Laszlo Hanyecz ,the guy who bought two pizzas with 10,000 Bitcoin back in 2010 to prove the digital currency worked is back again.
This time, Laszlo Hanyecz wanted to test the Lightning Network. He ended up paying 0.00649 Bitcoin for two pizzas, or $67, and the transaction cost about 6 U.S. cents. Lightning Network is a technology that runs parallel to a blockchain like Bitcoin’s network and aims to speed up transactions.
This also stood proof of the fact that mainstream purchases can be made using cryptocurrencies. But transaction fees reached stratospheric heights last year making it impractical to enter into everyday purchases with the cryptocurrency mode.
BitInfoCharts revealed that a whopping fee of $55 was charged on every single transaction. This problem is being catered to by developers of the Lightning Network who are trying to emphasize on the benefits of virtual currencies by diminishing its loopholes.
Laszlo Hanyecz revealed in a telephone interview from Jacksonville, Florida that:
“I wanted to show that yes, you still can buy pizzas with Bitcoin. But if it’s a $50 pizza and a $100 transaction fee, that doesn’t work. The idea is that on Lightning Network we can get the security of Bitcoin and instant transfers. You don’t have to wait for a blockchain confirmation.”
What is Lightning Network?
Two parties entering into a transaction need to open up a payment channel between them for committing funds to the channel and effective working of the Lightning Network. This can diminish chances of delay and exorbitant cost as the parties can transact directly without having to broadcast the transactions to the “../blockchain/” target=”_blank” rel=”noopener noreferrer”>Bitcoin Blockchain. Only the resulting balances get recorded on the blockchain ledger after the closure of the channel compared to its full history.
The technology behind this mechanism is still in the beta testing stage making the mechanism far from being frictionless. A payment channel was inaugurated by Hanyecz in collaboration with another blockchain aficionado who had placed the pizza order for him. The delivery person was under special instruction to deliver the pizza only if the first and last four characters of the string code was revealed to him thus proving payment. The pizza was delivered when the numbers written down in the notebook was revealed to the delivery boy which was in sync with the ones shared by Hanyecz’s friend.
The pizza bought on 22nd May 2010 was worth $30 compared to $100 million accounting for 10000 Bitcoins today. This day has been marked in cryptocurrency calendar as Bitcoin Pizza Day as a sign of the massive potential this dynamic token holds.
Rohit Kukreja is a Commerce graduate with Financial Markets expertise involving Stocks, Forex, Futures & Options Market and now Bitcoins & Cryptocurrency Markets. Blockchain Enthusiast but not a techie, Rohit is an active member of various Blockchain & Crypto communities all over India.