If you have been involved in the bitcoin market, then chances are that you’ve heard of Bitcoin Pizza Day, a celebration of the time when Laszlo Hanyecz purchased two pizzas with 10,000 BTC, in order to prove that the digital currency can be used as a means of value.
When it happened, the transaction represented one of the world’s first purchases made directly via the digital currency. At current value, this is roughly worth over $100 million, a massive price for two pizzas.
Now, recent reports indicate that the early adaptor and bitcoin developer, wanted to test out the Lightning Network, a fairly controversial technology whose purpose is to run parallel to a blockchain, to speed up transactions. To do this, Hanyecz decided to purchase 2 pizzas for 0.00649 BTC, equal to $67 at the current market value. The transaction cost for this purchase using the Lightning Network was of only 6 U.S. cents, considerably lower when compared to current transaction fees for bitcoin.
The Lightning Network is a fairly controversial project, given the fact that the cryptocurrency community is divided between two sides – one of which wants to further trial the technology, whereas the other one does not. It is important to point out the fact that last year, bitcoin transaction fees skyrocketed to a new all-time high, as people saw fees as high as $55 for relatively small transfers of value. The Lightning Network has been well-praised for being able to make transactions both faster, but also cheaper.
In a recent press statement, Hanyecz mentioned 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.”
For those who do not know, the Lightning Network works when two parties open up a payment channel between one another, and hence commit the funds to that channel in particular. Parties can then transact with one another, without having to broadcast the transactions over to the blockchain, therefore avoiding both delays and high transaction fees. Once the payment channel is closed, the resulting balances will be recorded on the blockchain network, rather than the full history containing all transactions carried out.
However, the technology is not frictionless at this point, as it remains in a testing stage. If adopted, in the future, it could make digital currencies more similar to cash, and therefore help improve adoption rates.