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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 made with the then-experimental digital currency. The value of these coins would be worth just under $700 million today.
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The story is well known, it is part of the “Bitcoin story” and is celebrated around the world every year. What is less well known are Hanyecz’s other contributions to Bitcoin. According to Bitcoin historian (and former CoinDesk editor) Pete Rizzowho published a detailed thread about Hanyecz on Wednesday, the first man to spend bitcoins in a business transaction was also something of a confidant of Satoshi Nakamoto.
This year’s Pizza Day can also be seen in a new context following the release of 120 pages of Satoshi’s email correspondence with former Bitcoin developer Martti Malmi (aka “Sirius”), which raises the question of How much of a coincidence was it that the first purchase using bitcoin was for pizza. Malmi wrote the first FAQ for Bitcoin.com website, apparently citing Satoshi’s answers to previous questions. He wrote:
“Bitcoin is valued for the things it can be exchanged for, just like all traditional paper currencies.
“When the first user publicly announces that he will make a pizza for anyone who gives him a hundred bitcoins, then he can use bitcoins as payment to a certain extent – no matter how much people want pizza and trust his announcement. A pizza-eating hairdresser who trusts him as a friend could then announce that she would start accepting bitcoins as payment for fancy haircuts, and the value of bitcoin would be greater – now you could buy pizzas and haircuts with them. When bitcoins are widely accepted, he will be able to retire from his pizza business and still be able to use his bitcoin savings.”
Without reading too much into it, it’s interesting that the first bitcoin transaction for a real-world object (rather than peer-to-peer exchanges for fiat currency) was pizza, given Satoshi’s analogy.
But as Rizzo notes, Hanyecz contributed much more to Bitcoin than simply proving that it could be used for real purchases. He was also the first to translate Satoshi’s code into Apple’s operating system, allowing more people to run real Bitcoin software. And he was a frequent commenter 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 considered the first person to begin mining Bitcoin using specially designed chips to run complex computer programs called graphics processing units (GPUs), giving him an advantage against others running Bitcoin source code on regular computers.
This started what Satoshi called the mining “arms race” that is ongoing today (currently, 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 discouraged from joining the distributed network if they had to invest hard cash to buy specialized equipment.
“GPUs would prematurely limit the incentive to only those with high-end GPU hardware,” Satoshi wrote. “I don’t want to sound socialist, I don’t care if wealth is concentrated, but for now, we get more growth by giving this money to 100% of the population than by giving it to 20%.”
It is possible that Hanyecz’s post asking someone to pay for his family’s dinner was a response to this conversation with Satoshi and a way for Hanyecz to redistribute his accumulated supply of bitcoins 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 (without anchovies!).
A few days later, on May 21, Hanyecz revisited the post to ask about the potential price increase. Eventually, 19-year-old Jeremy “Jercos” Sturdivant responded and offered to be on the other side of the negotiation. “I just want to let you know 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 offer and may have spent about $3 billion worth of bitcoins at today’s prices on Papa Johns pies. There are also apparently a commemorative plaque in Jacksonville, Florida, place in honor of the purchase.
While other people may rue the day they spent hundreds of millions of dollars on something so everyday, Hanyecz apparently has no regrets. “Someone had to start,” he said in an interview with CNN.
But whichever way you slice it, with bitcoin once again retracing all-time highs, the first bitcoin purchase was also the most expensive pizza ever sold.