“Crypto Titans” is a series of personal interviews conducted by CoinMarketCap with prominent and forward-thinking minds tinkering on and behind the scenes of the cryptocurrency landscape. Click here to see all the Crypto Titan interviews up to today!
While you may not know Laszlo Hanyecz’ name, you might have heard his story: he’s the man who paid 10,000 Bitcoin for two Papa John’s pizzas in 2010. The transaction was the first recorded instance of exchanging Bitcoin for a physical item (in this case, two cheesy ones), and as Bitcoin’s price skyrocketed in the years following the purchase, even mainstream media became obsessed with the man who bought two pizzas for $500, $5,000…and now today, over $90,000,000. There’s even a dedicated Twitter feed for those too lazy to do the math themselves.
Perhaps surprisingly, Hanyecz has no regrets about spending so much money on cheese and bread. And in fact, his interest in Bitcoin has only grown since the original Bitcoin Pizza Day transaction ten years ago.
Have you ordered pizza in quarantine?
Actually, I did order a pizza a couple times. But I generally don’t pay Bitcoin for this, because it’s still difficult. I know there’s people who will broker it, there’s websites, but Papa John’s actually gave me a whole bunch of store credit. I was getting pizza for free for a while. That was kind of cool.
They gave me this little golden pepperoncini — Papa John’s puts a pepperoncini in every box. They gave me a golden version, a little trophy. I got some other stuff from them, little pins and stickers. And they give me like $500 or something of store credit so I could order pizza for a while.
It’s pretty cool just to get recognition from them. They appreciate it, it was a cool experience for me. I got free pizza. So I guess, technically, my 10,000 Bitcoin bought me more pizza later.
People always ask. Yes, I wish I still had 10,000 Bitcoin, but that was a long time ago, and I still was glad to be part of it. I mean, I’m talking to you about it now. Bitcoin is still around. It’s popular. I get to be one of the pioneer guys. That’s worth something.
All these things are aligning. We have a crisis. We have the halving. Mining power is at an all-time high. Things are set up. We’ll see how it unfolds.
I still dabble in it. I think Bitcoin is a great idea and it keeps appreciating in value, which is nice. I do alright with it, I still mess with it and I try to use it where I can, as a gimmick sometimes, but I don’t know if that’s so important.
When people post forced use cases like, “I just paid for such and such in Bitcoin, this is so great.” I think it’s what people are interested in, but I’m not sure if those things are really moving the needle forward for anyone. They create more awareness, and if people keep doing that stuff, I think it’s cool, but none of these things just changed overnight. Money — it’s hard to displace it, but with this corona stuff and the halving, everything that’s coming up, it seems like it’s a really exciting time for Bitcoin.
All these things are aligning. We have a crisis. We have the halving. Mining power is at an all-time high. Things are set up. We’ll see how it unfolds. People are predicting it one way or the other, but nobody really knows. That’s kind of unique, right? Because with things like stock — people treat this as a stock. They gamble, they bet up or down, but in stocks, there are people in power who know things and they can influence things.
Some of that is true with Bitcoin. But in the end, the properties of Bitcoin are still true. It really is distributed. Anybody can mess with it. I can show up and add a ton of mining power to it overnight. We’ve seen that happen, we’ve seen the mining power shift around. We’ve seen political problems where partnerships broke up and there was fallout from that. I’m excited to see how it unfolds.
What’s one thing that you are doing differently now in quarantine?
I actually started getting a lot more physical exercise because I don’t have to go to an office. My office was closed, they don’t want anybody in the office. I have no routines. Now I’m completely free to do wherever I want. I’ve actually gone out every day and I walk four or five miles with a backpack, get exercise. It’s been really positive for me in that regard.
That’s why for me and for a lot of people around here, this has not been negative. Finance stuff aside, I think that my experience has been positive, emotionally. For a lot of people that I know, it’s been that way where it’s sort of a relief, they go, “Ok good, now I can clean my house, now I can take care of these things and do my hobby that I couldn’t do.”
And for some people, it’s an excuse to just be drunk all day —whatever you’re into.
You’ve said in the past that your job didn’t have to do with cryptocurrency per se, but you’ve tried to integrate it when possible. Does it still interest you in that way?
I’ve always been interested. My work revolves around e-commerce.
Guys my age, guys like us, we were tinkering with Linux, Perl, all the stuff early on. We kind of built the first websites. I’m not trying to take credit for all that, but guys in my generation or discipline, we built all this stuff up. We’ve all eventually ended up working in e-commerce and stuff like that.
I’ve always been interested in payments, so with Bitcoin it was like, “Hey, what is this? Just some more fake internet money?”
I mean, there’s tons of them. Before Bitcoin, I had e-gold, and then something else before that. They’re just centralized, alternative money systems for buying the things that you couldn’t buy with a bank account.
In e-commerce, especially now in the past 10 years, usually people are OK with using whatever — that’s really changed — where people are completely okay with whatever.
They’ll just lay down, like “Do whatever you want to me and I’ll pay. Here’s my ID. Here’s my child’s ID.” People are okay with that. As long as everything they’re doing is considered could be mainstream and aboveboard, it’s fine.
Payments: it seems like it’s a solved thing, but it’s really not. All those middlemen and all the reassignment of responsibility that happens with credit cards is a mess. I think that for merchants, if there was a better choice, [they would take it]. Now, people are going with the mainstream, that’s who they’re trying to appeal to. They want to make a lot of money, so you’ve got to appeal to the mainstream, the most customers you can.
Credit cards, PayPal and Apple Pay — I think that everybody would love to ditch those companies if they could, because they’re expensive. They take advantage of the merchant more than anyone. The way they give people rewards and guarantees is they just claw it back from the merchant.
Payments: it seems like it’s a solved thing, but it’s really not. All those middlemen and all the reassignment of responsibility that happens with credit cards is a mess. I think that for merchants, if there was a better choice, [they would take it]
Do you think payment is still an important use case for Bitcoin?
It’s always interested me in that regard, that was the original use case. People pitched it to get your attention: “Hey this is a payment system that allows you to pay anyone, anywhere.” Nobody has to know that you did, and there’s no there’s no clawing it back. There’s no cheating. All those things sound really appealing.
We’ve spent the last 10,11 years digging into those things and finding the flaws with them. But on the surface, that stuff is still true and it’s a lot more true than it is for credit cards. With a credit card, you can’t even charge me because you’re not a merchant. You have to establish some special trusted account. And then if I want my money back, they just take it back from you.
But one thing is, people who pay us in Bitcoin, I don’t have to worry about fraud. I know I’m not going to get charged back. I can even give them a discount for paying with it, because for me as a merchant, it’s cheaper.
I think it’s challenging because it always comes up when people say, “Oh, what if a billion people start using this, it’s not going to work, it’s going to be overloaded.” And that’s true. That’s true for a lot of things in the world. We’ve been trying to figure it out, and there isn’t a solution to just make it scale infinitely. It’s an interesting problem.
But, yes, I do still think that that payment is an interesting use case for e-commerce especially. We need to somehow figure out how to make it worth it.
Like BitPay which, you know, everybody hates them now — whatever label people are giving them now, “corporate sellout.” But their business was that they made a PayPal for Bitcoin. And when the mining fees, when the transaction fees rose, they’re like, “Well, this isn’t gonna work. We can’t do $0.50 transactions and charge people $8.000 to log that transaction.” That whole business model fell apart, not through a fault of their own. It’s just that it doesn’t work. That’s the scaling problem that everybody’s been trying to figure out.
The company that I work for, it’s an e-commerce company. I’m actually probably not going to be working there much longer, but I’ve been there for a long time. One of the things that I contributed there was I set up a Bitcoin payment option on their website, which it sounds pretty simple, and there’s a lot of ways to do it. You always see articles writing about BTC pay servers, but the reality of it is that it isn’t quite that simple, you have to explain it to customers, to handle all the errors and mistakes that happen. It’s a new technology.
But one thing is, people who pay us in Bitcoin, I don’t have to worry about fraud. I know I’m not going to get charged back. I can even give them a discount for paying with it, because for me as a merchant, it’s cheaper. It’s predictable. I know I get this money, and this money is fine. The mail could still get lost, but the money won’t.
Whereas with credit cards, retailers sell stuff and then three months later they get it clawed back from them because somebody reported fraud on their card. The merchant is somehow responsible for that fraud, which they’re really not. But the banks make it their problem because it’s like, “Well, we can’t take it from the customer, we can’t crap on the poor people. We just take it from the people who have the money”.
If everybody paid with Bitcoin on e-commerce sites, they wouldn’t need a bunch of fraud crap and all this other weird stuff people do to try to alleviate the bots and the hackers and whatever else.
After working so long in e-commerce with all of its payment problems then, do you think that we are getting closer to wider adoption in terms of Bitcoin payments?
I’m very interested in seeing that use case evolve, things like the Lightning Network. But the Lightning Network — there’s always people running headlines about how exciting it is, but it’s very experimental. It’s not really ready for primetime.
There’s applications and things you can download and interact with it today, but it’s mostly just a proof of concept and there’s still issues to work out. In the same way that Bitcoin is solving the Byzantine Generals Problem, Lightning Network is simply riding on top of the Bitcoin solution. It can’t be a solution on its own.
There’s a lot of challenges with it. I keep up with that. I don’t know enough about it to contribute at that level. But I do play with it, and I do track it and I hope to see some good stuff come out of that. It was something people have been talking about since 2013, and now it’s seeing a lot of interest. Those kinds of things, unfortunately, tend to encourage centralization, which is sort of the enemy of this whole thing. But it’s unlikely that it’s just going to explode overnight. We still have plenty of time to work on it.
In the same way that Bitcoin is solving the Byzantine Generals Problem, Lightning Network is simply riding on top of the Bitcoin solution. It can’t be a solution on its own.
But if a merchant can get Bitcoin instead of an IOU for a credit card — if that was the only option you had — you could simplify your whole workflow, your whole fraud holding and capturing payments and all this other stuff. It’s just a different paradigm to get into people’s heads instead of PayPal accounts, CloudFlare, whoever — hold my hand, save me from the bad, control me like here, please let me be your puppet, you tell me what to do.
People have to be their own people. It’s that whole “be your own bank.” But it also means you have to evaluate these things yourself. The traditional middlemen have spent the past twenty years of e-commerce convincing people, “Don’t think, don’t you worry. You just let us handle it and we’ll take care of this for you, and just click here if you need support.” I think that those two worlds are clashing.
That’s the challenge in traditional e-commerce. We’re trying to get people to pay Bitcoin, especially the kinds of people that surf into your site from Instagram and Facebook. That demographic of people, they’ll sign up for whatever — “Apple, Google, take care of this for me.” And the Bitcoin people are completely different. I don’t know if those two necessarily mix too well.
What’s the last time you paid for something in Bitcoin? here
A couple of days ago? I mean, it’s just at an e-commerce shop. I used the Wasabi Wallet, it was just a shirt or something. It’s just mostly a gimmick, but at least I don’t have to worry about being rejected for fraud or anything. I make my own transaction, I set my mining fee, I could see it on the blockchain. I could even mine my own transaction, if I get lucky, right?
It appeals to me as somebody who’s been doing it for a long time. But I’m not sure that it’s something that can be sold to a person who is looking for a mainstream solution. It’s a different way of thinking, like the people who go and hunt for their own meat versus the kinds of people who get in the drive thru at Burger King.
I make my own transaction, I set my mining fee, I could see it on the blockchain. I could even mine my own transaction, if I get lucky, right?
Have you heard about those people, Bitcoin carnivores? That section of the Bitcoin population that only eats steak?
That sounds cool. I wonder how strict they are with that. Can’t be good if you are restricting your diet to one thing. That is interesting, though.
I’ve heard of people who have started their own little crypto community or microcosm and they just trade crypto. I think it’s cool. It makes a good case study. But I’m not sure if that’s a scalable solution in itself. Everywhere you look, it’s all about making smaller communities with like-minded people. But people always talk about Bitcoin being this global thing, it’s going to take over the world to be worth a billion dollars — I don’t really see how one follows from the other. But I’m interested to see what is going to happen.
I’m just saying there’s a lot of people in this community that think that a crisis is the rocket fuel for Bitcoin.
This coronavirus stuff, this is the kind of stuff that these guys are waiting for. By these guys, I’m not trying to include or exclude myself. I’m just saying there’s a lot of people in this community that think that a crisis is the rocket fuel for Bitcoin. I guess we’ll find out.
Do you think Bitcoin has done well so far in this crazy situation?
I think it’s done really well. It didn’t crash to zero. I mean, there was a lot of volatility, but people are still interested in buying it. They might be foolish, but it seems like they’re still interested in it. As long as they’re interested in it, I don’t think it’s going away.
In the computer world, finances aside, there are (I myself work on some of these) old retro projects, people try to restore old video games and stuff like that. There’s people that fix up pinball machines.
I don’t think Bitcoin is ever going away. It may. It may not. I don’t know. I mean, who knows?
But it seems like there’s still mainstream interest in it. I don’t think we have to worry until we start seeing the blogs and the exchanges all fading away. If anything, this has been a really good time for them. It’s just more business recently, especially with all the fears. People think it’s like a hedge against inflation, and whether that’s good or bad in the long term, it’s for anyone to decide.
Things are valuable only because they’re scarce. The fiat money, the dollars are not scarce. It’s not like they’re being secretive about making more of them. People say, “Oh, I’m a millionaire.” They count how much money they have. But the other alternative is counting what percentage of the supply they have. That’s really the only objective way to measure how much value you command.
With Bitcoin, the whole idea is that we know what the supply is. We can verify it, we know it’s not going to keep growing forever.
It’s a big paradigm shift for people to start thinking about, instead of just being a customer of some other company and saying, this one’s better, I’m going to give it a good rating. You have to actually just not be a customer of any company and just figure out how to do these things on your own, which I know isn’t for everybody.
Wait, did you just compare an interest in Bitcoin to being fascinated with old video games? Do you think Bitcoin is retro?
No, no, no. I meant that there’s all these projects, you can find people restoring old technology and old video game consoles.There are still people out there in these small communities that mod those games, they take the game and they make it work on new hardware. They add new capabilities to it.
But if you ask the mainstream people — “Dude, these games are dead.” Games these days have a lifetime of a couple weeks before people move on to the next one. But the old games, the classics, they’re still around. There’s these diehard people in Bitcoin, they call them the buyers of last resort. And some people will just never give it up.
“Hey, look, here it is. This is what we’ve been working on for over 10 years. This thing is a type of money. It’s not the same as what you’re used to. But they can’t print more of this one. So take it or leave it.”
The price pumping in Bitcoin comes from the mainstream interests. I was just trying to compare it to the fact that I don’t think Bitcoin is dying ever, because even if there is some really bad stuff and people lose interest in it, there are going to be guys that are interested.
If the price drops to $3,000, that’s just the people on the gambling sites, the exchanges, the futures and derivatives, whatever they’re calling them. It’s like a casino. That’s just the casino players taking their chips. I don’t think that is really a reflection on the interest in Bitcoin or how it’s faring. Bitcoin is going to do its thing quietly.
Stuff like this is good advertising for it. But the people who have been following this since the start, they’re used to this by now. And if anything, everybody is excited to see how the mainstream people react to it. Now they’re like, “Hey, look, here it is. This is what we’ve been working on for over 10 years. This thing is a type of money. It’s not the same as what you’re used to. But they can’t print more of this one. So take it or leave it.”
This interview has been edited and condensed.