The man who bought pizza with 10,000 Bitcoins lost far more than what you see.

Author: Colin Harper

Compiled by: Deep Tide TechFlow

Laszlo Hanyecz and the legendary pizza transaction

For Bitcoin users, May 22nd - also known as “Bitcoin Pizza Day” - is a day of feasting.

Today, Bitcoin enthusiasts around the world are celebrating by enjoying pizza to commemorate the famous pizza order made by Bitcoin developer and miner Laszlo Hanyecz on May 22, 2010. 15 years ago on this day, Hanyecz exchanged 10,000 Bitcoins for two large Papa John’s pizzas from another early Bitcoin user.

This transaction marked the first time Bitcoin was used for purchasing goods in the real world, and at that time, this cryptocurrency had only been born for a year.

Laszlo Hanyecz posted the original Bitcoin Pizza Day post on May 18, 2010.

His request was fulfilled by another Bitcointalk user four days later.

The Bitcoin community commemorates this “greasy” holiday every year with a mix of celebration and sentimentality, as the value of those 10,000 Bitcoins has now exceeded 1 billion dollars.

However, what most people do not know is that Hanyecz may have spent as much as 79,000 Bitcoins to buy pizzas back then, which would be worth over 8.7 billion dollars today. Amidst the shock of everyone at him “squandering” billions of dollars, one question is often overlooked: how did Hanyecz originally acquire such a large amount of Bitcoins?

The little-known Bitcoin pizza transaction

In 2019, I interviewed Hanyecz, and he mentioned that he had almost spent 100,000 Bitcoins on pizza in 2010. At that time, he didn’t think much of it, after all, Bitcoin was virtually worthless back then.

Han Yez pointed out that the Bitcoin forum Bitcointalk is filled with users who often give away hundreds or thousands of bitcoins for free to newcomers.

Hayes does not regret this experience. He described himself as having “won the internet that day,” because his “hobby bought him dinner.”

In fact, he was so satisfied with this transaction that he kept this pizza trade proposal open from May 22, 2010, to August 4. On August 4, he posted on Bitcointalk saying, “I can no longer continue this, as I can no longer mine thousands of bitcoins every day.” (We will elaborate later on why he could no longer mine.)

In the same post, he also thanked “those who had already bought him pizza,” indicating that he indeed made more pizza transactions between May and August.

Four years later, Han Yates recalled his former Bitcoin wealth in another post. He wrote, “I spent it all on pizza.” and included the Bitcoin address he listed when he first posted on Bitcointalk as proof.

This wallet shows that from the creation date of April 10, 2010, until the proposal to close transactions on August 4, Hanyetz transferred out a total of over 79,000 bitcoins. Today, this wallet only has enough bitcoins left to buy a large pizza, and its last large transfer occurred in June 2011, with a total transfer amount of approximately 81,432 bitcoins.

How did Hanyetz obtain these Bitcoins?

In 2009 and 2010, the Bitcoin block reward was 50 bitcoins per block (plus transaction fees), and Bitcoin blocks were generated approximately every 10 minutes. Hanyetz’s 81,432 bitcoins accounted for about 1.5% of all mined bitcoins at that time. So how did he accumulate this wealth?

Han Yez is one of the early prolific developers of Bitcoin. He not only designed the first MacOS client for Bitcoin but also became the first person to discover that mining could be done using graphics cards (GPU) after the anonymous founder of Bitcoin, Satoshi Nakamoto.

Hayes announced this discovery in May 2010. Before this, Bitcoin miners typically used the central processing unit (CPU) of laptops or desktop computers for mining. The addition of graphics cards increased the computing power by 10 times, significantly improving the mining efficiency of Bitcoin.

This discovery opened the “Pandora’s Box”, and by the end of 2010, the computing power of the Bitcoin network increased by 1300 times. However, the intensification of competition is precisely the reason why Hayek lamented in his August 2010 Bitcointalk post that he could “no longer mine thousands of Bitcoins every day.”

Bitcoin’s hash rate skyrocketed after the legendary figure Laszlo Hanyecz discovered GPU Bitcoin mining on Bitcoin Pizza Day.

Bitcoin Pizza Day and communication with Satoshi Nakamoto

Hayes’s discovery also attracted a polite “criticism” from Satoshi Nakamoto. As Nathaniel Popper describes in his book “Digital Gold,” Nakamoto had a “complicated sentiment” towards the early introduction of GPU mining, seemingly having anticipated this situation long ago.

Satoshi Nakamoto wrote in an email:

“For new users, a major attraction is that anyone with a computer can generate some free Bitcoin. When the user base reaches 5000, this incentive may weaken, but it is still effective at present. GPU will prematurely limit the incentive to only those with high-end GPU hardware. GPU computing clusters will ultimately monopolize all generated Bitcoin, but I do not want to hasten the arrival of that day.”

If the difficulty becomes very high, it will actually increase the value of each Bitcoin, as the supply becomes more limited. The supply remains the same: 50 Bitcoins every 10 minutes. However, the distribution of GPUs is far from as uniform as CPUs, so the Bitcoins generated will only reward 20% of the people, rather than 100%.

I don’t mean to sound like a socialist; I don’t mind wealth concentration, but right now, by distributing this money to 100% of the population instead of 20%, we can achieve greater growth.

Furthermore, the longer we delay the GPU arms race, the more mature the OpenCL library becomes, and more people will have OpenCL-compatible graphics cards. If we see excessive GPU usage from the difficulty coefficient, we can reconsider the OpenCL issue. Perhaps my efforts to maintain the ‘purity’ of GPUs are nearing their end, but so far, it has been effective.

This inevitably raises a question: Did Hayetz give up his Bitcoin wealth to atone for accelerating the centralization of Bitcoin mining?

Only Hanyetz knows the answer, but he may never tell us, as he hardly ever gives interviews anymore. After all, why bring this up again? “Bitcoin Pizza Day” always reminds him that he traded a few ordinary pizzas for a fortune worth billions in future value.