How much I overpaid by

living off bitcoin for a

week
PUBLISHED TUE, MAR 2 20211:35 PM ESTUPDATED TUE, MAR 2 20213:56 PM EST

Seema Mody@SEEMACNBC

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!

How much I overpaid

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.
Apps make it easier now

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.

That’s probably one of the biggest changes from four years ago, a growing number of third-party
apps that make it easier to spend your bitcoin. Instead of putting a credit card into the apps, you
opt to pay with bitcoin. Generally, the apps show you prices in dollars and draw on your bitcoin
as the payment source.

Flexa, which bills itself as the “most fraud-proof payments network,” said retailers like
Nordstrom, GameStop and Lowe’s allow consumers to transact with bitcoin using its system.

However, Flexa told CNBC a majority of the transactions on its platform, more than 60%, are for
coffee, tea and other quick-service items. It charges no user fees.

What could redefine how cryptocurrency enthusiasts view bitcoin is PayPal’s success in rolling
out supportive technology that would allow its customers to use bitcoin as a payments tool with
its nearly 30 million merchants.

Regulation and taxes

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.

As for the issue of taxes with April 15 fast approaching, investors should be aware that the IRS
classifies bitcoin as a property, not a currency. So yes, capital gains taxes could apply.

Only time will tell if I’ll be kicking myself four years from now for buying items with bitcoin or
thanking my lucky stars. It all depends on whether the sky-high prices go even higher.

What does it mean, to “overpay” for something?

Do you think we should be concerned with how quickly currencies fluctuate and impact
the value of things?