Crypto legend bought pizzas 8 years ago with bitcoin to prove he could

Crypto legend bought pizzas 8 years ago with bitcoin to prove he could

It’s one of the best-known cryptocurrency legends: The guy who bought two pizzas with 10,000 bitcoin back in 2010 to prove the digital currency worked. Now he’s at it again.

This time, early bitcoin developer Laszlo Hanyecz wanted to test the Lightning Network, a technology that runs parallel to a blockchain like bitcoin’s network and aims to speed up transactions. He ended up paying 0.00649 bitcoin for two pizzas, or US$67 (NZ$92), and the transaction cost about 6 cents.

When Hanyecz bought pizza with bitcoin about eight years ago, it was one of the first purchases done with the cryptocurrency, and it showed the bitcoin community that it could actually be used as a means of exchange, he said.

That was put in doubt late last year as transaction fees skyrocketed to as a high as US$55, according to data provider BitInfoCharts, making everyday purchases impractical. 

Developers, including those for the Lightning Network, are working on ways to solve this problem.

Laszlo Hanyecz bought 2 pizzas with 10,000 bitcoin in 2010 - today, that would be a US$100m meal.

Laszlo Hanyecz bought 2 pizzas with 10,000 bitcoin in 2010 – today, that would be a US$100m meal.

“I wanted to show that yes, you still can buy pizzas with bitcoin,” Hanyecz said in a telephone interview from Jacksonville, Florida. “But if it’s a US$50 pizza and a US$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.”

Lightning Network works when two parties open a payment channel between each other, committing funds to the channel. The parties can then transact without having to broadcast the transactions to the bitcoin blockchain, avoiding delays and costs. Once the channel is closed, only the resulting balances are recorded on the blockchain, not the full transaction history of the channel.

The mechanism is far from frictionless at this stage as the technology is still in a beta, or a testing stage.

Hanyecz opened a payment channel with another blockchain enthusiast, who ordered the pizza for him. The delivery person was instructed to only deliver the pizza if Hanyecz showed him the first and last four characters of the string of code that proved he had made the payment. He showed him the numbers he had written down on a notebook, the driver saw they matched with what Hanyecz’s friend had told him, and he delivered the pizza.

The pizza Hanyecz bought was worth about US$30 on May 22, 2010, compared to US$100 million for 10,000 bitcoin today. That day has been remembered as Bitcoin Pizza Day since.

 – The Washington Post

Source

http://www.stuff.co.nz/business/world/101805806/Crypto-legend-bought-pizzas-8-years-ago-with-bitcoin-to-prove-he-could

Australian ‘bitcoin founder’ Craig Wright sued over claimed theft of bitcoins worth billions

Image: BBC Screenshot

  • Craig Wright, the Australian technology entrepreneur who once claimed to have been behind the creation of bitcoin, is being sued by the family of a dead former business partner.
  • The family of Dave Klieman claims Wright wrongly gained control over huge amounts of bitcoin that would be worth billions of dollars today.
  • The suit refers to a company initially set up by Kleiman for the purpose of mining bitcoin.

Australian tech entrepreneur Craig Wright has been accused of carrying out an illegal scheme to transfer ownership of at least $US5 billion worth of cryptocurrency from the estate of his dead business partner.

The suit alleges that Wright forged documents to claim sole ownership over bitcoin and other assets owned by his former colleague Dave Kleiman.

Both men have been rumoured to have had direct involvement in the early stages of Bitcoin, before Kleiman died in 2013.

The dispute centres around a US-based company — W&K Info Defense Research LLC (W&K) — incorporated by Kleiman in 2011, for the purpose of mining Bitcoin.

According to the lawsuit, the resulting bitcoins mined by W&K were transferred to a series of connected trusts in Seychelles, Singapore and the UK.

And there were a lot of them — over 1,100,000 — which at current prices would have a market value of more than $US10 billion.

The lawsuit was filed on February 14 in a US federal court in the southern district of Florida by Ira Kleiman — Dave Kleiman’s brother and the representative of his estate.

The suit states that the exact number of bitcoins rightfully owned by Kleiman’s estate will be determined at trial, but alleges that the figures amounts to at least $US5 billion.

“Various documents including private emails and transcripts from 2014 Australian Tax Office meetings with Craig, his counsel, and his accountant evidence Dave and Craig owned and controlled over 1,100,000 Bitcoins,” the lawsuit stated.

“As reflected in the February 18, 2014 transcript, in the meeting, Craig’s counsel states that the bitcoins W&K mined was held by Seychelles, Singapore, and UK trusts. As Dave owned between 50% to 100% of W&K, at least half of the bitcoins transferred to the trusts belonged to Dave.”

The lawsuit alleged that after Kleiman’s death, the W&K company was wound up and Wright illegally gained access to bitcoins rightfully owned by Kleiman.

“After Dave’s death, Craig concocted a scheme to claim sole ownership of all bitcoins owned by Dave, to steal Dave’s share of IP assets that belonged to Dave and Craig jointly through W&K. 76,” the lawsuit alleges.

“To accomplish this scheme, he drafted and backdated at least three contracts to create a paper trail purporting to document that many of Dave’s bitcoins and IP rights were to be transferred, sold, and/or returned to himself.”

The suit also highlights email correspondence between Ira Kleiman and Wright in March 2014, which implied Wright was holding 300,000 bitcoins belonging to Dave Kleiman.

“In one of the email exchanges between Dave and you, he mentioned that you had 1 million Bitcoins in the trust and since you said he has 300,000 as his part. I was figuring the other 700,000 is yours. Is that correct?,” Ira Kleiman wrote.

“Around that. Minus what was needed for the company’s use,” Wright replied.

In 2015, Wright’s name became the subject of rumours that he was the possible inventor of Bitcoin.

Around that time, Wright’s Sydney home was raided by the Australian Federal Police — although the raid was in connection with a separate tax matter.

Wright went off the radar for a few months but re-emerged in May 2016, claiming that he was the true identity behind Satoshi Nakamoto — the mysterious bitcoin founder.

However, Wright’s attempt to provide cryptographic proof of his identity didn’t stand up under expert scrutiny at the time.

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