Look, I wish I knew how to quit you. I did say I might do occasional one-off messages when something struck. I know it’s barely a week since the last Crypto Curious, but it took Tom Brady a few tries at retirement before that stuck. Before I wrapped, I had been working on a thread about the power of memes. It never quite came together, but then yesterday was Bitcoin Pizza Day and I was inspired. We’ll start there, share the “Rest of the Story” and then see how it all ties in to Jesus.
Yesterday, May 22, was Bitcoin Pizza Day, the day Bitcoiners celebrate the dude who spent $270 million for two Papa John’s pizzas. Well, not exactly, but in a manner of speaking. In 2010, a Bitcoin developer named Laszlo Hanyecz posted a standing offer of 10,000 Bitcoin for pizza:
At the time, Bitcoin was trading well under a penny a coin and had been live for just over a year. The original Bitcoin whitepaper, remarkable for its brilliance and brevity, envisioned an electronic cash system used to process payments so the idea of using it to pay for things seemed a worthwhile experiment.
Three days after his original post and a follow-up suggesting that he and his wife liked Papa John’s, Laszlo sent a forlorn post: “So nobody wants to buy me pizza? Is the bitcoin amount I'm offering too low?” Then a day later, 19-year-old Jeremy Sturdivant ordered two pizzas to Laszlo’s house and earned his 10,000 Bitcoin reward (which he reportedly spent traveling the US with his girlfriend).
Barely six months later, Laszlo was already getting roasted for having spent what had at that point risen to $2,600 for two pizzas. A year later, in mid 2011 when Bitcoin had risen to $1.70 a coin, people on the thread were moaning about how they had missed out on all of the cheap Bitcoin and how the Bitcoin community had lost its “all new, exciting atmosphere.”
Now, with Bitcoin trading around $28,000, Bitcoin Pizza Day is a full on *thing* with all of the big names posting photos of themselves with pizzas, ideally with funny toppings, or just lamenting the idea of spending the equivalent of $270 million on pizza.
Paul Harvey was the King of the “wait for it” meme long before the Internet even existed. If you know what AM radio is, there’s a good chance you’ve heard Harvey’s radio shorts “The Rest of the Story” wherein Harvey would tell a story with a twist at the end (here’s an indicative one about a kid named “Skinny” and his dog and some bullies). If Harvey were around today, he would surely think Bitcoin was stupid, but he would also appreciate the “rest” of the Laszlo story.
First, Laszlo apparently paid 10,000 Bitcoin for pizzas not once, but multiple times, likely handing out more than 100,000 Bitcoin. A few months after the first one, he posted an update:
“Well I didn't expect this to be so popular but I can't really afford to keep doing it since I can't generate thousands of coins a day anymore. Thanks to everyone who bought me pizza already but I'm kind of holding off on doing any more of these for now.”
We thought it was painful that he spent $270 million on pizza, but now it looks like he actually spent $2.7 BILLION!
But where it really gets interesting is that he may have done all of this out of guilt. Apparently, Laszlo was one of the very first people to use a graphics card to mine Bitcoin instead of a regular general purpose CPU. CPUs, the heart of your Mac or PC, have to do a little bit of everything and so are pretty good at everything, but not great at any one thing. Graphics cards are “dumber”, but much, much faster at what they do. They also happen to be well suited to the, frankly, dumb calculations that go into mining Bitcoin.
When Laszlo was mining with his CPU, he was winning, at best, one Bitcoin block per day. At that time each block reward was worth 50 Bitcoin (it is now 6.25 Bitcoin per block). When he switched to using a GPU, he started earning “one or two blocks an hour, and occasionally more.”
But Satoshi, the inventor of Bitcoin, was still active on the message boards back then and was not a fan of the idea when Laszlo emailed him:
“A big attraction to new users is that anyone with a computer can generate some free coins… It's inevitable that GPU compute clusters will eventually hog all the generated coins, but I don't want to hasten that day… I don't mean to sound like a socialist, I don't care if wealth is concentrated, but for now, we get more growth by giving that money to 100% of the people than giving it to 20%.”
One of the geniuses of Bitcoin was its self-adjusting difficulty adjustment. Every two weeks, the network assesses how quickly Bitcoin are being mined. If they are coming too fast, the difficulty to mine a block increases, two slow and it gets easier. There is no Federal Open Market Committee that looks at the data and debates where it should go, just an algorithm that plugs along.
For the first year of Bitcoin, the difficulty never got above 1 which meant that you truly could mine Bitcoin with spare cycles on a laptop. Satoshi was right that the GPU revolution was “inevitable,” but was wrong about any ability to forestall it. By July of 2010, the Bitcoin difficulty increased 5x over a week and it started a rise that has continued steadily until it peaked last year (and is now recovering to near that peak again).
Back to Laszlo. The theory from Nic Carter and others, is that Laszlo felt so guilty about “cheating” at earning Bitcoin that he wanted to give them away to better distribute Bitcoin and seed more holders (the equivalent of the air drops we see today in crypto). As Nic writes, “The narrative flips from ‘silly early bitcoiner spends ~$800m on pizza’ to ‘self-sacrificial early miner forsakes wealth for the glory of Bitcoin.’” There’s some credence to this theory. Laszlo admits that he felt bad about using GPUs saying to Satoshi, “Man, I feel like I crapped up your project. Sorry, dude.” In more recent interviews, Laszlo has consistently had no regrets about his lost fortunes, unlike the Welsh dude who in 2013 threw away a hard drive with hundreds of millions worth of Bitcoin and has spent the last three years fighting with the local dump to let him dig up the landfill in search of his lost dreams.
All of this is a roundabout way for me to get back to the power of memes. “Meme” is just a new name for an old phenomena. At the base level, memes are just funny images or videos that are repeated and imitated. It’s impossible to be on Twitter or really any social media without absorbing memes:
At the medium level, memes are “idea shortcuts”: a quick way to communicate a common understanding. But at the highest, most useful level, memes are the stories we tell ourselves, representing shared values and passions.
Memes, when called “memes”, also almost always seem dumb to outsiders (which, of course, helps give the memes power). Even (or perhaps especially) as a crypto enthusiast, it offends me to my core that Dogecoin, the first meme coin, has a $10 billion market cap. It was literally started as a joke on Bitcoin, its inventor swore off of his creation more than 8 years ago and it has virtually no development activity. But Elon Musk, King of Memes, will occasionally Tweet about it or change the Twitter logo to a Shiba Inu and millions of people think it’s “fun.”
Memes inspire more memes and Shiba Inu, an Ehtereum version of Dogecoin, has a $5 billion market cap. Then last month, Pepecoin, the latest of the meme coins exploded. Of course its total token supply of 420,690,000,000,000 has meme jokes embedded in it. Its price has exploded over the past month, up 100,000% and then down 62% now from its all time high, but it now has a market cap of almost $700 million based on “nothing.”
Obviously, memes are not limited to crypto. The entire Game Stop saga was memes meet Wall Street. Some plucky kids from WallStreetBets on Reddit killed a Wall St. hedge fund with a short squeeze and despite it all, Game Stop is still 20x the price it was before it all started. I still can’t help but think it is supremely dumb.
However, the more you look around, the more you see that memes aren’t just Internet obsessions or objects of financial speculation. Memes are all around us. It’s just that the longer they’ve been around, the more they feel “real” and the less they feel like jokes. I mean, just look at this dude:
That image conveys a lot immediately. To some it is the symbol of stability, national pride and civic duty. To others it’s repression, unearned privilege and wasteful spending. But just like the “distracted boyfriend” meme on Twitter, its message is understood immediately.
On the same day that this 74-year-old finally earned his Level 12 holy hand grenade, Warren Buffet (age 92) and Charlie Munger (age 99) were receiving 40,000 pilgrims at their annual meeting in Omaha. Despite the fact that Berkshire Hathaway has basically become a slightly levered S&P tracking stock that seems to have a particular fondness for diabetes (Coke, Dairy Queen, See’s), the thoughts of these nonagenarian are treated as gospel by attendees and the business press.
Of course, while I’m busy offending Brits and my parents, let’s double down and point out that religion operates basically as a meme, some newer, some older. Skeptics often think Mormonism is a bit out there: An angel showed up in Western New York in 1823, revealing to Joseph Smith golden plates written in ancient Egyptian which he translated and then returned back to the angel once he finished a few years later. Now there are 17 million people that are members of the Church of Jesus Christ of Latter-day Saints, most of whom believe deeply enough to give 10% of the income to the church. Meanwhile, many of those people that scoff at the Book of Mormon simultaneously believe that a virgin, who was married by the way, gave birth to the Son of God whereupon a new star rose and helped three men navigate hundreds of miles to a specific house.
Despite appearances, I’m not trying to belittle religion or the monarchy (British or American). Instead, I am trying to recognize my own blindspots and weaknesses. Obviously, I am a “rational” and “analytical” thinker as well as an above average driver. As such, I tend to dismiss meme-driven phenomena, whether it be Dogecoin or Elon Musk or Gamestop as frivolous and unlikely to last. This is a mistake. I frequently misunderstand and underestimate these phenomena. And as the meme matures into a mass movement, I’m still scrambling to dismiss it.
On the flip side, the memes I buy into I never seem like memes to me. When it comes to Internet money made up by an unknown person(s) (?) who then disappeared and is powered by computers trying to guess random numbers with 20 zeros at the front, well, that’s different from these silly stories. That’s not a meme of what money is, that’s just a brillant technical innovation and the future of digital gold.
Which brings us back to Bitcoin Pizza Day. Even just one year into Bitcoin’s existence, the people involved in the Bitcoin project believed its story and vision so deeply that they were willing to make sacrifices to help realize that vision. Bitcoin Pizza became a meme almost immediately after it happened, a shorthand for a community and a movement, and every year, especially as the price of Bitcoin continues to rise, that meme gets stronger and richer in its meaning.
Pretty much everyone that gets into crypto has an early moment of “it’s all made up”: “Sure Bitcoin is totally made up, but so is the U.S. dollar and art and fashion and…” Congressman Brad Sherman admitted as much two weeks ago:
And while the dollar is supported by a large military and the ability to tax, the world’s faith in the greenback is mostly about the softer aspects, essentially the meme of the U.S. dollar. Gold is valuable not so much because of our fondness for it as jewelry or its industrial uses, but because it has a 5,000 year history of being valuable (90% of the gold in the world sits untouched in vaults). Gold is just a meme.
As we get older, it’s easy to become more set in our ways and opinions. But we also live in a world that is globally interconnected within milliseconds. It’s cliche, but ideas travel, take root and multiply faster than ever. I suggest we all strive to keep an open mind.
As always, thanks for reading. Send me questions and please share with your crypto curious friends.
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