Bitcoin Pizza

Bitcoin Pizza refers to the purchase of two pizzas for 10,000 bitcoin on 22 May 2010, widely remembered as the first time bitcoin was used to buy physical goods. Laszlo Hanyecz, a programmer in Jacksonville, Florida, offered the coins on the Bitcointalk forum to anyone who would have two large pizzas delivered to him. Another user, Jeremy Sturdivant, accepted and ordered two pizzas from Papa John's, paying roughly $41 in total. The date is celebrated each year by the crypto community as Bitcoin Pizza Day.

The story has become a parable of early adoption. At the prices bitcoin later reached, the 10,000 BTC would have been worth hundreds of millions of dollars, so the pizzas are often called the most expensive ever bought. The episode also illustrates how bitcoin began acquiring a market value, moving from a hobbyist experiment to something people would exchange for real goods, a key step in its use as a medium of exchange.

In 2010, bitcoin was a curiosity known to a few hundred enthusiasts. Coins were easy to create on an ordinary computer and had almost no market price. One of those enthusiasts wondered whether he could actually buy something with them, so he offered a large pile of coins to anyone who would buy him dinner.

Someone agreed, bought the pizzas with a normal bank card and kept the coins. In that moment, a stack of digital tokens was swapped for something you can eat, which helped show that bitcoin could work as money. Years later, when bitcoin's price soared, people looked back and realised just how much that pizza order would be worth.

Hanyecz posted his offer on 18 May 2010, asking for two large pizzas, enough to have some left for the next day, in return for 10,000 BTC. For several days no one took him up on it. On 22 May he reported that the deal had been completed, posting photos of the pizzas. Sturdivant, then a teenager using the forum name "jercos", had placed the order for delivery and received the bitcoin. The implied price was about 0.4 US cents per bitcoin. Sturdivant later said he spent the coins on travel rather than holding them. Hanyecz bought further pizzas with bitcoin in the following weeks, spending tens of thousands of coins in total.

The pizza deal came early in Bitcoin's history. Satoshi Nakamoto had published the whitepaper in 2008 and launched the network in January 2009, starting with the genesis block. In 2010 there were only a few ways to buy or sell bitcoin, such as small exchange websites, and prices were set informally. Mining could still be done with a home computer, and Hanyecz is credited with being among the first to write software for mining with graphics cards, which greatly increased the number of coins one person could produce. Within months, the first large exchange, Mt. Gox, began trading, and bitcoin's price moved above a few cents. By February 2011 it reached one US dollar.

Each 22 May, crypto companies, exchanges and communities mark Bitcoin Pizza Day with pizza giveaways, discounts for paying in crypto and social media posts calculating what the 10,000 BTC would be worth. The anniversary has become a simple way to explain bitcoin's history and the growth in its price to newcomers. It is also used to discuss whether bitcoin should be spent or saved: some see the pizzas as a costly mistake, while others argue that spending was exactly what early adopters needed to do to prove the system worked. Hanyecz himself has said in interviews that he does not regret the purchase.

The Bitcoin Pizza story highlights several themes:

• Price discovery. New assets acquire value through trades like this one, which help establish what people will give up to hold them; see price discovery.
• Hindsight bias. Looking back, the outcome seems obvious, but in 2010 there was no way to know whether bitcoin would survive at all.
• Spending versus holding. Because bitcoin's supply is limited, many holders prefer saving, the attitude known as HODL; critics argue that this makes it harder for bitcoin to function as everyday money.
• Volatility. The enormous change in the coins' value is a reminder of how much bitcoin's price has moved, upwards and downwards, over its life, discussed in volatility.

For tax purposes, buying goods with bitcoin today is generally treated as disposing of an asset, which can trigger capital gains tax in many countries, a rule that did not trouble anyone in 2010 but affects people who spend crypto now. The forum thread where Hanyecz made his offer is still online and is one of the most visited pages in Bitcoin's early history.