One of Bitcoin's Earliest Breakthroughs Is Thanks to Pizza
Bitcoin can trace one of its earliest breakthroughs back to pizza. The now infamous Bitcoin Pizza Day marks the cryptocurrency’s first ever recorded transaction for the purchase of a physical item. After all, a currency is not fully formed unless it is exchanged for a good or service. That is key component of what makes up money and on May 22, 2010, that all changed for bitcoin.
Laszlo Hanyecz Paid 10,000 Bitcoins for Two Large Papa John’s Pizzas
The exchange was facilitated by a back and forth conversation between Laszlo and Jeremy Sturdivant on the online forum BitcoinTalk. Known by their forum aliases “laszlo” and “jercos”, the two somewhat knowingly made history, although they could not have realized the magnitude of the moment at the time.
Pizza was the good of choice thanks to Laszlo’s desire to have some already prepared food. He was hungry. He also wanted TWO pizzas so that he could have some leftovers to nibble on the next day. Who can blame him? The pizzas could either be handmade and then delivered or simply ordered from a delivery company. Jercos obliged. Being in Britain, jercos went the mainstream delivery route and, POOF, two Papa John’s pizzas became the center of the first ever recorded bitcoin transaction. The price tag on the pizzas has become regular fodder for journalists and the Twitter-sphere each year around May 22.
The Cost of the Pizzas Has Reached as High as $90 Million USD
The transaction continues to be referenced in relation to the rise and fall of the worldwide bitcoin price. Laszlo should not feel bad about his 10,000 BTC spend though. The cryptocurrency had little to no significance in terms of price or value at the time. With the pizza purchase, bitcoin came into being in a whole new way. It was a groundbreaking moment.
Previously, the electronic peer-to-peer cash system was simply its original protocol. Functional, yes, but more so in theory than anything else. The pizza purchase marked a necessary point in the evolution of bitcoin if it was to become the world’s most well-known cryptocurrency.
Bitcoin now has the potential to go beyond just buying pizzas. For example, take its impact on financial equity. Learn about how the cryptocurrency can help bank the unbanked.
Breaking Down the Case for Bitcoin as a Form of Digital Gold
Wild financial markets have once again thrust bitcoin into the news. Conversations about whether or not bitcoin a wise investment, if its price is going to the moon (…or to zero), and whether or not it’s a proper hedge against traditional fiat currency and markets are regular fodder these days. These conversations also spark some of the age old debates about bitcoin that a lot of us are still split on. For example, is bitcoin a form of digital gold?
What Is Gold Anyway?
It’s shiny, we can agree on that much. Gold used to be more like a form of money, but it’s better as a store of value. Gold, like many other assets, can act as a hedge against securities. Real estate is considered a store of value. So are things like fine art.
Not all of these stores of value work great as a safe haven asset or are even easy for the average person to tap into though. Recent volatility in the global financial markets has caused many to rush to safe haven asset classes like gold for its relatively stable pricing and accessibility. This means that people place value in gold; i.e. gold is a store of value.
There is some irony when it comes to the way we invest in gold today. You can purchase real gold — gold coins, bullion, jewelry, etc. But you can also purchase an exchange trade fund or other financial vehicle that represents gold. In this case, you don’t own any actual gold. Still, directly or indirectly, people do view gold as a store of value. Gold has a proven track record as a store of value.
Does Bitcoin Work as a Store of Value?
Many would say yes. Bitcoin’s track record is a lot shorter than gold’s but bitcoin is also operating in a much more fast-paced global financial environment than gold ever has. Bitcoin has done a lot in its short time here on earth. Innovation in finances and technology, combined with increased globalization in all aspects of our lives, means that the world can judge the viability of something much quicker. So far, bitcoin passes the test as a store of value.
Bitcoin Has Become a Speculative Asset in Recent Years
Early bitcoin pioneers championed the cryptocurrency as a medium of exchange. Its ability to verify transactions without the need for a central bank or third party was groundbreaking. It still is. Bitcoin has, however, become less of a form of money and more of a mixed asset class with many rushing to it as a form of digital gold.
Some look to bitcoin in times of financial turmoil because it can hold value better than a volatile national currency. Not all national currencies are created equal. Some trade bitcoin more like a security, treating it as something of a store of value that also has a higher investment upside than an asset like gold. Gold might be more stable in terms of pricing, but bitcoin could crush it in terms of return on investment. It might also be a lot riskier.
In Some Ways, Bitcoin Is a New Form of Digital Gold
The kicker though is that bitcoin is much more than just that. Bitcoin goes beyond the concepts associated with gold. The fact is that bitcoin can work well as a medium of exchange. It just isn’t being used that way right now. The current crypto environment and institutional money in the space are forcing bitcoin further away from being a medium of exchange.
The finite nature behind bitcoin makes it unique. There is a limited supply of bitcoin. There will only ever be 21 million bitcoin in existence. Bitcoin is also divisible in ways that gold is not, breaking itself down as far as one hundred millionth of a bitcoin. That’s called a satoshi. The cryptocurrency also brings with it the benefit of being digital. You can carry around your own bitcoin anywhere in the world much easier than you could gold, because it’s digital. Plus, bitcoin cannot be copied. You can’t counterfeit bitcoin and nobody can spend the bitcoin that you possess.
Bitcoin Has a Lot Going for It
Even if bitcoin doesn’t stick around forever, it has already taught the world what is possible when it comes to money and technology. So is bitcoin digital gold? The answer is kind of, with plenty of caveats. Bitcoin’s use case is evolving over time, adapting to the environment in which it exists. Bitcoin is capable of much more than gold but how bitcoin mainstreams will determine what it becomes.
Keep reading about bitcoin and find out how the world's largest cryptocurrency can be used to bank the unbanked and increase financial equity.
Satoshi Nakamoto Invented Bitcoin
The name "Satoshi Nakamoto" is an alias. We don't actually know who Satoshi is. That's about all we know about Satoshi. Well, we know a little bit more. The alias is about as personal as we can get when it comes to the creator of bitcoin. There is plenty of speculation around his identity, with some even believing Satoshi to be more than one person. Multiple people were involved in the early days of the bitcoin code. Some theorists think that bitcoin was created by multiple developers or that Satoshi at least relied heavily on a select few other individuals when getting bitcoin off the ground.
Here Is What We Do Know About the Creator of Bitcoin
Satoshi created bitcoin between 2007 and 2008. He reached out to cryptographer and cypherpunk Adam Back via email in either July or August of 2008 for feedback on bitcoin. Satoshi then reached out to a larger list of cryptographers on October 31, 2008.
Satoshi was likely aware of previous attempts at digital money. These included Back's hashcash, Nick Szabo's bit gold, and Wei Dai's b-money. Prior to bitcoin, the central problem with attempts at digital money was that it was difficult to prevent people from copying or double-spending the currency. Satoshi solved the double-spend problem with bitcoin.
The Early Bitcoin Code Was a Collaboration
Bitcoin's initial code development was a collaboration between Satoshi and other developers like Gavin Andresen. These others helped support the bitcoin network through their own work on it. Satoshi communicated with several of these early collaborators in online forums or via email. He did not reveal any personal information in their conversations.
Should We Care About Satoshi's Identity?
So, we don't know who Satoshi is. Does that matter? Should we even care about his identity? The short answer is no. His identity will not impact the future of bitcoin. The world's largest cryptocurrency works because of the way that Satoshi designed it. Bitcoin does not need a leader.
We can care about Satoshi though. It's interesting to speculate on who he might be or even might have been. For example, Hal Finney was a brilliant developer and early bitcoin collaborator. Finney passed away in 2014 though. Some think that he could have been Satoshi Nakamoto.
Satoshi Nakamoto Left His Mark on Bitcoin
Regardless of Satoshi's identity, he left his mark on bitcoin. Sure, he created the initial code, but he also got his name in there too. The smallest unit of bitcoin is named after him. One "satoshi" represents one hundred millionth of a bitcoin. The identity of Satoshi Nakamoto remains a mystery to this day and bitcoin continues on.
Discover more about bitcoin by learning how the cryptocurrency is mined and comes into existence.