing an obvious group. No Bitcoin logos are in sight. I see a guy wearing a baseball cap with an Apple logo, playing around on an iPad and looking kind of tech-geeky. I walk up and ask if he here’s for Buttonwood. My instincts were right: he’s a regular, having started buying and mining Bitcoin in 2011. We grab a high-top table in the mall food court and are eventually joined by four other guys, one quite late (and a little buzzed) wearing a Dainese leather motorcycle jacket and carrying a helmet. “I’m a zero-day miner,” he says. “I’ve melted houses.” Only two of the guys are very open to being identified, a newbie to Bitcoin named Ed, a Gary-Shteyngart-doppelganger interested in mathematics who wants to buy his first bit of the coin — and knows so little that he’s surprised when told there are places online where he can buy it — and a regular named Al, who is a part-time astrologist who decides when to buy Bitcoin based on the planets’ alignment. It sounds kooky but the planets told him to binge on Bitcoin early last year when it was valued at $13, so it seems to be working for him.

The veterans give Ed advice on buying Bitcoin at a decent rate and which exchanges can be trusted. Most of them use Coinbase to buy coins online because the other exchanges like BitStamp and BTC-E — based in Slovenia and “Bulgaria, supposedly,” respectively — sketch them out. But they also hate Coinbase for encouraging people to store their Bitcoins with the company. “That’s not what Bitcoin is supposed to be. You’re not supposed to have a Bitcoin bank. the point of Bitcoin is that you don’t trust another party with your funds,,” he says angered by the people new to Bitcoin who don’t understand that. These guys like to buy using Coinbase but they immediately transfer their Bitcoin away to wallets, like that of Blockchain.info, where users are the only ones with the keys to move value out of the wallet.

There used to be more people who came to these, they say, especially when Bitcoin was surging in the fall. “People tend to be more bullish when the price is high,” says one long-time Bitcoiner with a German-Swiss accent, who then laughs to signal he’s taken advantage of these types.

“And Ross Ulbricht was coming to these things and selling his Bitcoin really cheap,” they say.

“Whoa” is my immediate response, but it makes sense. Ulbricht, alleged to be Dread Pirate Roberts, the owner of Silk Road, the underground online drug marketplace that only took Bitcoin, lived in San Francisco last year, and was arrested here, at a library while signed into Silk Road.  He would have had a lot of Bitcoin, and would likely have wanted to get rid of them in a setting like this, private with no identifying details exchanged.

“He was a nice guy,” says one ruefully. “Now he’s a political prisoner.”

It was back when Bitcoin was selling for $100 – $120, they say. He would always offer to sell for the lowest prices. “We all wanted the Mt. Gox price, which was the highest. But he would do Bitstamp price, and offer a discount below that.”

There’s a rumor that he once showed up and said he had 1,000 coins to sell. Usually, people traded small amounts, 5 coins at most. On this night, the only trade happens when Ed buys .25 of a Bitcoin from Al for $114.

There is a member of the Meet-up group named Josh S — who is one of the few without a real photo. He just has a “Skifree Yeti” cartoon for his profile pic. Ulbricht’s roommates in San Francisco knew him as “Josh” and John Light, the founder of the group who attends irregularly now, tells me later by phone that he never actually remembers meeting anyone named Josh at the meet-ups.

“Even when Ulbricht came, he didn’t sell very much,” the Bitcoin traders tell me. “No one rolls in there with a suitcase of cash,” says John Light by telephone later. But it is a good place to meet people with the intention to buy and sell a bunch of bitcoin even if they don’t do it here.

A guy came once with a roll of 20 one-ounce gold coins that he wanted to sell for Bitcoin, they recall.

These are the Bitcoin originals, the quirky guys who nurtured Bitcoin when it was nothing and made it grow into the relative behemoth it is now. But they regret that a little. Bitcoin is the indie band that they knew and cherished for years, and now it’s being commercialized and sanitized and adopted by people for the wrong reasons. The polished entrepreneurs, venture capitalists, mainstream media, and lawyers who have adopted Bitcoin and made it their cause. People who want to see it regulated, who want to see the same kind of financial infrastructure built around it that exists around the dollar… and they hate that.

Earlier this year, I met the director of the Department of Treasury’s FinCen. She told me that all money exchangers need to be registered to operate, even people meeting at a local Starbucks and trading locally. So these guys.

“If it turns into an act of civil disobedience to trade Bitcoin at Buttonwood, I would question if that’s the type of world I want to live in,” says Light.

“Early Bitcoin were loners. There were no meet-ups,” says the Bitcoin trader with the accent with a tone of longing. “It was an empty space. If there was one blog post about it, it was exciting.”

The motorcycle-riding miner is watching the clock. “Is it 9 yet? I want to go back to my strip club.”

He invites me to come along. “I can only pay in Bitcoin,” I explain, begging off. He says they’ve been thinking about taking it, and invites me to come Friday night if they are. I call a Lyft and head home, uncertain about my plans for Friday.

Value of Bitcoin as of this post’s writing: 1 BTC = $446 USD.

Day 1: Living On Bitcoin A Year Later: Will It Be Easier?
Day 2: Living On Bitcoin A Year Later: The Cryptocurrency’s Youngest Miner?
Day 3: Living On Bitcoin A Year Later: Eating Like A Crypto-King
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