A Blog by Jonathan Low

 

May 19, 2021

Why 'Bitcoin Pizza' Won't Accept Bitcoin

The logic of this ostensible 'enterprise' sums up the problems with cryptocurrency in their current state. JL 

Jessica Klein reports in Motherboard:

Bitcoin Pizza will begin deliveries May 22 in ten U.S. cities including Boston, New York, Seattle and San Francisco. People could go to Bitcoin Pizza’s website, choose a pizza, and select when they want it delivered. A local pizza shop should then deliver that pizza. The initiative aims to fund Bitcoin development with its profits—but, it won’t accept bitcoins. The goal isn’t to get people using their bitcoins transactionally, it’s to “raise money in the form of depreciating fiat dollars to help fund bitcoin development.” Bitcoin Pizza's message is that Bitcoin is too good to spend

There’s a new decentralized pizza chain in town. Called Bitcoin Pizza and created by investor and podcaster Anthony Pompliano, co-founder of Morgan Creek Digital Assets, the initiative aims to fund Bitcoin development with its profits—but, as many incredulous critics pointed out, it won’t accept your bitcoins.

Bitcoin Pizza, created in partnership with Popchew, which helps launch food brands, will begin deliveries on Saturday, May 22 in ten U.S. cities including Boston, New York, Seattle, San Francisco, and Houston. Starting on Tuesday, people in those cities could go to Bitcoin Pizza’s website, choose a type of pizza, and select when they want it delivered (between May 22 and 29, the length of the Bitcoin Pizza pilot). A local pizza shop in the area—not a big chain—that’s partnered with Pompliano’s initiative should then deliver that pizza in a branded Bitcoin Pizza box. (Yes, this initiative also aims to “take on Big Pizza,” according to its website, by supporting local business.)

The May 22 launch purposefully coincides with the 11 year anniversary of the  original Bitcoin pizza, Pompliano wrote to Motherboard in an email. In that transaction, Laszlo Hanyecz paid 10,000 bitcoins to buy two pizzas. Today, that would be the equivalent of about $400 million USD, making them, retroactively, the world’s most expensive pizzas. 

While Bitcoin was once seen by many as a form of spendable currency, it's been a long time since those days and now it's mostly a vehicle for speculation. Hanyecz's purchase is now legendary as an example of why it's not always a good idea to trade your deflationary bitcoins for anything else, even delicious pizza. 

“We don't want people giving up their bitcoin for pizza,” writes Pompliano. In other words, Bitcoin Pizza isn’t accepting customers’ bitcoin in the event that they become another Hanyecz and miss out on a steep appreciation of their funds. This perspective makes sense coming from Pompliano, who has said the price of one bitcoin could reach $1 million USD in his lifetime (the price is currently fluctuating around $40,000 USD).

But why not accept Bitcoin, if the goal is to support the cryptocurrency? Many critics pointed this out on social media, suggesting it's a bit of a self-own. However, it makes more sense if you see it from the perspective of a dedicated Bitcoiner: fiat currency is inflationary trash, pizza is delicious, and Bitcoin is good. What if there was a way to funnel fiat into Bitcoin development, using pizza? Voila. 

The goal of Bitcoin Pizza, therefore, isn’t to get people using their bitcoins transactionally. According to Pompliano, it’s to “raise money in the form of depreciating fiat dollars to help fund bitcoin development.”

To do this, the pilot’s profits—derived from an upcharge on the cost of pizza—will go to the Human Rights Foundation’s Bitcoin Development Fund. The fund reported $316,303 in donations as of April 15 and has been running for about a year. HRF’s Chief Strategy Officer Alex Gladstein said in an interview that donations so far have gone to Bitcoin Core developers, a privacy newsletter, internships for students aiming to learn about bitcoin, and people working on building bitcoin-related apps in “emerging markets” like Argentina and Senegal. 

Gladstein said he isn’t exactly sure how the fund will use its Bitcoin Pizza donations, but it plans to support “at least two core developers” with its next funding allocation. It also plans to spend pizza money on “work in the Lightning ecosystem.” Lightning apps facilitate faster, lower fee transactions than those made on the Bitcoin main chain, which could help make Bitcoin more useable in the emerging markets where the HRF aims to contribute. Gladstein said he expects the Bitcoin Development Fund to receive somewhere around $10,000 to $20,000 from Bitcoin Pizza’s pilot.

The HRF’s fund, of course, accepts Bitcoin. Though it was not involved in creating the pizza delivery campaign, Gladstein said Bitcoin Pizza “might be working on adding” a bitcoin payment option. Gladstein is interested in seeing merchants accept Bitcoin, he said. While he acknowledges that many Bitcoin users want it “as a store of value and an inflation hedge,” he adds that it’s also useful for making “censorship resistant payments that aren’t attached to your identity.” This could be helpful for activists who may otherwise have their bank accounts frozen.

“From HRF’s perspective, it's very important that bitcoin both be understood as a savings instrument, but also as a payments network,” he says. “They're both very, very important.”

Bitcoin Pizza's message that Bitcoin is essentially too good to spend is unlikely to quell critics who will likely see it as yet another admission of defeat. In the end, Bitcoin Pizza appears to support Bitcoin as a speculative investment while cutting against the mission of the organization it supports. As usual, two visions of cryptocurrency's future are on display, but instead of butting heads they're working together to support the technology and spread tasty pizza.

1 comments:

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