A Pizza Box

In the early days of the first cryptocurrency, one man used Bitcoin to purchase two pizzas.
Now the value of those pizzas, given today's Bitcoin price, is mind blowing.

Shout Outs:

This week we wanted to give a shout out to a few fellow history podcasts.

The History Cache: History better than fiction. A podcast crafted for the most curious of minds.
Link: https://podcasts.apple.com/us/podcast/the-history-cache-podcast/id1478446385

Civics and Coffee: The people, events and topics of United States History in the time it takes to enjoy a cup of coffee.  
Link: https://podcasts.apple.com/us/podcast/civics-coffee/id1527172324

Support great storytelling by simply giving these shows a listen!

Transcript:

We’ve all been there before. It’s been a long day and you’re hungry. You don’t feel like cooking, you don’t feel like going out, heck you don’t even feel like picking up the phone to order something. And this is where Laszlo Hanyecz found himself in May of 2010. He was craving pizza. So what did he do? Well he did something no one had ever done before. He went on to a message board and offered to pay Bitcoin to anyone who would order, and either have delivered or deliver themselves, two pizzas for him. 

Yes, you heard that right, he wanted to pay in Bitcoin. Most of you have probably heard about it by now as it’s usage has become more and more accepted. But in 2010 it was just a baby, barely exposed to the outside world. Today though people young and old buy, sell, and trade it. People have become Bitcoin millionaires, billionaires even. They’ve bought “lambos”, that’s short for lamborghini. They’ve ridden it to the moon, that mythical place in the sky which represents the highest level of achievement. Some pro athletes are even opting for their salary to be paid in it. So one thing is for sure, Bitcoin has changed the way the world looks at money. But for those of you who don’t know what it is, that’s fine, don’t feel bad. Let me explain it for you. It’s not too complicated. And we’ve got time.

Bitcoin was the world’s first decentralized cryptocurrency built using a blockchain. It was first pitched by Satoshi Nakamoto in 2008. And what’s interesting is that the real identity of Satoshi, or even if they are a single individual or a group of individuals, is not known to this day. Anyway it uses cryptographic hash functions to create coins as well as verify and secure transactions and transfers of said coins, all digitally, all on computers. With me so far?

Okay, let’s get back to Laszlo. He was flexible with his request. He listed off a variety of toppings that he liked. All the usual stuff. Pepperoni, sausage, tomatoes, olives, peppers and onions. You get the point. But he said nothing weird like fish. And yeah, I get it. You want someone to order you a pizza but you still want to be able to enjoy it. Oh, and he even said plain cheese is fine too, nothing fancy necessary. But they should be large pizzas if possible, as he wanted leftovers for the following day. And as compensation he was offering the equivalent of forty dollars in Bitcoin at the time. If the pizzas cost less than that the remainder would just be a tip. But why did he even have those Bitcoins?

Laszlo was what is known as a miner and miners were like the blue collar workers of the blockchain. They have computers that process transactions on the network and as a reward for their computers helping out they mine new coins. Meaning they were given Bitcoins, lots of them, which is cool. But you couldn’t do much with them. Like almost nothing. Laszlo was a smart guy, he worked in tech, he knew that at that point no one had ever purchased anything with Bitcoin before, ever. So at that point, not so great of a currency after all if you can’t spend it. 

Like I said, Laszlo was smart, so when he put the offer out there he had to know that there was a good chance he wasn’t going to get those pizzas, at least not any time soon. And as his call went unanswered that day, I’m sure he got something else to eat. Unfortunately we don’t know what it was. One of those fated pieces of information lost to time. Did he order his own pizza, did he get chinese delivered, or did he just make a sandwich at home. We’ll never know, there’s no clear record of that.

Okay so back to Bitcoin for a second. The reason why it was so interesting when it was created was because it was totally digital money and it was decentralized, meaning no banks. Which in 2008 was a big deal with the huge financial crisis happening in the United States. Instead of a central institution, the network is peer to peer and their computers verified all transactions. This is easy because there is a record of everything that has ever happened on the network which is the blockchain. Each block contains a time stamp, a hash pointer to a previous block, and the transaction data being processed. So if you try to send Bitcoins, the network can, in an instant, determine whether you actually have the coins to send or not, and will leave a record on the block being mined that those coins were transferred. Safe, secure, fast, and cheap.  

Phew. Let’s get back to those pizzas.

It was a couple days later that Laszlo posted an update on the forum that he was successful in his trade. Two pizzas were delivered to his home and he paid for them in Bitcoin. Pretty cool. Laszlo posted pictures of the pies, supremes from the looks of it. One showed his daughter, standing on the floor, reaching high above her head to snag a slice. They were good looking pizzas. From a big chain that’s known for including their signature garlic dipping sauce and whole pepperoncini in the box. You’ve probably heard of them. Anyway, Laszlo was happy. So much so that he left it open as a standing offer. If anyone else wanted to get him pizzas in the future he would gladly pay them in Bitcoin as well. But no one did… Poor Laszlo.

And poor Bitcoin. The cryptocurrency went through some growing pains in the following years. The price rose and fell in great waves as the popularity of the once obscure coin grew. There was a major hack at the go-to exchange website that handled much of the trading volume for people buying and selling their Bitcoins. Millions of dollars in Bitcoin were missing, so the price and interest faded for a little while. Over time though it recovered. Like anything financial there are highs and lows, just look at the stock market. But with Bitcoin and other later developed cryptocurrencies, it took time for people to fully understand and accept this new way of looking at money. 

But what about Laszlo? It didn’t take long before word of his purchase made waves across the internet. While the fact that Bitcoin was used in an actual commercial transaction was huge for the community, it was soon overshadowed by another idea. As the price of Bitcoin went up, even in the months immediately following the pizza purchase, people did the math on how much those pies were now worth. More specifically, how much the Bitcoins he used to pay for them were now worth. And before long the numbers were staggering. Hundreds of dollars, then thousands of dollars. If poor Laszlo hadn’t craved that pizza, or had just paid cash instead, he would still have those Bitcoins which were now worth way way more. 

Eventually the date the pizzas were purchased, May 22nd, became known as Bitcoin Pizza Day among the online community. The pizza chain responsible for the pies even put up a billboard one year to commemorate it. And now with the popularity of cryptocurrencies exploding Laszlo always makes time to do interviews for various publications wishing to ask him about his famous purchase. They never shy from making note of how much those pizzas are worth today. They ask him if he regrets the purchase. To this the answer is always no. He goes on to explain how what he did that day helped push Bitcoin forward. Like how in 2014 Overstock.com became the first major retailer to accept Bitcoin as a method of payment. And more would follow in their footsteps. Currencies are meant to be spent after all, even the digital ones.

And he’s right. But it’s hard to gain perspective on just how big of a deal that first purchase was without knowing all the numbers. So let me lay it out for you if I can. 

If Bitcoin was going to be the future of money it had to find a way to grow and flourish. In order to do that there had to be enough coins out there to achieve enough value to make it sustainable as a currency. And the only way the coins were created were through mining transactions in the form of blocks on the blockchain. When Bitcoin was just getting started they needed to incentivize miners to do the necessary work but because each bitcoin was worth so little they had to reward people with lots of them. The very first block mined had a reward of 50 Bitcoins. 50 whole bitcoins.

Now back to Laszlo and those pizzas one last time. Covered with sauce, meat, cheese, and veggies. Baked to perfection and hand delivered to his door. Two because he wanted leftovers. Laszlo offered to pay 10,000 Bitcoin for such a convenience. If you know nothing else you must know that that is a ridiculous amount of Bitcoin by today’s standards, but back then it was just forty bucks. Now because of the continued volatility in price I can’t give you an exact value of how much those pizzas are worth today. From the time of recording this, to the time the episode releases, to the time you listen to it, the price can change drastically. But needless to say, if those pizzas were purchased today for 10,000 Bitcoin, those would be some pricey pies. Or if Laszlo simply held on to those coins? Today they’d be worth somewhere in the ballpark of roughly half a BILLION dollars.

Today’s episode was written by me, Cory Greiner. Keepsake is produced and edited by Alex Hoelscher. If you have an idea you’d like us to explore on the show, send us an email at keepsakepod@gmail.com. 

If you want to hear more episodes, please make sure you subscribe to the show on your favorite podcast platform and leave us a review. This is an independently produced podcast and reviews are the best way for us to gain more listeners which will help us produce more episodes. 

And finally, next episode’s item, A Straw.

This has been Keepsake. Thanks for listening.