How much I overpaid by living off bitcoin for a week

Four years ago, I attempted to live off bitcoin for a week and failed. It was too hard to find businesses that would accept it as a form of payment.

Bitcoin was trading in the $2,500 range at the time in 2017. Later that year, it soared to a then-record high of nearly $20,000. In 2018, it lost 80% of its value.

With bitcoin soaring 2,220% since the days of $2,500 per coin — most recently surpassing $58,000 — I decided to put it to the test, again.

But before I embarked on my new adventure, I looked back at the things I was able to pay for in bitcoin in 2017, and how much that amount of bitcoin would be worth at last month’s record prices.

Ouch!

Back then, I found a bitcoin holder on a chat room who agreed to meet me at Penn Station and sell me a New York City MetroCard in exchange for bitcoin. I ended up paying him $20 worth of bitcoin. If I had held on to that $20 in bitcoin, it would have been worth $464 now.

That $10 salad I paid for in bitcoin at a French restaurant on the Lower East Side four years ago, would now be worth about $232.

The ice cream sandwich from Melt? It cost me $6.50 of bitcoin in 2017. That amount of bitcoin would be worth around $150 at February’s peak.

But that was then, and this is now.

I cut my recent experiment down to only a couple days because of the health risks during Covid, the city’s virus restrictions and the closure of a number of restaurants due to the pandemic.

In 2017, I found it difficult to buy coffee directly using bitcoin. In 2021, it’s possible thanks to Bakkt Cash, a digital currency platform that Starbucks is testing out via a limited program.

“PayPal’s involvement should make this much easier for merchants to become comfortable with accepting bitcoin, particularly since what PayPal is doing is essentially enabling the synthetic acceptance of the cryptocurrency. At the end of the day, the merchants will have fiat currency in their books for their goods and service,” Mark Palmer, managing director of fintech and digital assets at BTIG, told CNBC.

David Grider, director of digital asset strategy at Fundstrat, said that decreased bitcoin volatility, lower crypto-to-fiat exchange fees, and wider crypto use in general are needed before cryptocurrency payments achieve mainstream adoption.

Until then, most experts said bitcoin will be widely viewed by holders as a store of value versus a currency. It’s often referred to as digital gold.

However, before you start to prep your phone with apps that enable you to use your bitcoin, beware of two things: regulation and taxes.

Just last week, Treasury Secretary Janet Yellen sounded the alarm on the use of cryptocurrencies in illicit activities as a “growing problem,” prompting some concerns about whether digital coins, which by their nature are decentralized, would be regulated somehow.