Friday marked the 10-year anniversary of a very special day in the world of cryptocurrency. All over the world, Bitcoiners would chow down some pizza, whether they be in the office or at home. They are not just doing this because pizza is delicious; they are doing it because it is tradition.
The man who started it all
It all began with Laszlo Hanyecz, a man living in Florida. The young programmer was an early contributor to Bitcoin’s software back when it was still in its infancy. To be exact, it was less than a year old. Being an active member of a niche community, Hanyecz actually had a hand in significantly advancing Bitcoin mining. He would eventually code a program that makes it possible for miners to mine Bitcoin with the use of their computer’s graphics cards (GPUs). This is a comparatively more powerful method than utilizing a computer processor (CPU), which was the original bitcoin mining method.
In 2010, Hanyecz would make a name for himself as ‘Bitcoin Pizza Guy.’ He became the first person to use bitcoin in a commercial transaction. On May 22, when Bitcoin was a little over a year old, he bought two Papa John’s pizzas (worth $30). He did so for 10,000 BTC, and thus Bitcoin Pizza Day was born.
The million dollar pizza
Hanyecz took to Bitcointalk to make a post. This is a forum that focuses on Bitcoin and whose founder is the coin’s creator. It was a hub for discussion during the days of Bitcoin’s development. In his post, Hanyecz writes:
“I’ll pay 10,000 bitcoins for a couple of pizzas… maybe 2 large ones so I have some leftover for the next day … If you’re interested please let me know and we can work out a deal.”
A Bitcointalk user going by the name of “jercos” would show some interest in the proposition. They eventually came to an agreement. Hanyecz would pay him 10,000 BTC and in exchange, he would order two large supreme pizzas for Hanyecz. One user made a point to caution the Floridian on his plan. This person states that 10,000 BTC “is quite a lot.” Moreover, it’s roughly $41 on one of Bitcoin’s first trading hubs, bitcoinmarket.com, which is now defunct.
In a phone interview with CoinDesk last year, Hanyecz says that the price on a trading forum means little to him. He has a point, given that he was responsible for inventing GPU mining. What’s more, he was simply eating a meal that he paid for with internet currency. A currency that he made from working on his desktop computer, no less.
Moreover, in his mind, he did not pay for anything. In a way, this pizza was free.
“I wanted to do the pizza thing because to me it was free pizza. I mean, I coded this thing and mined bitcoin and I felt like I was winning the internet that day. I got pizza for contributing to an open-source project. Usually hobbies are a time sink and money sink, and in this case, my hobby bought me dinner.”
To say that Hanyecz’s actions sparked something would be an understatement. Over a short period of time, his decision would go on to be a point of fascination in the Bitcoin community. In fact, not even six months later did one curious Bitcointalk user on the same thread ask this question:
“Will this eventually become the world’s first million-dollar pizza?”
To answer this user’s question, yes. Multiple times over as a matter of fact. The 10,000 BTC Hanyecz used to purchase the pizza in 2010 is worth about $900,000,000 at the time of this writing. Back then, it was worth roughly $2,000,000,000; an all-time high for Bitcoin.
As one could probably guess, this story would go on to become another piece of the Bitcoin community’s lore. For proof, just pay the original post a visit. When you do, you will notice that over time it has managed to garner over 70 pages worth of reactions. All written by people blown away by how the legendary pizza transaction’s price rose over time.
Now, for some people, the most common reaction would be disbelief and a small amount of snark. For instance, they could ponder what it would be like to be in this man’s position. Buying pizza for 10,000 BTC? How does he live with himself?
However, Hanyecz appears to be doing fine, regardless of the presumed absurdity of what he did on that day in 2010. Moreover, this particular perspective is not taking into account a single basic fact. That being anyone at this point in time was able to buy or mine for bitcoin. With that in mind, it seems as though everyone who didn’t hold onto bitcoin from 2010 missed out on life-changing wealth.
With one BTC being worth about $9,500, it would be easy to see this as a joke. And the punchline? Hanyecz’s $45 million pizzas. At the time, this would appear to be quite a bargain, taking Bitcoin’s low value into consideration. However, let’s move forward to the present day. At this point in time, one BTC is worth roughly $8,000. Therefore, paying for the pizza would cost approximately $80 million, which is insane.
One can interpret the joke as also a moral story. Think about it: it illustrates the competition and interplay that exists between various uses of bitcoin. One of these types of uses is simply ‘speculation’. Bitcoin’s decade consisting mainly of upward price movement is the driving force behind many headlines and it motivates participation. Generally speaking, people see it as a way to generate a substantial profit. As Hanyecz said in a recent interview, “Bitcoin is a way to harness greed.” It is greed that ultimately establishes the delicate balance of incentives that fuel Bitcoin’s operations.
Hanyecz is well aware of this delicate balance. He was, after all, a contemporary of Bitcoin’s mysterious founder, Satoshi Nakamoto. What’s more, he was an early bitcoin miner who had a goal to mine more efficiently and earn comparatively more bitcoin. The bottom line is he has experience.
Some treat “speculation” as something that is not a legitimate use. Contrary to this belief, it is – and always has been – an important part of Bitcoin since its creation. U.S. Federal Reserve Chair, Jerome Powell, speaks of Bitcoin’s role in a respectable manner. He says that its role is a “speculative store of value.”
What about today’s value?
The prevailing “missing-out-on-millions” mindset seems to ignore a crucial part of this pizza story. That being the fact that Hanyecz was able to invent an efficient mining method. Therefore, his surplus essentially makes the transaction inevitable.
When you think about it, the slice was no more or less expensive than anything else he could buy at that time. All he did was purchase it with bitcoin. What he did is worth roughly a million dollars, especially when you take into account how fringe Bitcoin was. Even with that in mind, we tend to draw more attention to what that bitcoin would be worth today.
Would we be focusing this much on the event if he opted to use dollars? It is highly unlikely, but it’s not a bad idea. The cash that went towards buying the pizzas has lost approximately 20% of its value throughout the course of the decade. This means that today, it would be worth $6 more to purchase the same amount of pizza.
With the dollar’s ever-changing value, perhaps concentrating on how much that 10,000 BTC would be worth today isn’t necessarily a bad thing. Particularly, in comparison to the dollar.
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