Bitcoin Pizza Day: The Tale Behind the Tradition

An increasing number of institutional clients of Oxido Solutions use our Bitcoin trading bots to generate passive income. Without Bitcoin, Oxido Solutions wouldn't have become a major player. As a result, we take every opportunity to celebrate Bitcoin's existence, and today we did it by eating pizza—sliced safely because risk management is our top priority. Today was Bitcoin Pizza Day! Here's the story:

On May 22, 2010, Florida resident Laszlo Hanyecz made history by paying 10,000 bitcoins (BTC) for two Papa John's pizzas. This is considered the first real-world purchase using the then-experimental digital currency. Today, those bitcoins would be worth just under $700 million.

The story is famous and celebrated worldwide every year as part of "Bitcoin history." What’s less known is Hanyecz's other contributions to Bitcoin. According to Bitcoin historian and former CoinDesk editor Pete Rizzo, who shared a detailed thread about Hanyecz on Wednesday, the first person to spend bitcoins in a commercial transaction was also a confidant to Satoshi Nakamoto.

SIRIUS & SATOSHI

This year’s Pizza Day takes on new significance with the release of 120 pages of Satoshi’s email correspondence with early Bitcoin developer Martti Malmi (also known as “Sirius”). This raises the question of whether it was just a coincidence that the first Bitcoin purchase was for pizza. Malmi, who wrote the first FAQ for the Bitcoin.com website, apparently quoted Satoshi’s responses to earlier inquiries.

He wrote:

“Bitcoin is valued for the things it can be exchanged for, just like all 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.”

It's intriguing that the first real-world bitcoin transaction was for pizza, considering Satoshi’s analogy. But, as Rizzo points out, Hanyecz has done much more for Bitcoin than just proving it could be used for purchases. He was the first to translate Satoshi’s code for Apple’s operating system, enabling more people to run Bitcoin software. He was also an active participant on the BitcoinTalk forum, where he answered questions about the software and its design.

THE MINING ARMS RACE

However, Hanyecz and Satoshi didn’t see eye to eye on everything. Hanyecz is believed to be the first to start mining bitcoin using graphics processing units (GPUs) designed to handle complex computer programs. This gave him an edge over others who were using regular computers to run the Bitcoin source code.

This innovation kicked off what Satoshi referred to as a mining “arms race,” which continues today. Nowadays, bitcoin miners use factories full of application-specific integrated circuits (ASICs) designed specifically for proof-of-work mining. Satoshi was worried that with such a low user base at the time, people would be discouraged from joining the network if they had to spend money on 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%.”

Hanyecz's post asking for someone to buy his family dinner might have been a way to redistribute his bitcoins via the free market, possibly inspired by a conversation with Satoshi. On May 18, 2010, Hanyecz made an offer: 10,000 BTC for two pizzas (hold the anchovies!). For three days, there were no takers.

On May 21, Hanyecz updated the post, considering raising the price. Eventually, 19-year-old Jeremy "Jercos" Sturdivant responded and agreed to the trade. “I just want to report that I successfully traded 10,000 bitcoins for pizza,” Hanyecz announced at the time.

$3 BILLION ON PIZZA'S

According to Rizzo, Hanyecz, who remains active in Bitcoin circles, made the pizza offer an open invitation and might have spent bitcoins now worth around $3 billion on Papa John's pizzas. There's even a commemorative plaque at the Jacksonville, Florida, location marking the historic purchase.

While others might regret spending what would now be worth hundreds of millions on something as ordinary as pizza, Hanyecz has no regrets. “Someone had to start it,” he told CNN in an interview.

However you look at it, with Bitcoin reaching all-time highs again, that first Bitcoin purchase still stands as the most expensive pizza ever sold. Meanwhile, our clients continue generating passive income with our crypto trading bots. If our bots' strong performance of 36% to 59% YTD continues, we'll have plenty more reasons to celebrate Bitcoin. We’re even considering creating a Bitcoin Sushi Day because one Bitcoin Pizza Day just isn’t enough to celebrate all our successes.