Happy Bitcoin Pizza Day

On May 22, 2010, Florida-resident Laszlo Hanyecz paid 10,000 bitcoin (BTC) for two Papa Johns pizzas in what is largely considered to be the first purchase ever made with the then experiential digital currency. The value of those coins would be worth just under $700 million today.

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The story is well known, a part of “Bitcoin history” and celebrated across the world every year. What is less known is Hanyecz’s other contributions to Bitcoin. According to Bitcoin historian (and former CoinDesk editor) Pete Rizzo, who published a detailed thread about Hanyecz on Wednesday, the first man to ever spend bitcoins in a commercial transaction was also something of a confidant to Satoshi Nakamoto.

This year’s Pizza Day might also be viewed in a new context following the release of 120 pages worth of Satoshi’s emailed correspondence with early Bitcoin developer Martti Malmi (a.k.a. “Sirius”), which raises the question of how much of a coincidence it was that the first purchase using bitcoin was for pizza. Malmi wrote the first FAQ for the Bitcoin.com website, apparently quoting Satoshi’s responses to earlier inquiries. He wrote:

“Bitcoin is valued for the things it can be exchanged to, just like all the traditional paper currencies are.

“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 some extent – as much as people want pizza and trust his announcement. A pizza-eating hairdresser who trusts him as a friend might then announce that she 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 bitcoins have become accepted widely enough, he could retire from his pizza business and still be able to use his bitcoin-savings.”

Without reading too much into it, it is interesting that the first bitcoin transaction for a real world object (rather than peer-to-peer exchanges for fiat) was pizza, given Satoshi’s analogy.

But, as Rizzo notes, Hanyecz has contributed far more to Bitcoin than simply proving it could be used in actual purchases. He also was the first to translate Satoshi’s code for Apple’s operating system, allowing a greater number of people to run the actual Bitcoin software. And he was a frequent commentator on the BitcoinTalk forum, where he’d answer questions about the software and how it was designed.

However, Hanyecz and Satoshi didn’t agree on everything. Hanyecz is also thought to be the first person to start mining bitcoin using chips specially designed to run complex computer programs called graphics processing units (GPUs), giving him a leg up against others who were running the Bitcoin source code on everyday computers.

This kicked off what Satoshi called a mining “arms race” that is 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 put up cold 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 mean 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 giving it to 20%.”

It’s possible that Hanyecz’s post asking for someone to buy his family dinner was in response to this conversation with Satoshi, and a way for Hanyecz to redistribute his accumulated stash of bitcoins via the free market. In his initial ask 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 potentially raising the price. Eventually, 19-year-old Jeremy “Jercos” Sturdivant responded and offered to be on the other end of the trade. “I just want to report that I successfully traded 10,000 bitcoins for pizza,” Hanyecz said at the time.

According to Rizzo, Hanyecz, who is still active in Bitcoin circles, made the pizza swap an open offer, and may have ultimately spent bitcoins worth around $3 billion worth at today’s prices on Papa Johns pies. There is also apparently a commemorative plaque at the Jacksonville, Florida, location memorializing the purchase.

While other people may rue the day they had spent hundreds of millions of dollars for something so quotidian, Hanyecz apparently has no regrets. “Someone had to start it,” he said in an interview with CNN.

But, whatever way you slice it, with bitcoin again retracing all-time highs, the first bitcoin purchase was also the most expensive pizza ever sold.