Date
17 October 2018
There are analysts out there who say bitcoin will reach US$50,000 by the end of this year, and to the other extremes, those who believe it will be worthless. Photo: Reuters
There are analysts out there who say bitcoin will reach US$50,000 by the end of this year, and to the other extremes, those who believe it will be worthless. Photo: Reuters

Bitcoin, human stupidity and the US$82 mln pizza order

How could a pizza order be worth US$82 million? The answer lies in Bitcoin pizza day, which first happened on May 22, 2010 – when Bitcoin user Laszlo Hanyecz bought two pizzas with the cryptocurrency. Our friend spent 10,000 BTC on the Papa John’s order, in the first widely documented purchase of a goods with Bitcoin. BTC was priced at around US$8,200 on 22 May 2018, and so the order is now worth a cool US$82 million, an event celebrated in an annual Bitcoin pizza day.

They don’t have that brand in Hong Kong, but it better be some darn good pizza, because that kind of money would be able to buy you some of the nicest flats in the city. As a result people are bemoaning the fact that our pizza hero would have been HK$643.5 million to the good if he had just held on to those Bitcoin.

Stupidity? The judgment would be too simplistic. It all comes down to how one assigns value to assets or currency. Is an equivalent flat on the Peak worth all that money or merely a result of market manipulation? Should people have faith in Fiat currencies when they are subject to whims and manipulation of central governments and can be printed when needed as opposed to BTC, which has a cap?

The argument usually put forward is: Bitcoin and other alt coins are based on nothing and can’t buy any ‘stuff’. True, but it depends on sentiment of market and the people. The zeitgeist of this moment, is in digital culture, communication and now, currency. The idea is the most important element, the infrastructure will follow if this concept is strong enough.

Should you go and put your life savings in Bitcoin? Hell no. Well, if you have an extremely high threshold for risk go for it. There are analysts out there who say Bitcoin will reach US$50,000 by the end of this year, and to the other extremes, those who believe it will be worthless. The likes of Warren Buffet and Bill Gates are famous sceptics, but the fact is no one has a crystal ball, or shall we call it, a ‘cryptoball’, particularly when it comes to digital currencies.

The fact is there is a strong demand for cryptocurrencies. One could argue this is the result of money laundering, criminal activities and pure speculation. Or you could say people are sick of the 5 ‘b’s:
- Bad service from commercial banks and other financial entities
- Blown-up fees for currency trading
- Barriers of entry to investment and assets
- Bailouts for those who destroy the market; see 2008
- Bonuses for the established cartels

So what will happen next? A look into the cryptoball says it will be a rollercoaster ride. In any case, don’t call Laszlo Hanyecz an idiot. Proof of concept is a crucial step; our hero was the first man on the moon, the guy who led the charge on D Day, another in the pantheon of pioneers. If you get rich off BTC, thank him; if you lose everything and Bitcoin becomes worthless, remember that the guy got two pizzas for cheap.

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RC

EJI contributor

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