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From Pizza to Payments: How Bitcoin Went Mainstream
Today, Bitcoin is one of the most popular cryptocurrencies, with a market cap of $1385.49 billion. You can use it to buy anything from local groceries to air tickets and luxurious cars. As of today, there are over 34,000 Bitcoin ATMs worldwide, and popular brands like Twitch and NewEgg accept it.
While Bitcoin may seem like a standard payment method now, it wasn’t always like this. In its early days, Bitcoin was only mined as a hobby, and no one used it for commercial transactions until one day, someone decided to challenge the status quo. Let’s see how Bitcoin turned from a hobby to the world’s #1 cryptocurrency used by millions of people every day.
The story of how a Bitcoin enthusiast spent $707,433,000 on a couple of large pizzas never gets old. On May 18, 2010, Laszlo Hanyecz, a Florida-based programmer, made a rather absurd request to exchange 10,000 Bitcoins for “a couple of pizzas”.
After waiting for 4 days and several to-and-fro conversations with other community members, he finally got his pizza.
It was Jeremy Sturdivant, a bright-eyed 19-year-old who went by the username “jercos” on Bitcointalk.org, got Laszlo two large pizzas, which were worth $41 at the time. Later, Laszlo also posted an update on the forum confirming that he successfully exchanged 10,000 Bitcoins for 2 large pizzas.
At the time, Bitcoins were worth nothing. This was the first-ever commercial transaction that gave Bitcoin a real-world value of $0.0041. Looking back, this seemingly insignificant transaction transformed how people perceived Bitcoin, demonstrating its potential as an ideal alternative to traditional currencies. Ever since the pizza exchange in 2010, people across the world have been celebrating Bitcoin Pizza Day on 22nd May.
Let’s look at Bitcoin’s origin, understand its purpose, and the consequences that followed Bitcoin Pizza Day.
Bitcoin was conceptualized as a “peer-to-peer electronic cash system” in 2008 to counter the Global Financial Crisis (GFC) that fueled inflation and adversely affected the economy in the early 21st century.
The domain bitcoin.org was registered on August 18, 2008. Later, in January 2009, Satoshi Nakamoto, the anonymous creator of Bitcoin, released the software as open-source code. He aspired to create a “trust-less” cash system that didn’t require third parties to moderate or approve transactions. This would take financial control back from giant corporations and give ordinary people an opportunity to be a part of the financial system.
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.”
– Satoshi Nakamoto (Anonymous Creator of Bitcoin)
Ever since its inception, Bitcoin has remained the talk of the town. However, people only mined it out of passion, and no one really used it to buy or sell goods and services. Laszlo Hanyecz challenged the status quo and changed people’s perception of Bitcoin by exchanging it for pizza.
Later, in an interview, Hanyecz told The Sun, “I mean, I coded this thing and mined Bitcoin and I felt like I was winning the internet that day.” He added, “I was like, ‘Man, I got these GPUs linked together, now I’m going to mine twice as fast. I’m just going to be eating free food; I’ll never have to buy food again.’”
Hanyecz’s pizza transaction quickly made headlines as it was the first-of-its-kind electronic payment at the time. He repeated it many more times and spent approximately 100,000 Bitcoins on pizza that summer.
Gradually, people started using Bitcoin to exchange goods and services. In early 2010, a Bitcoin enthusiast who went by the name of “dwdollar” on Bitcointalk.org announced that he was creating an exchange platform for Bitcoins. Two months later, on March 17th, the first-ever cryptocurrency exchange platform, Bitcoinmarket, went live.
Until February 2011, Bitcoin wasn’t worth a dollar. Its value was merely $0.003, which means a single dollar was worth 333 Bitcoins. However, things began to change very quickly. By June 2011, Bitcoin’s price had shot up 30 times, reaching a peak of $29.60 on June 8, 2011. The price hike was followed by a steep recession, which caused Bitcoin’s price to drop to $5 by the end of the year.
At the time, Mt. Gox became a notable crypto exchange, accounting for 70% of the total Bitcoin trading volume worldwide. However, the platform suffered multiple security breaches, which caused it to suspend trading, file for bankruptcy, and cease operations in February 2014.
While the collapse of Mt. Gox was an unfortunate event for the crypto community, it didn’t stop Bitcoin from growing at a rapid pace. By then, many major exchanges were facilitating Bitcoin trading, and it was one of the most popular cryptocurrencies, with a market capitalization of $4.4B in December 2014. This is when its widespread adoption began.
The seemingly insignificant Bitcoin pizza order turned into a worldwide phenomenon. By early 2015, Bitcoin had become widely popular among tech enthusiasts, and the rising number of crypto exchanges fueled its growth. Here’s how Bitcoin grew year on year since the pizza transaction in 2014:
By July 2014, several giant corporations, such as NewEgg and Dell, had already started accepting Bitcoins. The American game developer Zynga also announced it was testing Bitcoin payments for in-game assets in over seven games. In the same year, more companies like Overstock.com and TigerDirect also enabled Bitcoin transactions.
Bitcoin was steadily gaining popularity worldwide. Over 100,000 merchants, including giants like Microsoft, Twitch, and Expedia, had started accepting Bitcoin payments by 2015. The same year, MAK — Museum of Applied Arts in Vienna became the first museum to acquire “Event Listeners” — a screensaver art using Bitcoin.
Bitcoin got the government’s attention across many countries. In March 2016, the Cabinet of Japan recognized several virtual currencies, like Bitcoin, as “similar to real money.” Over the years, academic interest in Bitcoin increased steadily. The total number of Google Scholar articles increased from 424 in 2012 to 3580 in 2016.
Bitcoin also experienced its second halving event on July 9, 2016. In a halving event, the supply of Bitcoin is reduced by 50% to ensure it retains its value over the long run. The halving hugely impacted Bitcoin’s price, boosting it from $368 in January to $966 by the end of the year.
Several retail and institutional investors started considering Bitcoin as an investment asset. Its trading volume increased by 1500% on Bitso — a popular Mexican exchange platform. In the same year, online stores accepting Bitcoin in Japan increased 4.6 times over the past year. The Japanese government also passed a law to accept Bitcoin as a legal payment method, and Russia legalized the use of Bitcoin.
In March 2018, Bitcoin Lightning Network was released — a second layer on top of Blockchain that facilitates near-instant transactions at the lowest network fees. The Lightning Network was introduced to solve Bitcoin’s scalability issue. Despite being a robust network, Bitcoin was unable to handle large volumes of transactions. The Lightning Network settles payments off-blockchain, scaling Bitcoin’s capacity to process millions or billions of transactions per second.
Due to the COVID-19 crisis, economies were shut down worldwide. However, this didn’t stop Bitcoin from growing. It went from $3,844 in January to $7,240 by the end of the year. This growth was fueled by citizens’ fear of government policies and changes during the pandemic.
Despite the constant threat of COVID-19, Bitcoin grew about 302% in 2020. The third Bitcoin halving significantly boosted Bitcoin’s price by slashing the block reward from 12.5 BTC to 6.25 BTC. People started using Bitcoin as an alternative to fiat currency because it was contactless and facilitated near-instant payments.
In June 2021, El Salvador’s president, Nayib Bukele, announced that the country would adopt Bitcoin as legal tender. It became the first-ever country to take such radical measures to promote financial inclusion and foster foreign investment. Later, the Central African Republic also followed suit, allowing their citizens to use Bitcoin as a primary currency for everyday transactions.
This year, Bitcoin is set to break records thanks to its widespread adoption worldwide. On January 10, 2024, the SEC approved 11 spot Bitcoin ETF proposals from Blackrock, Fidelity, and others — marking an important milestone for the crypto community. This means that investing in Bitcoin has become easier and less intimidating, attracting billions of dollars from investors worldwide.
Bitcoin also reached a new all-time high of $73,750 on March 14, 2024. And with the fourth halving due in April, its price is expected to increase significantly in 2024. As more and more people start using Bitcoin, it will also become a more stable and highly resourceful asset for day-to-day transactions.
Since its inception, Bitcoin has been steadily growing. A pizza that was once worth 10,000 BTC is now just 0.00061 BTC. Well, the price of Pizza has not gone down. It’s the Bitcoin that went all the way from $0.0041 to $70,000.
Bitcoin is the future of payments. According to the latest report by Blockware Solutions, Bitcoin adoption will hit 10% in 2030. After that, the growth will be parabolic, eventually reaching 80% of the population by 2050.
We already know only 21 million Bitcoins will ever exist in its ecosystem. If we divide that number by 8 billion—the global population—we can predict Bitcoin’s value in the coming years. Owning just one Bitcoin today and holding it for a long time could generate generational wealth.
Bitcoin is the future of digital payments. Thanks to Laszlo Hanyecz, now you can use Bitcoin to buy everything from gadgets to groceries and everything in between. Bitcoin is the only currency that cannot be inflated, is future-proof, and gives you full control over your funds.
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