Back in the heady days of May 2010, Laszlo Hanyecz, a computer programmer, bought two Papa John's pizzas for 10,000 Bitcoins. This princely sum may have been daring when the cryptocurrency was still in its infancy, but today each Bitcoin is trading for $5,641 each. These pizzas cost around $28 million each in today's money. I'm sure Mr Hanyecz is glad he didn't order sides with that!
Bitcoins have seen enormous fluctuations in exchange rates hour to hour, day to day, nearly doubling in value over the course of a month. However, this week, we have seen a London property go on sale for approximately $24 million, to be payable in Bitcoins only, no cash.
The owner of the property noted that "[he wants] to be the first company to transact in Bitcoin. It can be done quicker, more efficiently and it is much easier to deal with than using banks, which are putting in unnecessary over-regulation.”
Smart contracts and other smart financial instruments are destined to revolutionise intermediary exchanges and the way the world does business without human intervention. Distributed ledgers and other technologies built from crypto-foundations have found a legitimate place in the world of property registers, asset tracing and identity management.
However, with Bitcoins exchange rates showing enormous volatility, are bricks and mortar a safer bet than bits and bytes? And can you pay HM Revenue and Customs's stamp duty in 7 year old pizzas?
The co-founder of London Wall admitted this was in its experimental stage and it was trying to work out the details of the sale. For example, the tax on the property that will be paid to the government after the sale could be a couple of million pounds. The company will need to figure out how to pay this to the U.K. tax office.