My Experience with Bitcoin Living in Hawaii
Although I’ve lived in various parts across the globe during my lifetime, the majority of the last dozen or so have been spent in beautiful Honolulu, Hawaii, where I first heard about bitcoin (BTC) as early as 2011, largely thanks to my addiction to nerdy podcasts. NPR chronicled an experiment in one of their several podcast series where they bought and sold bitcoin before the collapse of MtGOX, the first ever bitcoin exchange. This was back during the time when its value was purely speculative in nature and quite often referred to as “nerd money.” While the hosts of the NPR podcast were quite enthusiastic to watch their experimental investment rise ten fold over a period of less than a year, and I could definitely hear the excitation in their voices when discussing the potential of bitcoin, I still just thought to myself, eh, “nerd money,” and wouldn’t consider making an investment until a couple years later.
Fast-forward to December 2013: Bitcoin breaks $1000 a coin for the first time ever, and MtGOX is drained of over $400 million in customer funds kept on the exchange almost immediately after surpassing the $1000 mark, in what remains the biggest cryptocurrency swindle of all-time. These two events push bitcoin into the mainstream limelight for the first time, and suddenly I find myself wanting to know more about what the heck the big deal is. Around the same time period, but having nothing to do with bitcoin, I watch people pay for coffee at Starbucks by scanning a QR code presented on their smart phone… I had never seen a QR code before but immediately understood the concept… Oh, you can transfer money digitally (in this case, “Starbucks Money”) by simply displaying a square resembling a 3-dimensional barcode that represents your “account.” Now that’s pretty freakin’ cool, I thought to myself, and after learning you can basically transfer bitcoin the same way, from phone-to-phone, computer-to-phone, or computer-to-computer, I’m officially on board. I sign up for a Coinbase account and make my first purchase late in the year, getting in around $770 per coin.
Immediately, my investment started to plummet, as I was too naive to know that a couple “trading bots” being run on MtGOX artificially inflated the price to its record level of $1000, and that bitcoin was in the midst of a severe price correction. Ultimately, BTC would drop to the $220s by May 2014, and boy, did I not feel like a genius at that point. But, as we all know, the story does not end there. I had simply got in at the wrong time, and even though I thought of myself as just another sucker / idiot investor, had I retained my initial purchases, well, I would be sitting on a 20x profit right now.
Rewind a couple of months to January 2014. My love affair with podcasts still runs strong. Joe Rogan has a well-spoken, eloquent guest that I’d never heard of before, Andreas Antonopoulos, on his podcast, The Joe Rogan Experience (you can re-watch the podcast for yourself here — I highly recommend it if you consider yourself to be something of a bitcoin noob). The way that Andreas described how bitcoin worked was crystal clear, and his list of potential applications for blockchain technology was impressive and seemingly endless. He explained it in a way that made it understandable to pretty much anybody with a high school-level education. We were looking at a decentralized future of finance that had the potential to bring power back to the people by skirting the monopolies of costly financial middlemen, like banks, Western Union and PayPal. This was an especially appealing idea, given the malodorous and corrupt practices that empowered Wall Street and the 1% at the expense of the rest of the world, as was demonstrated in the aftermath of The Great Recession of 2007-2012. Thanks to Andreas’ passion in Joe Rogan’s podcast, I was now genuinely psyched, yet the steady downtrend in the price of BTC prevents me from adding to my stash.
So what do I do with my bitcoin, now that I’ve got my Coinbase account and phone wallet set up, ready to join the future of finance and be part of the “internet of money“? I can’t exactly buy a cup of coffee at Starbucks with it (you still can’t), and most of my friends had never heard of it. Those who had were either turned off by its complexity, still considered it to be “nerd money,” or else were afraid to get involved due to the negative press generated by MtGOX, and, soon thereafter, The Silk Road debacle. To this day, a good portion of people I know in Hawaii refuse to get involved with bitcoin (or cryptocurrency in general) because its association with criminal elements (past and present) is an unshakable stigma in their minds. That’s a shame, because for the Native Hawaiian sovereignty movement, here lies an opportunity for an “underground resistance” to detach themselves from reliance upon a U.S.-backed currency, and create their own monetary unit and system of transfer through the use of cryptocurrency technology.
The answer to the question posed at the beginning of the last paragraph turned out to be, “buy other coins.” After joining bitcointalk.org in early 2014 (the premiere, legendary site for all things cryptocurrency; once frequented by the mysterious and anonymous bitcoin creator Satoshi Nakamoto himself), I quickly learned that there was already a huge, burgeoning world of “altcoins” (an altcoin is any cryptocurrrency that is not bitcoin) that were easily purchasable using bitcoin, through dozens of different “altcoin exchanges.” Unlike a bitcoin exchange (Coinbase being the most famous example), which usually require the provision of elements of personal identification, such as a proof of address, copy of an official ID and/or linkage to a bank account, altcoin exchanges tend to require none of these things since no “real money” is technically involved. This allows them to fly under the radar of any government entity that is only tracking the movement of fiat money. Not only are altcoin exchanges largely anonymous, the lack of red tape involved with fiat currency makes transacting in cryptocurrency lightning fast in comparison. No waiting times for funds to clear, no filing of paperwork to keep records of transactions for the IRS (bitcoin is still barely on their radar, even in 2018), and no rules governing what constitutes a coin as legitimate or tradeable on these very open, Wild West-type markets. Altcoin exchanges were basically like online DIY stock brokers on steroids.
One of the first coins to catch my eye, naturally, was called HawaiiCoin (HIC). I found some HIC for sale on a first-of-its-kind altcoin exchange, Bittrex, and immediately plunked down about $40 worth of BTC to buy about 10,000 HIC. The next day I check the HawaiiCoin thread on the bitcointalk forum to see what’s up. “Pump currently happening on HIC,” one comment said. “Pump?” What the heck was that? It turns out I had placed a market order that was not completely filled and at a comparatively high price, giving HIC holders a chance to sell their stashes to a sucker willing to pay such a high price for them (me). I quickly learned my lesson as I watched the price of HIC decline about 50% within a matter of days.
Well, a $20 mistake wasn’t going to get me down for too long, and I gradually increased my stash to about half a million coins. And then something happened that I didn’t think was possible. The coin “died.” It broke. It turns out that there was a coding flaw in the HawaiiCoin wallet software that suddenly brought the network to a grinding halt, making it impossible for anybody to move coins anywhere. The developer of the coin (usually known as a “dev”) had used a “coin cloning” website service that will basically develop a coin for you, based upon parameters provided by the developer. In this case, somehow the HawaiiCoin dev had entered conflicting parameters that allowed the coin to cease functioning altogether — something that has never happened in the history of bitcoin or any altcoin worth a grain of salt. I had got to work on developing a HawaiiCoin mobile wallet, persuaded friends into thinking this was the next big thing and got them to buy some — finally, a currency specifically for the residents of Hawaii, a unique, isolated region of the globe which often considers itself as barely part of the United States to begin with. And now this revolutionary idea was suddenly kaput; the anonymous developer of the coin went into hiding and pangs of guilt and/or stupidity plagued my soul. If there was going to be a currency to be used by Native Hawaiians to avoid having to deal with the U.S. dollar, it certainly wasn’t going to be HIC.
So, I had failed as Hawaii’s first cryptocurrency ambassador. It took my ego a few days/weeks to recover. But I was still determined to bring cryptocurrency to Hawaii. As Hawaii is one of the few states without any sort of Lottery program and gambling of most sorts is outright illegal (though, let’s be honest, if you’ve been around here long enough you know these laws are seldom enforced), cryptocurrency could also serve to fill the void for Hawaii’s gambling needs. Hawaii (along with most other states) does not consider online gambling to be illegal (Nevada is one blatant exception), but all forms of land-based gambling are. Through the sole power of its legality, bitcoin has the power to bring down the ancient, sometimes shady “gambling houses” and parlay systems that have serviced Hawaii’s love for gambling for several decades now. Let’s face it: we refer to Las Vegas as the “9th Island” for a good reason — its because, for the most part, Hawaiians love to gamble. While these gambling houses have been filling a need for quite some time, at the end of the day, they are – after all – illegal. The biggest only still exist thanks to law enforcement agencies turning a blind eye to such operations, and since Hawaii is such a tight-knit community, that means that everybody tends to know everybody, or else knows somebody who does. So if a major gambling house was to be rustled by a rookie cop who didn’t know any better, a few handshakes, smiles and perhaps a small exchange of cash (or “favors-for-favors”) between more powerful, allied sources could make any related charges stemming from a small-time bust disappear in the blink of an eye.
Nevertheless, bitcoin and cryptocurrency in general has the power to make gambling totally legitimate in Hawaii, granted you are tech savvy enough to obtain some bitcoin and then know how to deposit it at any number of the hundreds of crypto-casinos currently available online. Most of us are familiar with the expression that “Hawaii is 5 years behind the mainland” when it comes to the adoption of new technologies, and bitcoin has been no exception to this rule. Whether it is the result of the well-known “brain drain” effect that results in those with higher IQs and strong entrepreneurial drives to leave Hawaii in search for better career opportunities in more business-friendly environments, or Hawaii’s geographic isolation from the rest of the country – or a combination of the two – Hawaii certainly has not been eager to catch on to the whole cryptocurrency thing. Take for example, as anecdotal evidence, the fact that the Bitcoin Hawaii Facebook page has not been updated since 2014.
Having said that, in 2015, Honolulu opened its first Bitcoin ATM for business. Tucked away in the side room of a coins and collectibles establishment in the downtown area, finally the residents of Hawaii (or Oahu at least) had a direct route to purchasing bitcoin without having to go through the technical rigmarole of opening an account at an online bitcoin exchange. You could simply slip in cash, present the QR code for your bitcoin address to a camera on the machine, and voilá, you could now be the proud, anonymous owner of some bitcoin. Though Honolulu’s bitcoin ATM was always considered something of a novelty, those in the know used it regularly to obtain their BTC, that is, until the machine itself ran out of BTC, and suffered from technical issues that were frequently left unresolved. Last time I checked, the ATM was offline for good, though apparently another one has stepped in to fill its place (if you are willing to pay the 15% premium for purchases). You can always consult this website for a map of all bitcoin ATMs across the world to see if any new ones pop up in the future.
In late 2015, the Hawaii Division of Financial Institutions introduced a crushing referendum that would require bitcoin exchanges to hold an amount of fiat reserves equal to that of the worth of their bitcoin holdings in order to legally operate inside the state. The first of its kind, a non-voted upon measure, spelled the end of legal bitcoin buying via exchanges, rendering Hawaii technically the least bitcoin-friendly state in the country. Citing that this measure was basically impractical to employ for any bitcoin exchange, including themselves, Coinbase announced that it would cease support to Hawaii-based customers in early 2017, forcing closure of all Hawaii resident accounts by mid-2017. Now I was on my own to figure out how to buy and sell bitcoin without breaking any sort of explicit law, and as it turns out, the saying does hold true: where there’s a will, there’s a way. Several, in fact.
To conclude on more of an optimistic note, as we start the new year, perhaps we are nearing the end of Hawaii’s 5-year technology lag, as bitcoin first entered the eye of the general public and mainstream media towards the end of 2013. There is a small, but growing list of vendors who are willing to accept bitcoin as payment for food and services (including a crêperie). Though it may pale in comparison to lists of BTC-friendly vendors in other states and countries, there’s no doubt that an ever-increasing proportion of Hawaii residents are becoming aware of and more comfortable with the idea of bitcoin and blockchain technology. After all, with the swarm of media hype now swirling around bitcoin and cryptocurrency, it’s pretty much impossible to ignore it by this point — unless you’re out surfing all day, soaking in the natural beauty and splendor of the Hawaiian Islands, or you have enough money to just relax and enjoy life without having to worry about improving it through a financial revolution.
And let’s just admit it: most of us enjoy at least one or more of these benefits, to which the mainland is not necessarily privy. If the “5-year rule” holds true, mainstream Hawaii should finally become interested in bitcoin around December of this year, as it was around that month 5 years ago that bitcoin finally caught the (rest of the American) public’s eye. Until then, well, the winter north shore swell is now underway, so, aloha to bitcoin for now… For a while.