Technically speaking, the first Bitcoin transaction was not for pizzas.
The first Bitcoin transaction was actually from Satoshi Nakamoto, the now-mythical and completely anonymous creator of Bitcoin, to the legendary cryptographer and “cypher-punk” Hal Finney.
It was for a total of 50 Bitcoin and it happened on the 12th January, 2009.
And while we’re being specific with technicalities, the first actual sale of Bitcoin for real dollars, in others words; the first fiat for Bitcoin transaction that we know of occurred on the 12th of October, 2019.
Martti Malmi, who was one of Satoshi’s first helpers and the maintainer of the original bitcoin.org site, sold 5050 Bitcoin for $5.02, receiving the money via Paypal. This gave us the first known “market value” for Bitcoin at 0.001c per Bitcoin.
It wasn’t until the 22nd May in 2010 that the famous “Bitcoin Pizza transaction” actually occurred when Laszlo Hanyecz paid 10,000 Bitcoin for 2 Pizzas from Papa Joe’s.
May 22nd is now commemorated as Bitcoin Pizza Day.– Laszlo Hanyecz
Why’s this Bitcoin pizza order so important?
Well aside from Martti’s transaction which did technically give Bitcoin a price in dollar (or fiat) terms, the Bitcoin Pizza order signified the first time Bitcoin was used for an actual purchase.
This was Bitcoin’s first use as a transactional currency, which is the primary way people understand “money” – and it raised the question of “what can I buy with Bitcoin?” even though it was kind of done in a round-a-bout way.
Lazlo Hanyecz was in the unique position at that point in Bitcoin’s history. He ‘had’ to use it as a currency instead of storing it as an investment, because there was no market value established for it yet. In doing so, he was actually able to showcase Bitcoins potential. His theory? “If nobody is using it, it doesn’t matter if I have it all”. So did he kickstart the momentum of Bitcoin by providing the context of its use? His reasoning on the experiment can be found here.
Where did Laszlo find 10,000 bitcoins to pay for the world’s most expensive pizza?
Ironically enough, Laszlo became known as the Bitcoin Pizza Guy despite actually having been the computer genius behind the development of higher efficiency & higher capacity Bitcoin mining.
He was the first to discover that a GPU could perform hash functions MUCH faster than a general purpose CPU and as a result became the OG or “original” Bitcoin mega miner.
He used this advantage to acquire a significant amount of Bitcoin to begin with, before others caught up and the network became overall stronger and more decentralised. The network was so small in the early days, that the cost in terms of electricity, was extremely low. Furthermore, the original block reward was 50 bitcoin every 10min.
So it didn’t take Laszlo all that long nor a great deal of money to amass quite a bit more than 10,000 Bitcoin.
This is the beauty of Bitcoin’s original organic growth and part of what makes it unique. Nobody and no central authority gave Bitcoin a price. People were drawn to its attributes, to its potential and to its promise, so they initially started playing around with it as if it was a collectible.
Fun fact: All ‘natural money’ (meaning money whose value emerged from the consensus of the people using it), all throughout history actually started off as a collectible, and the more broadly it was held, the more useful it became as actual currency.
So Laszlo, sitting there with tens of thousands of Bitcoin decided to put a post up on the original Bitcoin Forum, and someone took him up on the offer.
The conversation that ensued after he posted the original question is actually quite hilarious and is really summed up by:
“I just think it would be interesting if I could say that I paid for a pizza in bitcoins.”– Laszlo Hanyecz
You can see that in its early stages, it was just a “thing” that people were playing with and attempting to understand.
It maps really well to a chart that Murad Mahmudov put together in 2018:
And here we are, more than 10 years since that fateful day and Bitcoin is well on its way to becoming a reliable, global store of value.
In fact, its credibility as a store of value, immune from inflation and the shenanigans of the fiat currency economy has been validated by not only the likes of legendary billionaire hedge fund managers like Paul Tudor Jones & Stanley Druckenmiller, but also by its inclusion on the balance sheet of a number of major publicly listed companies, most notably Microstrategy ($MSTR) who took $425m of cold hard cash and bought Bitcoin. Square ($SQ) followed suit less than 2mths later with a cool $50m. You can see the full list of publically traded companies and how much Bitcoin they each hold here.
What’s the value of 10,000 Bitcoin today?
Well unless you’ve been hiding in a cave, you’ll know Bitcoin’s grown year on year at a stupendous rate. As of this writing, it’s broken $16,000 USD again, which is more than $22,000 AUD.
That would price the 2 pizzas bought with Bitcoin at $1.6bn US dollars, or just over $2bn Australian Dollars.
Yep. These have gone down in history as the worlds most expensive pizzas ever made, and as Bitcoin’s success continues, the staggering initial price of those pizzas will continue to make people’s heads spin.
Bitcoin and the future of digital payments
Now before you go away thinking that “it was really silly of Laszlo to do that”, it’s important to note that whatever the first transaction would’ve been, Bitcoin’s success was always going to make it an expensive first transaction.
Some “Holders”, ie; people who advocate holding onto your Bitcoin for dear life, have criticised Laszlo or have used the Bitcoin pizza order story as an example of what not to do, but I’d argue that this was necessary in the beginning. The network needed to be bootstrapped, and Bitcoin’s price had to be discovered.
The most important ingredient for an organic, non-centrally controlled money is that it emerges from and is priced by the market. In other words, its users, and not by some “authority”.
Money priced by authority or by decree is by definition, “fiat” money, and is exactly what Bitcoin stands against.
Bitcoin is the money of the people, and even though it might seem crazy that 2 pizzas could’ve been purchased for 10,000 Bitcoins, it’s important to note that the Bitcoin circulated back through the actual Bitcoin mini-economy.
It’s not lost value by any stretch of the imagination. It was a completely natural part of Bitcoin’s journey to becoming global spendable money.
So what’s next for you and Bitcoin?
There are three clear and actionable steps to getting started or further into your Bitcoin journey.
- Learn. Educate yourself on Bitcoin, past and present and understand if it’s a path for you. You can do this by starting at Why Bitcoin Matters and then subscribing to our newsletter.
- Invest. Utilise Amber’s ROI calculator to better understand your investment strategy level and what returns you can expect to see by investing in Bitcoin.
- Buy something. Already using Bitcoin? Next Bitcoin Pizza Day, ie; May 22nd, go out to your nearest Pizza shop and pick up two pizzas in commemoration and thanks to Laszlo Hanyecz, The Bitcoin Pizza Guy, and his truly groundbreaking first official Bitcoin purchase.