Blockchain
Happy Bitcoin Pizza Day
On May 22, 2010, Florida resident Laszlo Hanyecz paid 10,000 bitcoins (BTC) for two Papa Johns pizzas in what is widely considered the first purchase ever made with the then experiential digital currency. The value of those coins would be worth just under 700 million dollars today.
Note: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates. This is an excerpt from The Node newsletter, a daily roundup of the most crucial crypto news on CoinDesk and beyond. You can sign up to get the full service newsletter here.
The story is well known, it is part of the “Bitcoin story” and is celebrated around the world every year. What is less known are Hanyecz’s other contributions to Bitcoin. Second Bitcoin historian (and former CoinDesk editor) Pete Rizzowho on Wednesday posted a detailed thread about Hanyecz, the first man to spend bitcoin in a commercial transaction, was also something of a confidant of Satoshi Nakamoto.
This year’s Pizza Day could also be seen in a new context following the publication of 120 pages of email correspondence from Satoshi with early Bitcoin developer Martti Malmi (aka “Sirius”), which raises the question of how much It’s a coincidence that the first purchase using bitcoin was for pizza. Malmi wrote the first FAQ for the Bitcoin.com website, apparently citing Satoshi’s answers to previous questions. He has written:
“Bitcoin is valuable because of the things it can be exchanged for, just as all traditional paper currencies are.
“When the first user publicly announces that he will make a pizza for anyone who gives him one hundred bitcoins, then he can use bitcoins as payment to some extent – as much as people want pizza and trust his announcement. A pizza-eating hairdresser who trusts him as a friend could then announce that he starts accepting bitcoins as payment for fancy haircuts, and the value of the bitcoin would be higher – now you could buy pizzas and haircuts with them. When bitcoin is accepted widely enough, he could retire from his pizza business and still be able to use his bitcoin savings.
Without exaggeration, it is interesting to note that the first bitcoin transaction for a real-world item (rather than peer-to-peer exchanges with fiat) was pizza, given the Satoshi analogy.
But, as Rizzo notes, Hanyecz contributed much more to Bitcoin than simply demonstrating that it could be used for real purchases. He was also the first to translate Satoshi’s code for Apple’s operating system, allowing more people to run the actual Bitcoin software. And he was a frequent commentator on the BitcoinTalk forum, where he answered questions about the software and how it was designed.
However, Hanyecz and Satoshi did not agree on everything. Hanyecz is also believed to be the first person to start mining bitcoin using specially designed chips to run complex computer programs called graphics processing units (GPUs), giving him an edge over others who ran Bitcoin source code on everyday computers .
This kicked off what Satoshi called a mining “arms race” that is still ongoing today (nowadays, bitcoin miners rely on factories full of application-specific integrated circuits designed specifically for proof-of-work mining). Satoshi was concerned that because the user base was so low at the time, people would be disincentivized from joining the distributed network if they had to shell out cash to purchase specialized equipment.
“GPUs would prematurely limit the incentive to only those with high-end GPU hardware,” Satoshi wrote. “I don’t want to sound like a socialist, I don’t care if wealth is concentrated, but for now we get more growth by giving that money to 100% of the people than to 20%.”
It is possible that Hanyecz’s post asking someone to buy his family dinner was a response to this conversation with Satoshi and a way for Hanyecz to redistribute his accumulated supply of bitcoin through the free market. In his initial request on May 18, 2010, which went unanswered for three days, Hanyecz offered 10,000 BTC for two pizzas (no anchovies!).
A few days later, on May 21, Hanyecz revisited the post to ask about a potential price increase. Finally, 19-year-old Jeremy “Jercos” Sturdivant responded and offered to be on the other end of the exchange. “I just want to report that I successfully exchanged 10,000 bitcoins for pizza,” Hanyecz said at the time.
According to Rizzo, Hanyecz, who is still active in Bitcoin circles, made the pizza exchange an open offering and ultimately may have spent about $3 billion worth of bitcoin at today’s prices on Papa Johns pies. Apparently there is too a commemorative plaque in Jacksonville, Florida, location to commemorate the purchase.
While other people might rue the day they spent hundreds of millions of dollars on something so everyday, Hanyecz apparently has no regrets. “Someone had to start it,” he said in an interview with CNN.
But, any way you slice it, with bitcoin charting all-time highs again, the first bitcoin purchase was also the most expensive pizza ever sold.