History repeats itself.
Regarding the cryptocurrency world, it is sometimes in the form of a cryptocurrency reaching the same value from its initial days, and at others, it is in the form of a legendary transaction taking place in a different setting.
Laszlo Hanyecz, a Bitcoin developer and the man known for making the first transaction to buy goods with Bitcoin, recently made another transaction to mark the usage of Bitcoin Lightning Network in the same capacity.
Hanyecz had made the now famous transaction of buying two Papa John’s pizzas in 2010, for a now whopping number of 10,000 Bitcoins. The coins had valued at around $41 at the time and are currently valued at more than $106 million at press time.
As per Hanyecz, he had made that transaction to show people that cryptocurrency was not just a means to show numbers and values on a computer screen, but could actually be used in the real world as a means for exchange – since not many people in 2010 took Bitcoin or the concept of cryptocurrencies that seriously.
Way after Hanyecz’s transaction, after the slow rise of Bitcoin and other cryptocurrencies, the perspective of viewing them as real means of value did garner significant traction. Hanyecz’s goal was achieved to some extent, but it was then challenged by Bitcoin’s sky-high transaction fee and snail speed transaction speed, which at one point in recent times hit more than $50 with a few hours to confirm the transaction – essentially negating the concept of “pizza” transactions, since no one would have liked to pay $50 in transaction fee for pizza that was not even valued at $50, and which could only get delivered a day after it was ordered.
That is where the Lightning Network came in, which introduced pre-funded payment channels that could not only allow actual “lightning fast” transactions that were not depended on confirmation from the blockchain to get validated, but also cut the transaction fee significantly.
Having deployed only a few weeks ago, the Lightning Network is currently being tested and thus has to establish itself as a tangible solution to Bitcoin’s transaction issue, and to drive attention towards this solution, Hanyecz thought to recreate his momentous pizza transaction.
Hanyecz used the Lightning Network to purchase pizza to signify the growth that Bitcoin has made as a network and cryptocurrency, and how the implementation of the Lightning Network would only help increase its everyday usage.
About the 2010 transaction
While the pizza transaction performed in 2010 had seemed insignificant at the time, as Bitcoin’s presence and reach grew further, it was slowly established as the stuff of cryptocurrency legend, a status that only got cemented when Bitcoin’s value rose to unprecedented levels.
It seems that Hanyecz had to earn the stature that the transaction got him, as buying pizza through Bitcoin had not been easy.
Hanyecz first had to find someone to transfer the required amount to in Bitcoin, who could then pay for the pizza for him in fiat. He was going through this complicated procedure as no regular vendor accepted Bitcoin payments at the time.
He started his hunt for the third party with Reddit and found them a few days later on May 22 (now known as Bitcoin Pizza Day).
The person who Hanyecz found received the Bitcoin and then paid for the pizza in fiat on Hanyecz’s behalf, completing the then-difficult transaction and opening doors to major vendors accepting payments in Bitcoin.
Its connection to the current lightning network transaction
Much like the transaction that Hanyecz had done in 2010, he also had to find a middleman who set up a lightning node to receive Hanyecz’s Bitcoin payment, since for a Lightning Network transaction to be completed, the network requires the channel to be set up at both ends, which is something that still needs to be adopted by payment vendors.
Similar to how Hanyecz showed the effectiveness of Bitcoin enabled transactions in 2010, he aims that this particular transaction will show vendors and users alike how Bitcoin, with the help of the Lightning Network, still can perform transactions, which would allow more and more people to look into this new method.