In May 2010, Laszlo Hanyecz, a developer from Florida, made the first known purchase of a good with bitcoin. He was mining tens of thousands of bitcoin from his home. Even though he had large amounts, he had nowhere to spend his bitcoin.
Fortunately, he was part of a Bitcoin Talk Forum started by Satoshi Nakamoto, the anonymous creator of bitcoin. On the day of his first bitcoin purchase he had posted a question to the forum: was anyone willing to deliver two large Papa John pizzas to his home in exchange for 10,000 bitcoin? Someone agreed and the day has since become known as Bitcoin Pizza Day.
Here’s where it gets interesting: At that time, 10,000 bitcoin were worth about $25 USD – a reasonable exchange. Today, 11 years later, those 10,000 bitcoin are worth around $570 million USD. The story carries an important lesson in value. Bitcoin is often dubbed a volatile asset, but when you look at it’s performance – a compound annual growth rate of 200% over the last decade, the best return of any asset class —.that’s value at a colossal scale.
So why is bitcoin growing so quickly? For one thing, governments are printing an unprecedented amount of money (as a result of the pandemic) which will devalue our currency over time. People fear we may be entering an inflationary era where the price of goods and services keeps rising, while we work harder and longer hours to be able to afford the same goods. Put another way, they fear our dollar will lose purchasing power while our savings shrink.
Fear is what motivates people to reallocate their capital and readjust assets and bitcoin offers an exit system to a world plagued by growing inflation. With bitcoin capped at 21 million in supply, people can finally own a digital asset that is protected from hyper inflation.
And it’s not just people investing in bitcoin: it’s corporations, like Tesla and MicroStrategy, who are putting billions of dollars into bitcoin. It’s municipalities, like the City of Miami, looking to invest some of the city’s treasury into bitcoin. It’s institutions like Citibank saying “bitcoin is at a tipping point and could become the currency of choice” or Deutsche Bank saying “bitcoin’s market cap if $1 trillion makes it too important to ignore.” Whether you’re bullish or not, bitcoin is now more mainstream than it is fringe.
Bitcoin Pizza Day is a reminder of how far the asset has come in just over a decade. It’s withstood ups and downs, and despite its skeptics, continues to survive and thrive.
Given the value of bitcoin today, many wonder if Laszlo has regrets of spending 10,000 bitcoin on two large pizzas. Would he have done it differently if he knew how valuable it would become? Surprisingly, the answer is no. Here’s what Laszlo has said about his decision:
“It was a really interesting system but there was no one using it and so if no one’s using it it doesn’t matter if I have it all. I was trying to spread it around and get people interested.” – Laszlo Hanyecz
Today, people in the bitcoin community celebrate Laszlo’s bold move in helping expedite its adoption. We acknowledge how far the asset has come and look optimistically to what the next 10 years will bring.