On May 22, we're celebrating Bitcoin Pizza Day! You probably know that this event marks the purchase of two pizzas for 10,000 bitcoins. But did you know that the user behind this mythical transaction is also a developer who greatly influenced the evolution of Bitcoin in the early 2010s? In this article, we trace the story of the very first purchase of a physical asset in Bitcoin, as well as that of Laszlo Hanyecz, the pioneer behind this transaction.
Bitcoin Pizza Day: what is it?
Bitcoin Pizza Day is an event celebrated every May 22 by the Bitcoin community, which commemorates the first documented purchase of a physical asset in exchange for BTC.
On May 18, 2010, developer Laszlo Hanyecz Proposed on the BitcoinTalk forum to pay 10,000 BTC in exchange for two large pizzas. At that time, those 10,000 bitcoins were worth only forty dollars. On May 22, 2010, Laszlo confirmed that a user under the alias “Jercos” had accepted his offer. We will learn later that Laszlo finally had sent his 10,000 bitcoins to Jeremy Sturdivant, alias Jercos, a 19-year-old student from California at the time. Jeremy then paid a restaurant called Papa John's to deliver the two pizzas to Laszlo, who was then living in Florida.
Today, Bitcoin Pizza Day is a major event in the community that is celebrated every May 22, as it symbolizes the potential of BTC as a bargaining chip. The annual tradition is to commemorate this purchase by enjoying pizza, which is also ideally paid for in bitcoin.
Laszlo Hanyecz and GPU mining
Laszlo Hanyecz became famous in the Bitcoin community for his historic transaction, earning him the nickname “Bitcoin Pizza Guy.” However, his role in the Bitcoin ecosystem goes well beyond this transaction, as as a developer, he contributed greatly to the beginnings of the invention of Satoshi Nakamoto.
In particular, Laszlo was the first to propose an implementation allowing the mining of bitcoins by graphics card (GPU - Graphics Processing Unit). Indeed, during the first months following the launch of Bitcoin, mining was not very competitive and the difficulty level to mine a block was very low. Users were therefore mining directly with their processors (CPU - Central Proccessing Unit). At the time, it was even a feature included directly in the Bitcoin software offered by Satoshi. Users could thus launch the software on a conventional computer and, after initial synchronization, automatically mine bitcoins.
In 2010, thanks in particular to Laszlo's software, graphics card mining took off. GPUs, capable of running calculations in parallel, quickly took up the majority of block generation and caused the Hashrate to explode. Indeed, the hash calculations required for mining are relatively simple, but they have to be repeated a large number of times. GPUs are very efficient at doing these types of repetitive calculations, while CPUs are more optimized to handle varied and complex tasks, making them much less efficient at mining Bitcoin.
However, Satoshi Nakamoto did not welcome Laszlo's promotion of GPU mining. He even asked her by email to slow down her development. Here is this email sent by Satoshi in 2010, translated into French:
One of the main draws for new users is that anyone with a computer can generate free coins. When there are 5,000 users, that incentive may wear off, but for now, that's still the case. GPUs would prematurely limit this incentive to users of high-end GPU hardware only. It's inevitable that GPU compute clusters will end up taking up all the parts generated, but I don't want to rush this day. If the difficulty becomes really high, it increases the value of each piece in some way as the offer becomes more limited. The offer is the same: 50 coins every 10 minutes. But GPUs are much less well distributed, so the coins generated are only used to reward 20% of people who join the network, instead of 100%.
However, Satoshi Nakamoto already knew, before Laszlo launched his software, that GPU mining would be much more efficient. He mentioned it on Bitcoin Talk and asked to avoid this GPU race. He even developed his own GPU mining software to be ready to defend his protocol in case of an attempt to attack 51% when Bitcoin was launched.
With the gradual industrialization of mining and the constant increase in difficulty, miners abandoned GPUs and then turned to the application-specific integrated circuits (ASICs) we know today. These chips, designed specifically for SHA-256 hashing, surpass all previous technologies in terms of computing speed and energy efficiency.
It is sometimes said that the purchase of the two pizzas by Laszlo Hanyecz was the very first transaction of a good for bitcoin. In reality, it is more like the first exchange of bitcoins for a physical good. At least two other exchanges took place before the one between Laszlo and Jercos.
The very first seems to have been a simple exchange of bitcoin for dollars. This first known sale took place on October 12, 2009, when Martti Malmi, a very active contributor to the first versions of Bitcoin, exchanged 5,050 BTC for $5.02 with a user known under the alias NewLibertyStandard.
On January 24, 2010, another exchange was attempted on the BitcoinTalk forum. A user then offered to exchange a wallpaper image he had created for 500 bitcoins.
Bitcoin Pizza Day is an event that is held every year on May 22 to celebrate the very first purchase of a physical good in exchange for bitcoin. This historic purchase took place on May 22, 2010, when Laszlo Hanyecz ordered two pizzas in exchange for 10,000 BTC. Each year on this date, the community celebrates the anniversary by enjoying pizza.
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