One of the most significant events in Bitcoin history, like the creation of the genesis block, is BItcoin Pizza Day. This story has been told many times, but some details may have been left out. We will dive a little deeper into the facts to understand much better why this event is such a big deal. Many wonder how it was possible and wether it was a genuine transaction or just a hyped up story. We can always make claims, but the good thing about the blockchain is it can back up those claims with proof.
The Story In A Nutshell
It started back on May 18, 2010 when a Bitcoin software engineer (also an early miner), Laszlo Hanyecz, wanted to pay for an order of 2 pizzas using Bitcoin (BTC). He posted a message on the BitcoinTalk forum (Bitcointalk.org original thread):
“I’ll pay 10,000 bitcoins for a couple of pizzas.. like maybe 2 large ones so I have some left over for the next day. I like having left over pizza to nibble on later. You can make the pizza yourself and bring it to my house or order it for me from a delivery place, but what I’m aiming for is getting food delivered in exchange for bitcoins where I don’t have to order or prepare it myself, kind of like ordering a ‘breakfast platter’ at a hotel or something, they just bring you something to eat and you’re happy!"
It was an extraordinary request that was definitely not something you would expect. During this time, 1 BTC was worth just $0.004. Laszlo was also a Bitcoin miner, so the BTC he had came from his own mining operation. There was very little competition and the hardware requirements were not as high, so it was possible to use a PC with a GPU to mine plenty of Bitcoin (now it requires an ASIC).
When it seemed like nobody wanted to accept 10,000 BTC, Laszlo posted on the forum:
"So nobody wants to buy me pizza? Is the bitcoin amount I'm offering too low?"
A man named Jeremy Sturdivant (aka Jercos) who was in California, took Laszlo up on the offer. He would accept 10,000 BTC, which was worth approximately $41.00 as payment for 2 pizzas. Sturdivant would order from Papa John's Pizza and have them delivered to Laszlo's home. Laszlo lived out in the state of Florida (USA), but delivery can be arranged for from another location. Nonetheless, the transaction was settled on May 22, 2010, which would become the date of Bitcoin Pizza Day. It is official that 2 pizzas were paid for worth 10,000 BTC ($41). At current prices (as of this posting) the 10,000 BTC would be worth $280,000,000 (at $28,000+ per Bitcoin)!
A photo of the actual pizzas ordered by Laszlo Hanyecz (Source: Bitcoinmagazine)
Debunking The Myths
First, let us debunk the impression that Papa John's Pizza accepted payment in BTC back in 2010. Many people assumed that Laszlo paid for the pizzas to Papa Johns directly with BTC. If that were the case, Papa John's Pizza would either be in violation of accepting a non-recognized tender in the US or would have to declare their Bitcoin holdings for proper accounting purposes. As we know, Papa John's Pizza had never acknowledged payment in any form of cryptocurrency or accepted Bitcoin and other cryptocurrency for payments back in 2010. The BTC was paid to another person, who was Jeremy Sturdivant. Sturdivant would pay for the order of the 2 pizzas in fiat for delivery to Laszlo's home.
Another fact is that Laszlo did not just pay for 2 pizzas, he actually bought more with BTC. According to some reports, Laszlo made an open offer for as long as he can pay with BTC. He eventually had to stop because he would have to mine more BTC to keep the payments for the pizza going. A more likely reason Laszlo had to stop paying for pizzas in Bitcoin is due to the price appreciation of the asset. It was becoming more expensive to pay for pizza worth 10,000 BTC when the price is going up.
A misconception about Laszlo is that he was an over eager Bitcoin fanatic who did not know any better when buying the pizzas with Bitcoin. That is perhaps a very incorrect assessment. Laszlo was a developer and also one of the early miners on the Bitcoin network. He knew what he was doing back then, and has had no regrets about it (as he stated in an interview). He wanted to "get the ball rolling" to start the Bitcoin revolution, and it proved to be the start of cryptocurrency for payments. It shows that it was possible, since Sturdivant received the BTC and exchanged it for the value of what it was worth at that time.
Sturdivant did not keep all the BTC he was paid. Based on the blockchain explorer records, he sold off the BTC rather quickly after he received the payment. He also does not seem to have any regrets, since at that time he was viewing BTC as currency. He was also quite young at that time, at just 19 years old. He was actually a student from the UK staying in the US. He may not have an investor's mindset as it appears, otherwise he would have HODLed most of the BTC.
Bitcoin Pizza Day celebrates the first recorded business transaction between two individuals, but is not the first significant transaction on the Bitcoin network. Many forget that Satoshi Nakamoto, Bitcoin's mysterious founder, sent 10 BTC to software developer Hal Finney before the pizza transaction. This would be the first actual transaction between two individuals on the Bitcoin blockchain. Laszlo's transaction has more to do with being the first Bitcoin transaction that involved the purchase of an item (pizza).
The Proof Is Recorded On The Blockchain
We can check the Bitcoin blockchain explorer which records all transactions from the very beginning to the most recent. We can see that Laszlo's wallet address of 1XPTgDRhN8RFnzniWCddobD9iKZatrvH4 made a payment to Sturdivant's address of 17SkEw2md5avVNyYgj6RiXuQKNwkXaxFyQ.
The transaction was recorded at a block height (also called number) of 57043 at transaction hash of:
a1075db55d416d3ca199f55b6084e2115b9345e16c5cf302fc80e9d5fbf5d48d
Although Bitcoin Pizza Day is May 22, the date recorded on the blockchain explorer is 5/23/2010. There is some discrepancy, but this is common with Bitcoin transactions. The payment was sent on May 22, but the network must first come to a consensus among the Bitcoin miners before a block that contains the transaction is confirmed. In this case, the confirmation of the block includes the received time of 5/23/2010 with the amount of 10,000 BTC (written as 10000.00000000 BTC). The final cost would be 10,000.99 BTC, with 0.99 BTC being the network fee paid to the miners.
Final Thoughts
While many would criticize Laszlo for paying 10,000 BTC, it would become a very important moment in Bitcoin history. What makes this event significant is that it proves the Bitcoin network can be used as a direct peer-to-peer payment system. Proof of a transaction is recorded on a blockchain, for transparency and immutability. Once it gets recorded, it cannot be modified or removed. This presents a use case for Bitcoin as a decentralized payment system which is open to anyone who wants to transfer value in exchange for goods or services. The blockchain backs up the story of the BItcoin Pizza Day transaction.
I think it also shows how much value Bitcoin has gained over the years. Laszlo mentioned in the forum that it was getting harder to mine BItcoin. At that time the competition among miners was just beginning. As participation increased, we would see the Bitcoin network grow in value. This is true since the price of Bitcoin has surged, reaching all time highs in 2021 up to $68,789.63 (November 10, 2021). If you were to pay 10,000 BTC for 2 pizzas in 2022, you would be considered crazy charitable. There is now a Bitcoin pizza index that tracks the cost of the pizzas based on the current price of BTC.
If Laszlo had the Lightning Network back in 2010, it would probably be easier. If the pizza restaurant accepts Bitcoin, he could pay them directly using the Lightning Network, which is an off-chain layer (also called Layer 2) for payments to help scale up Bitcoin transactions. Laszlo actually did use the Lightning Network to once again pay for pizzas. This shows that Bitcoin can be used as currency, and not just as a store of value. He will be a pioneer for being the first to pay for something in Bitcoin, and is honored for that when Bitcoin Pizza Day is celebrated.
(Photo Credit: Vincent Rivaud)
