I lived on Bitcoin for three years: Meet cryptoanarchist Amin Rafiee

Bitcoin's value has not recovered since some global authorities started talking about banning it, but some believers say its use goes beyond monetary.

Amin Rafiee has just returned home to Australia after he spent three years in Europe living on Bitcoin.

He worked as a contractor in a variety of roles, and asked to be paid in the cryptocurrency.

"I would use it to pay my rent, my daily expenses, and find ways where I could exchange it for cash."

"Back then it was a lot harder, but now you have Bitcoin debit cards so you can just register, verify yourself and from there use your Bitcoin or other cryptocurrencies to exchange to fiat money, which is the US dollar or Australian dollar, and like any other VISA card or Mastercard you can use it to pay your bills."

Meet cryptoanarchist Amin Rafiee

Services are harder to find in Australia, but he believes in the future, most people will have both a cryptocurrency and bank account.

The self-proclaimed 'cryptoanarchist' says for him, Bitcoin and cryptocurrencies are not a money making exercise, rather a way to control his personal freedom.

"Once you have a choice, it's very empowering because you can be like, my government is going into hyperinflation what can i do? The choice then becomes why don't I exchange some of my money into crypto or change some of my assets into a smart asset. So by doing this you're empowering individuals to have a choice."

Japan's virtual currency exchanges Coincheck's director Yusuke Otsuka.
Source: AAP

No consumer protection

Economist, Stephen Koukoulas is cautious.

"When you are transacting into the Bitcoin market to buy Bitcoin and use it, there is no support from the government to say that, that transaction is valid."

Mr Koukoulas adds, that the lack of consumer protection is a concern.

"I would be extremely cautious about getting into Bitcoin at any price really... because it isn't regulated, you are putting your trust in an entity that is not regulated by the government, and giving them money to buy Bitcoin and you're not sure if you're going to get your money back."

"There's already been a few scandals where the Bitcoin transactors have gone bust and people have been unable to access their money, that causes me a lot of grief, we do know that regulators around the world are looking at it very closely."

Over the weekend, Japanese cryptocurrency exchange Coincheck fell victim to the world's largest cyrptocurrency theft.

Nearly US$530 million was stolen from its accounts.

The fallout impacted Japanese pop group, the Virtual Currency Girls, who sing about the virtues of the likes of Bitcoin.

They're paid in part with crytpocurrency, and had their account frozen, which meant they weren't paid for a month.

It highlights the need for users to understand the risks.

Japan's Virtual Currency Girls are the world’s first Cryptocurrency group.
Source: Cinderella Academy Inc

Safety your responsibility

"The first thing we need to think about is personal responsibility," says Amin Rafiee.

"Don't use a service unless you know it's safe, even though you can have a million users, keep stuff like your private key to yourself and back up everything. You just have to become very wary of it."

"You can also have multi-signature wallets so if I loose my part of the deal, two other people that I know can unlock my wallet. Still the other part is that you would treat it like cash. What if you loose it? You would try and not lose your cash, you would try and split it up."

"If they don't feel like they can keep it safe, then they really shouldn't be doing it."

Bitcoin's volatility doesn't concern Amin for now, because he sees a future where thousands of cryptocurrencies exist, for different purposes.

"I see it as each currency serves a purpose, so it's like cars. A lot of people say there will only be one coin, but we don't have one car, we have diesel car, we have petrol car, we have gas car, we have electric car, each has a purpose. A person likes the electric car, they buy the electric because they might not like to drive that long distances."

He says stores for example, will one day have their own crytocurrency, but to get there, technology needs to improve.

"Currently, Bitcoin and other cryptocurrencies are running on roads that are built on outdated system, so it's quite hard to see it's true power yet. We need systems to improve, we need it be established enough so it can have its own path."

An advertisement for Bitcon near the train station in Tokyo.
Source: AAP

'Be prepared to lose everything'

As the debate continues about the viability of Bitcoin and cryptocurrencies, what seems to have universal support is the technology behind them - Blockchain.

"The Blockchain technology is allowing for the settlement of transactions to occur instantly and without the third party in the middle of the transaction who of course mean fees and other costs as well," says Stephen Koukoulas.

"So Blockchain is still evolving."

While organisations like the ASX investigate how it can use Blockchain, some, like Amin Rafiee say its use goes beyond finance.

"You can have things like everyone's computational power come together to solve problems. So currently you can have university computers come together to solve problems like how proteins form and diseases occur, or searching for interstellar activity, mathematical issues and financial analysis.

"These things can all be done by you saying I'll share my computer power at home that's not doing anything overnight and I'll get rewarded for it."

As out of this world as that sounds, believers compare today's cryptocurrency world, with the beginning of the internet, when most of people didn't understand it, nor its potential.

Still, some are trying to cash in at this early stage.

Bitcoin explained: An online payment system

CMC Markets analyst, Michael McCarthy says some companies are reinventing themselves as cyrptocurrency providers, others are adding the word Blockchain to their names, or buying Blockchain assets to inflate their value.

"We're clearly talking about the higher risk, higher potential reward scenario, so any investor going into this space must be prepared to lose everything they put into it because nobody knows the future."

The future looks uncertain, as global authorities, namely South Korea and China investigate the possibility of banning the use of crytpocurrencies.

The Australian Tax Office, is also cracking down, for now, making sure all relevant taxes are paid.

Published 30 January 2018 at 3:02pm, updated 30 January 2018 at 7:26pm
By Ricardo Goncalves