Whatâs your favorite food? The crypto industry seems to be partial to pizza.
At least thatâs the case today, with the industry celebrating (with some nostalgia) the first Lightning Network transaction used in the purchase of the Italian food favorite, one made by none other than the man who made bitcoinâs first major purchase â Laszlo Hanyecz.
If that name doesnât immediately ring a bell, the transaction that made him famous will â on May 22, 2010, Hanyecz traded 10,000 bitcoins ($41 at the time) for two Papa Johnâs pizzas.
The transaction went viral then and is legendary today, namely because bitcoinâs price has increased so much that those bitcoins would be worth a whopping $100 million. But it is also heralded as the first bitcoin transaction in which someone bought something from a mainstream merchant, a couple years before the push for merchants to accept bitcoin began.
In that way, Hanyecz was seen as a bitcoin maverick, and now, heâs made himself known again by purchasing pizza with bitcoinâs in-progress (and still dangerous to use) off-chain Lightning Network, what many enthusiasts see as the cryptocurrencyâs liberator from its scaling and payments constraints.
âGood people, harken and know that on this day the one called Laszlo did buyeth the first Bitcoin Lightning Pizzas, bringing us into this new era of glory and cheesy goodness,â blockchain researcher Brian Lockhart wrote on the Lightning mailing list.
And on Reddit, a user commented: âThis dude Laszlo has nerves of steel and should be in the first batch of Mars colonists.â
For Hanyecz, though, itâs not about a dish or his daring, itâs about making sure the vision of bitcoin as a cheaper, faster, altogether better online payment system fulfilled.
âOn my [2010] pizza transaction, I paid a fee of 1 BTC, and it just didnât matter then because I was happy to get anything with it. I was spending this internet money to purchase a real good,â Hanyecz told CoinDesk, adding:
âI came out to post about lightning because I do believe in it. And itâs still in its very early stages, but the lightning network promises to bring back that functionality of being able to buy pizza with bitcoin.â
Like Hanyeczâs 2010 purchase, this most recent one may be only a small blip today, but its symbolic value could prove just as far-reaching. For one, it says much about bitcoinâs technical direction, and the recent debates over this roadmap.
For those new to the industry, bitcoinâs scaling debate was (and in some sense, remains) an exhausting ordeal, one that has pitted different parts of the community against each other.
On one side have been those insisting transactions fees were growing too high for businesses, necessitating an immediate change to the software. On the other, advocates for slow and steady changes that would encourage optimizations and the use of new network layers.
While all sides seemingly wanted the same thing, each had their own urgency and ideas about how that vision might be reached.
In the end, bitcoinâs open-source developer team introduced Segregated Witness, a code change meant to impact scalability, and a competing cryptocurrency bitcoin cash broke away, showing off an 8 MB block size.
And all that started a new era of competing cryptocurrencies birthed from hard forks.
âA lot of the reasons that these altcoins got a big push this past year is that people have started seeing you know bitcoin, it canât process every transaction in the world, we need something better, and all these people came out of the woodwork promising something better,â Hanyecz said.
But he remains very skeptical that any of these new coins are worth a slice.
âAll these things that are supposed to be better, theyâre just kind of a copy and paste for the most part; theyâre not solving the problem,â he said.
He continues, lamenting what he sees as salacious cash grabs between forks and initial coin offerings (ICOs), and firmly planting his stake in the ground as a bitcoin maximalist of sorts.
And with that, Hanyecz is very much interested in seeing the Lightning Network â which Bitcoin Core developers have been working on for years â to resuscitate bitcoin as a payment mechanism.
âYou know itâs not some new thing that somebody came out with to try to sell their coins, you know. Itâs not like theyâre issuing coins and getting rich off them, like these ICOs or whatever,â he told CoinDesk, adding:
âThis is a completely different thing and I could stand behind it because you know, Iâm using it, I bought a pizza with it.â
Yet, even though Lightning development is nearing completion, issues â the biggest of which is the networkâs usability as detailed by Hanyeczâs recent purchase â remain.
For one, because lightning relies on what is called a bi-directional payment channel, Hanyecz had to employ the services of a middle man.
With a bi-directional payment channel, both parties â the consumer and the merchant â would need to set up the payment channel in order to accept lightning payments. Because the pizza place Hanyecz was ordering from did not have the ability to set up a Lightning payment channel, Hanyecz paid a friend who set up the channel to facilitate the transaction.
So, like the 2010 transaction, where Hanyecz paid pizza seller Jeremy Sturdivant to make the pizza purchase, Hanyecz paid a friend who was also running a lightning node to purchase pizzaâs for him in dollars.
While using a middlemen isnât technically the point, the transaction âdemonstrates the basic premise of how this works for everyday transactions,â Hanyecz said.
Still, there were a couple other tricky technical hindrances (one that will likely need to be worked out before lightning is used widely) â Hanyecz had to prepay for his pizza, and needed to prove heâd made the transaction in a simple way, without any kind of invoice.
âI didnât want to prepay and end up with no pizza,â Hanyecz said.
As an easy workaround, the pizza delivery driver was given the first few characters of the hex string, the transactionâs unique payment identifier, and told not to hand the pizza over unless Hanyecz gave him that code.
Once the pizza arrived, Hanyecz flashed a piece of paper with the code, â7241-a8c1,â and the pizza was handed over.
In response, Lightning mailing list regular Robert Olsson wrote that in the future this process could be facilitated with an escrow service of some kind, and urged the mailing list: âStart your brains, guys! Things are getting serious, there is pizza at stake!â
Seeing how far bitcoin has come since Hanyeczâs first crypto-for-crust purchase, he doesnât believe the challenges interfacing with lightning will persist for long.
âIâm thinking that people will figure that stuff out pretty quickly, and theyâll provide ways of doing it automatically so that people donât have to think about it,â he said, concluding:
âThe software takes care of it for you.â
Pizza image via Shutterstuck