Spitfire List Web site and blog of anti-fascist researcher and radio personality Dave Emory.

For The Record  

FTR #760 Bit[coin]burg–The Rebels Without a Clue

Dave Emory’s entire life­time of work is avail­able on a flash drive that can be obtained here. (The flash drive includes the anti-fascist books avail­able on this site.)

Lis­ten: MP3

Side 1  Side 2

Intro­duc­tion: Ronald Rea­gan observed that; “Gov­ern­ment isn’t the solu­tion to your prob­lems. Gov­ern­ment is the prob­lem.” In the decades since that utter­ance, many young, ide­al­is­tic indi­vid­u­als have embraced lib­er­tar­ian polit­i­cal phi­los­o­phy. Well intended, those adher­ents are ulti­mately embrac­ing a phi­los­o­phy that will lead to a form of fascism.

Tak­ing a slight detour from our dis­cus­sion of “The Adven­tures of Eddie the Friendly Spook,” we exam­ine a clan­des­tine, online cur­rency called bit­coin. Bit­coin has been hatched from the same lib­er­tar­ian, Lud­wig von Mises milieu to which Eddie “get rid of social secu­rity, bring back the gold stan­dard” Snow­den adheres.

Used by the Silk Road net­work for clan­des­tine and largely ille­gal activ­i­ties, Silk Road allegedly was mas­ter­minded by Ross Ulbricht, an admirer of Ron Paul and devo­tee of the Lud­wig von Mises eco­nomic and social ideology.

Alone among sov­er­eign nations, Ger­many rec­og­nizes bit­coin, in keep­ing with the mon­e­tary the­o­ries of Friedrich von Hayek, a dis­ci­ple of Lud­wig von Mises.

Although the cur­rency has usu­ally been attrib­uted to one Satoshi Nako­moto. An arti­cle in Fastcompany.com hypoth­e­sizes that the actual devel­op­ers of bit­coin were Charles Bry, Neal J. King (who offi­cially denies any involve­ment) and Vladimir Oks­man. All three work for a Ger­man firm called Lantiq.

Lan­tiq is derived from Siemens, A.G. (a com­pany inex­tri­ca­bly linked with the Bor­mann cap­i­tal net­work and the BND). Bit­coin may well be an Under­ground Reich/BND project.

Bitcoin’s defend­ers tout it as an alter­na­tive to fiat cur­ren­cies and some­thing that will prove a vehi­cle for eco­nomic sal­va­tion for the world. That claim has proved utterly vain, as bit­coin has proved to be, if any­thing, even more sub­ject to crooked manip­u­la­tion as other currencies.

Pro­gram High­lights Include: The role of Golden Gate Cap­i­tal in cre­at­ing Lan­tiq; Golden Gate Cap­i­tal personnel’s back­ground in Bain Cap­i­tal (Mitt Romney’s firm); Bain Capital’s con­nec­tion to the mur­der­ous El Sal­vado­rian junta that ruled in the 1980’s; Bain’s link to alumni of Howard Hughes’ oper­a­tions; Bain’s links to Bebe Rebozo’s old bank, allegedly used to laun­der Bor­mann net­work funds; the hope by some that bit­coin could help replace the dol­lar as the reserve cur­rency of choice in the world; Peter Thiel’s embrace of bit­coin; Peter Thiel’s back­ing of Tea Party favorite Ted Cruz; review of Thiel’s cap­i­tal­iza­tion of Ron Paul’s super PAC (located in Provo, Utah); the close polit­i­cal rela­tion­ship between Ron Paul and Mitt Romney.

1. Dis­cus­sion begins with analy­sis of the Silk Road network’s alleged mas­ter­mind, Ross Ulbricht. Ulbricht is a fan of Ron Paul and an adher­ent to the eco­nomic and social the­o­ries of the Lud­wig von Mises Institute.

Exem­pli­fy­ing the appar­ently well mean­ing but mis­in­formed young cit­i­zens attracted to Paul and the von Mises school, Ulbricht appears to exem­plify the adage that “The [Silk?] road to Hell is paved with good intentions.”

Ron Paul is a hard­core fas­cist, joined at the hip with Nazi and white-supremacist ele­ments. The Lud­wig von Mises insti­tute is explic­itly anti-democratic and is joined at the hip with the neo-Confederate move­ment, which jus­ti­fies African-American slav­ery and ratio­nal­izes a future seces­sion by the South­ern states.

Indica­tive of Ulbricht’s super­fi­cial­ity is his state­ment that; “Just as slav­ery has been abol­ished most every­where, I believe vio­lence, coer­cion and all forms of force by one per­son over another can come to an end. . . .” 

In addi­tion to the von Mises Institute’s jus­ti­fi­ca­tion of African-American slav­ery prior to the Civil War, Wal­ter Block (and aide to Ron Paul and a Lud­wig von Mises Insti­tute scholar) has crafted what he calls “vol­un­tary slavery.”

We view “vol­un­tary slav­ery” as the ulti­mate col­lat­er­al­ized debt obligation.

“Who Is Ross Ulbricht? Piec­ing Together The Life Of The Alleged Lib­er­tar­ian Mas­ter­mind Behind Silk Road” by Ryan Mac; Forbes; 10/02/2013.

. . . While at Penn State, Ulbricht was also polit­i­cally active. A mem­ber of the school’s Col­lege Lib­er­tar­i­ans group, he took part in on-campus debates that were doc­u­mented by the school’s news­pa­per, The Daily Col­le­gian. In one arti­cle from March 2008, Ulbricht is iden­ti­fied as a sup­porter of Ron Paul who had attempted to become a del­e­gate for the then-presidential can­di­date at the Repub­li­can National Convention.

“There’s a lot to learn from him and his mes­sage of what it means to be a U.S. cit­i­zen and what it means to be a free indi­vid­ual,” he told the school paper. “He doesn’t com­pro­mise his integrity as a politi­cian and he fights quite dili­gently to restore the prin­ci­ples that our coun­try was founded on.”

In Silk Road’s com­mu­nity forums, the Dread Pirate Roberts always made the lib­er­tar­ian under­pin­nings of his orga­ni­za­tion clear. In Oct. 2012, he noted in a post: “Silk Road was founded on lib­er­tar­ian prin­ci­ples and con­tin­ues to be oper­ated on them … The same prin­ci­ples that have allowed Silk Road to flour­ish can and do work any­where human beings come together. The only dif­fer­ence is that the State is unable to get its thiev­ing mur­der­ous mitts on it.” He called Paul “a mighty hero in my book” in a note from Nov. 2012. . . .

 This Is The Physics Stu­dent And Used Book Seller Who Allegedly Ran The ‘Silk Road’ Mar­ket For Drugs And Assas­sins” by Jim Edwards; Busi­ness Insider; 10/02/2013.

. . . . But he lost his inter­est in physics and chem­i­cals some­time after he grad­u­ated from Penn State in 2008, in favor of a new pas­sion — lib­er­tar­i­an­ism. He wrote on his LinkedIn profile:

Now, my goals have shifted. I want to use eco­nomic the­ory as a means to abol­ish the use of coer­cion and aggres­sion amongst mankind. Just as slav­ery has been abol­ished most every­where, I believe vio­lence, coer­cion and all forms of force by one per­son over another can come to an end. The most wide­spread and sys­temic use of force is amongst insti­tu­tions and gov­ern­ments, so this is my cur­rent point of effort. The best way to change a gov­ern­ment is to change the minds of the gov­erned, how­ever. To that end, I am cre­at­ing an eco­nomic sim­u­la­tion to give peo­ple a first-hand expe­ri­ence of what it would be like to live in a world with­out the sys­temic use of force.

He became a fan of the Aus­trian School of Eco­nom­ics, a con­ser­v­a­tive take on the free mar­ket. The indict­ment against him says he became a devo­tee of the Mises Insti­tute, and that the writ­ing of Lud­wig von Mises and Mur­ray Roth­bard “provid[ed] the philo­soph­i­cal under­pin­nings for Silk Road.”

Silk Road was, in many ways, the apoth­e­o­sis of free mar­ket eco­nom­ics. Because it was com­pletely encrypted and com­pletely anony­mous, using Bit­coin — an uncrack­able “cryp­tocur­rency” — it stood out­side any gov­ern­ment reg­u­la­tion at all, includ­ing the crim­i­nal law.

Until today. . . .

2. Next, the pro­gram high­lights a com­pelling work­ing hypoth­e­sis that bit­coin was devel­oped by indi­vid­u­als asso­ci­ated with the Lan­tiq company.

In 1985, Ronald Rea­gan incurred the wrath of many when he agreed to visit the Bit­burg ceme­tery in Ger­many, where Waf­fen SS sol­diers are interred.

In this post, we exam­ine the ori­gins of the bit­coin vir­tual cur­rency, which evolved into the online cur­rency of choice for the cus­tomers of the Silk Road net­work.

Alone among sov­er­eign nations, Ger­many has rec­og­nized bit­coin as legal ten­der, fol­low­ing on the the­ory of Friedrich von Hayek of the Autrian school of eco­nomic the­ory, dis­sem­i­nated from (among other insti­tu­tions) the Lud­wig von Mises Insti­tute.

Credit for cre­at­ing this vir­tual cur­rency is gen­er­ally given to one Satoshi Nako­moto. An arti­cle at Fast­com­pany hypoth­e­sizes that three indi­vid­u­als named Neal J. King, Charles Bry and Vladimir Oks­man are the true orig­i­na­tors of bit­coin. (Lis­ten­ers are emphat­i­cally encour­aged to read the entire linked arti­cle to flesh out their under­stand­ing of Adam Penenberg’s argument.)

Of more than pass­ing inter­est under the cir­cum­stances is the fact that all three of the hypo­thet­i­cal cre­ators of bit­coin work for a com­pany called Lan­tiq.

Lan­tiq is a German-based firm that has evolved from Siemens. Siemens spun-off Infi­neon A.G. (a semi­con­duc­tor firm). Then Infi­neon and Golden Gate Cap­i­tal cre­ated Lan­tiq.

Golden Gate Capi­tol was formed by alumni of Bain Cap­i­tal, Mitt Romney’s firm.

In addi­tion to links to the death squad-manifesting El Sal­vado­ran junta of the 1980’s, Bain has links to the milieu of the late bil­lion­aire, Howard Hughes, as well as the milieu of Bebe Rebozo’s bank­ing oper­a­tions. The lat­ter appears to have had links to the Bor­mann cap­i­tal net­work.

If we were going to express this in bib­li­cal phrase­ol­ogy, it would go some­thing like this: “And so Siemens begat Infi­neon. And Bain Cap­i­tal begat Golden Gate Cap­i­tal. Infi­neon did lie with Golden Gate Cap­i­tal. And thus did Infi­neon beget Lantiq.”

Among the points to be con­sid­ered here are:

  • Siemens func­tions as some­thing of a quar­ter­mas­ter for Ger­man intelligence-the BND, the suc­ces­sor to the Rein­hard Gehlen spy out­fit. It is inex­tri­ca­bly linked with BND, as well as with the Bor­mann network.
  • With Lan­tiq hav­ing evolved directly from Siemens, Lantiq’s pos­si­ble con­nec­tions with BND should be care­fully weighed.
  • Lantiq’s links with Golden Gate Cap­i­tal, run by alumni from Mitt Romney’s Bain Cap­i­tal, war­rants con­sid­er­a­tion that both Lan­tiq and GGC may be Under­ground Reich, Bor­mann entities.
  • We have noted that Infi­neon A.G. is a lead­ing pro­ducer of TPM chips, which were cited by the Ger­man press as a back­door source for NSA snoop­ing. We won­dered if that TPM back­door might actu­ally be a BND backdoor?
  • Neal J. King has denied Penenberg’s mus­ings. He may, of course, be doing so hon­estly. IF, how­ever, bitcoin’s devel­op­ment was in con­junc­tion with BND, denial would be pro forma intel­li­gence methodology.
  • We will explore the bit­coin land­scape at greater length in a future post for greater per­spec­tive and understanding.

The Bit­coin Crypto-Currency Mys­tery Reopened” by Adam L. Penen­berg; fastcompany.com; 10/11/2011.

. . . I looked at the date on the patent appli­ca­tion fil­ing: 08/15/2008.

Now take a look at the domain bitcoin.org. It was reg­is­tered three days later.


Cre­ated On:18-Aug-2008
Now that is one hell of a coin­ci­dence. What are the odds that a phrase in Nakamoto’s Bit­coin paper would be repli­cated in a patent appli­ca­tion filed the same year? Fur­ther, what are the odds the domain name for Bit­coin would have been reg­is­tered 72 hours after the patent appli­ca­tion was filed?

Based on the tim­ing, I won­dered if one of the peo­ple on the patent application–or per­haps all three–had based the Bit­coin con­cept on research that led them to this patent appli­ca­tion. The three inven­tors listed on patent #20100042841 are Neal King, Vladimir Oks­man, Charles Bry, and all three have filed numer­ous patent appli­ca­tions over the years.

Neal King (he also goes by Neal J. King from Munich, Ger­many) is listed on a num­ber of patent appli­ca­tions, notably “UPDATING AND DISTRIBUTING ENCRYPTION KEYS” (#20100042841) and “CONTENTION ACCESS TO A COMMUNICATION MEDIUM IN A COMMUNICATIONS NETWORK” (#20090196306), both of which seem Bitcoin-y to me.

Charles Bry, who also resides in Munich, has filed sev­eral appli­ca­tions, many deal­ing with nodes and networks.

Vladamir Oks­man, who lives in the U.S., has sev­eral patent appli­ca­tions, too, and they too seem related to net­works, nodes.

I found another patent appli­ca­tion that lists the three of them as inven­tors, filed June 2008–two months before the Bitcoin.org domain was registered.


“Abstract One embod­i­ment of the present inven­tion relates to a method for key man­age­ment in a com­mu­ni­ca­tions net­work. In this method, a pub­lic key authen­ti­ca­tion scheme is car­ried out between a secu­rity con­troller and a plu­ral­ity of nodes to estab­lish a plu­ral­ity of node-to-security-controller (NSC) keys. The NSC keys are respec­tively asso­ci­ated with the plu­ral­ity of nodes and are used for secure com­mu­ni­ca­tion between the secu­rity con­troller and the respec­tive nodes.“
Could that also be related to Bitcoin?

Now, another coin­ci­dence: The Bitcoin.org domain was reg­is­tered by a Finnish provider, based in Helsinki.

Charles Bry trav­eled to Fin­land in late 2007, six months before the domain was reg­is­tered. In addi­tion, Bry, who is a senior sys­tem engi­neer, lists Ger­man, Eng­lish, French, and Ital­ian as lan­guages he speaks, and went to col­lege in Paris. He works for a com­pany called Lan­tiq.

Then there’s Neal J. King, and there are more odd­i­ties. A Neal J. King has a Face­book page that is sketchy with per­sonal infor­ma­tion, yet if you search for “Neal J. King” in Facebook’s search box, his pro­file doesn’t pop up. His wall is filled with posts about the recent Wall Street protests, bank­ing, and crit­i­cism of the Patriot Act. Keep scrolling down and he “likes” blau.de, a Ger­man mobile phone sim card site. He also claims high­brow taste in lit­er­a­ture and books, and it seems he’s an avid reader, hav­ing reviewed 46 books on Amazon–many deal with astron­omy, biol­ogy, cryp­tog­ra­phy, lin­guis­tics, lit­er­a­ture, math­e­mat­ics, phi­los­o­phy and physics. I read through his reviews, and his writ­ing is excel­lent. Very clean. No typos. His sen­tences are ele­gant yet there are no extra words. The writ­ing style reminds me of Satoshi Nakamoto’s posts in the Bit­coin Forum minus British spellings, which, as I noted above, I believe is a canard.

Finally, I looked up Vladamir Oksman’s LinkedIn pro­file (there are a cou­ple of guys with this name, but he was easy to find). . . .

. . . [Cor­rec­tion, May 22, 2013: The Vladamir Oks­man described above is the wrong one. The right one is listed on LinkedIn as hav­ing worked as a tech­ni­cal mar­ket­ing direc­tor for semi­con­duc­tor com­pany Lantiq. . . . .

3.  “Neal J. King”; LinkedIn.com.

. . . I rep­re­sented Lan­tiq in Home Net­work­ing Stan­dards. . . .

. . . .

IEEE P1901
2009 – 2011 (2 years)

I rep­re­sented Infineon’s inter­ests regard­ing the broad­band Power Line Com­mu­ni­ca­tion stan­dards. I was active in clar­i­fy­ing the text.

IEEE P1901.2
2010 – 2010 (less than a year)

I rep­re­sented Infineon’s inter­ests in a tech­ni­cal stan­dard for nar­row­band Power Line Communications.

Rep­re­sen­ta­tive for Infi­neon
1997 – 2010 (13 years)

I rep­re­sented the inter­ests of Infi­neon in the cre­ation and revi­sion of tech­ni­cal stan­dards on xDSL and PCM (V.92) modems. I was the edi­tor of the V.44 stan­dard on Data Compression.

Sys­tems Engi­neer
Infi­neon Tech­nolo­gies
Pub­lic Com­pany; 10,001+ employ­ees; IFX; Hal­bleiter indus­try
March 1997 – Decem­ber 2008 (11 years 10 months)

- Analy­sis and roadmap plan­ning for secu­rity tech­niques & pro­to­cols for Wire­less LAN sys­tems; cal­cu­la­tion of com­mu­ni­ca­tions capac­ity gained by adding a low-frequency band; assess­ment of exter­nal tech­nol­ogy pro­pos­als. One issued patent on emer­gency phone calls.

- Orga­nized Infineon’s par­tic­i­pa­tion in tech­ni­cal stan­dards for broad­band modems (xDSL modems): threat assess­ment, resource assign­ments, coor­di­na­tion and edi­to­r­ial con­trol. Com­mit­tees: ITU-T Q.4/SG15, NIPP-NAI, DSL Forum; Sec­re­tary of NIPP-NAI for sev­eral years.

- Devel­op­ment of web-based infor­ma­tion sys­tems and tools to make technical-standards infor­ma­tion avail­able corporation-wide.
– Worked to achieve key agree­ments in the technical-standards process favor­able to our posi­tion in the broad­band modem mar­ket by either com­pro­mis­ing with com­peti­tors and poten­tial cus­tomers, or out-maneuvering them. . . .

4.  “Lan­tiq”; wikipedia.com.

Lan­tiq is an inter­na­tional fab­less semi­con­duc­tor busi­ness of approx­i­mately 1,000 people.

Lantiq’s cen­tral func­tions and the exec­u­tive man­age­ment team are located at Lilien­thal­str. 15 in Neu­biberg near Munich in Germany.

Lan­tiq makes semi­con­duc­tor solu­tions for Next Gen­er­a­tion Net­works and the Dig­i­tal Home and, via its Infi­neon her­itage, has an over 20-year record of tech­nol­ogy development. . . .

 5. “Infi­neon Com­pletes the Sale of Wire­line Busi­ness; Lan­tiq Becomes a Stand Alone Busi­ness”; lantiq.com.

. . . Neu­biberg, Ger­many– Novem­ber 6, 2009 – Infi­neon Tech­nolo­gies AG (FSE: IFX / OTCQX: IFNNY) and Lan­tiq today announced the clos­ing of the sale of Infineon’s Wire­line busi­ness to Lan­tiq, an affil­i­ate of the U.S. based investor Golden Gate Capital. . . .

6.  “Golden Gate Cap­i­tal”; wikipedia.com.

. . . Golden Gate Cap­i­tal Part­ners is an Amer­i­can pri­vate equity firm based in San Fran­cisco, Cal­i­for­nia. The firm makes invest­ments pri­mar­ily in mature tech­nol­ogy com­pa­nies, as well as other select indus­tries, through lever­aged buy­out trans­ac­tions as well as sig­nif­i­cant minor­ity pur­chases and growth cap­i­tal investments.

The firm was founded in 2000, by for­mer invest­ment pro­fes­sion­als from pri­vate equity firm Bain Cap­i­tal, as well as busi­ness con­sul­tants from its affil­i­ate Bain & Com­pany. . . .

7.  “Infi­neon Tech­nolo­gies”; wikipedia.com.

Infi­neon Tech­nolo­gies AG is a Ger­man semi­con­duc­tor man­u­fac­turer founded on 1 April 1999, when the semi­con­duc­tor oper­a­tions of the par­ent com­pany Siemens AG were spun off to form a sep­a­rate legal entity. As of 30 Sep­tem­ber 2010, Infi­neon has 25,149 employ­ees world­wide. In fis­cal year 2010, the com­pany achieved sales of €3.295 billion. . . .

8.   “Bit­coin Rec­og­nized by Ger­many as ‘Pri­vate Money’” by Matt Clinch; CNBC.com; 8/19/2013.

Vir­tual cur­rency bit­coin has been rec­og­nized by the Ger­man Finance Min­istry as a “unit of account”, mean­ing it is can be used for tax and trad­ing pur­poses in the country.

Bit­coin is not clas­si­fied as e-money or a for­eign cur­rency, the Finance Min­istry said in a state­ment, but is rather a finan­cial instru­ment under Ger­man bank­ing rules. It is more akin to “pri­vate money” that can be used in “mul­ti­lat­eral clear­ing cir­cles”, the Min­istry said.

“We should have com­pe­ti­tion in the pro­duc­tion of money. I have long been a pro­po­nent of Friedrich August von Hayek scheme to dena­tion­al­ize money. Bit­coins are a first step in this direction,“said Frank Scha­ef­fler, a mem­ber of the Ger­man parliament’s Finance Com­mit­tee, who has pushed for legal clas­si­fi­ca­tion of bitcoins. . . .

9. Not sur­pris­ingly, bit­coin is show­ing all of the cor­rupt, highly spec­u­la­tive char­ac­ter of the very cur­ren­cies that the very “techno-libertarians” who sup­port the “alter­na­tive cur­rency” criticize.

Fol­low­ing our posts on Silk Road and Bit­coin, we explore the phe­nom­e­non of bicoin against the “shut­down” milieu of the GOP, itself inex­tri­ca­bly linkd with the ele­ments sur­round­ing and pro­mot­ing Edward Snow­den. Review­ing pre­vi­ous points of information:

Alleged mas­ter­mind of the Silk Road online clan­des­tine funding/merchandising net­work, Ross Ulbricht is a devo­tee of Ron Paul and the Lud­wig von Mises school of social and eco­nomic theory.

Exem­pli­fy­ing the appar­ently well mean­ing but mis­in­formed young cit­i­zens attracted to Paul and the von Mises school, Ulbricht appears to exem­plify the adage that “The [Silk?] road to Hell is paved with good intentions.”

Ron Paul is a hard­core fas­cist, joined at the hip with Nazi and white-supremacist ele­ments. The Lud­wig von Mises insti­tute is explic­itly anti-democratic and is joined at the hip with the neo-Confederate move­ment, which jus­ti­fies African-American slav­ery and ratio­nal­izes a future seces­sion by the South­ern states.

Indica­tive of Ulbricht’s super­fi­cial­ity is his state­ment that; “Just as slav­ery has been abol­ished most every­where, I believe vio­lence, coer­cion and all forms of force by one per­son over another can come to an end. . . .” 

In addi­tion to the von Mises Institute’s jus­ti­fi­ca­tion of African-American slav­ery prior to the Civil War, Wal­ter Block (and aide to Ron Paul and a Lud­wig von Mises Insti­tute scholar) has crafted what he calls “vol­un­tary slavery.”

We view “vol­un­tary slav­ery” as the ulti­mate col­lat­er­al­ized debt obligation.

Alone among sov­er­eign nations, Ger­many has rec­og­nized bit­coin as legal ten­der, fol­low­ing on the the­ory of Friedrich von Hayek of the Autrian school of eco­nomic the­ory, dis­sem­i­nated from (among other insti­tu­tions) the Lud­wig von Mises Insti­tute.

Credit for cre­at­ing this vir­tual cur­rency is gen­er­ally given to one Satoshi Nako­moto. An arti­cle at Fast­com­pany hypoth­e­sizes that three indi­vid­u­als named Neal J. King, Charles Bry and Vladimir Oks­man are the true orig­i­na­tors of bit­coin. (Lis­ten­ers are emphat­i­cally encour­aged to read the entire linked arti­cle to flesh out their under­stand­ing of Adam Penenberg’s argument.)

Of more than pass­ing inter­est under the cir­cum­stances is the fact that all three of the hypo­thet­i­cal cre­ators of bit­coin work for a com­pany called Lan­tiq.

Lan­tiq is a German-based firm that has evolved from Siemens. Siemens spun-off Infi­neon A.G. (a semi­con­duc­tor firm). Then Infi­neon and Golden Gate Cap­i­tal cre­ated Lan­tiq.

Golden Gate Capi­tol was formed by alumni of Bain Cap­i­tal, Mitt Romney’s firm.

In addi­tion to links to the death squad-manifesting El Sal­vado­ran junta of the 1980’s, Bain has links to the milieu of the late bil­lion­aire, Howard Hughes, as well as the milieu of Bebe Rebozo’s bank­ing oper­a­tions. The lat­ter appears to have had links to the Bor­mann cap­i­tal net­work.

If we were going to express this in bib­li­cal phrase­ol­ogy, it would go some­thing like this: “And so Siemens begat Infi­neon. And Bain Cap­i­tal begat Golden Gate Cap­i­tal. Infi­neon did lie with Golden Gate Cap­i­tal. And thus did Infi­neon beget Lantiq.”

Among the points to be con­sid­ered here are:

  • Siemens func­tions as some­thing of a quar­ter­mas­ter for Ger­man intelligence-the BND, the suc­ces­sor to the Rein­hard Gehlen spy out­fit. It is inex­tri­ca­bly linked with BND, as well as with the Bor­mann network.
  • With Lan­tiq hav­ing evolved directly from Siemens, Lantiq’s pos­si­ble con­nec­tions with BND should be care­fully weighed.
  • Lantiq’s links with Golden Gate Cap­i­tal, run by alumni from Mitt Romney’s Bain Cap­i­tal, war­rants con­sid­er­a­tion that both Lan­tiq and GGC may be Under­ground Reich, Bor­mann entities.
  • We have noted that Infi­neon A.G. is a lead­ing pro­ducer of TPM chips, which were cited by the Ger­man press as a back­door source for NSA snoop­ing. We won­dered if that TPM back­door might actu­ally be a BND backdoor?
  • Neal J. King has denied Penenberg’s mus­ings. He may, of course, be doing so hon­estly. IF, how­ever, bitcoin’s devel­op­ment was in con­junc­tion with BND, denial would be pro forma intel­li­gence methodology.
  • “Techno-Libertarians” have sug­gested that bit­coin might be an alter­na­tive to the dol­lar as the reserve cur­rency of choice. Their views echo Ronald Reagan’s state­ment that “Gov­ern­ment isn’t the solu­tion to your prob­lems. Gov­ern­ment is the problem.”
  • The dollar’s sta­tus as a reserve cur­rency has been under crit­i­cal review as a result of the “shut­down cri­sis,” pro­voked by the same polit­i­cal forces engener­ing Eddie the Friendly Spook’s “op.”
  • Bit­coin has been sub­ject to some of the same wild swings in value as main­stream currencies.
  • Those swings in value appear to have been delib­er­ately engi­neered by what one observer terms “the shark squad.” It is unclear who they might be. One won­ders if the shark squad might be Ger­man, per­haps the BND. The manip­u­la­tion of bit­coin is ille­gal in for­mal cap­i­tal mar­kets. Those machi­natins are, to an extent, rem­i­nis­cent of the maneu­ver­ing that occurred on 11/22/1963 and on 9/11/2001.
  • Peter Thiel is a big fan of bitcoin.

“World to Wash­ing­ton: ‘Really?’” by Serge Schme­mann; The New York Times; 10/20/2013.

Some of the more alarmed and out­raged voices rose from China, the coun­try hold­ing the largest share of Amer­i­can debt. One com­men­tary from China that attracted atten­tion in Europe was by Liu Chang of Xin­hua, the offi­cial Chi­nese news agency, who called not only for the diver­si­fi­ca­tion of Beijing’s huge dol­lar hold­ings, but for a “de-Americanized world.” That, he wrote, would include “new inter­na­tional reserve cur­rency that is to be cre­ated to replace the dom­i­nant U.S. dol­lar, so that the inter­na­tional com­mu­nity could per­ma­nently stay away from the spillover of the inten­si­fy­ing domes­tic polit­i­cal tur­moil in the United States.”

From Athens — where an Amer­i­can default could have turned an unend­ing eco­nomic cri­sis into cat­a­stro­phe — Nikos Kon­stan­daras wrote in the daily Kathimerini that Aristo­phanes, the mas­ter of ancient Greek com­edy, “would have loved the idea of a group of law­mak­ers exploit­ing their posi­tion to abol­ish the state they are sworn to serve. For Greece’s ancient trage­di­ans, the vain indif­fer­ence, the igno­rance of dan­gers caused by our char­ac­ter and actions, was famil­iar mate­r­ial.” The ques­tion, he added, was whether Amer­ica is “the scene of com­edy or tragedy.”

When the deal was reached in Wash­ing­ton last Wednes­day, the world exhaled. But nobody believed it was over. “There is noth­ing more tem­po­rary than the defeats and vic­to­ries in Wash­ing­ton,” wrote Le Figaro, the Paris daily. Even if civil ser­vants are back at work for now, “America’s finan­cial cred­i­bil­ity is dam­aged and its demo­c­ra­tic sys­tem has revealed to the world its gap­ing blockages.”

The ques­tions abroad will con­tinue; answers, how­ever, are hard to find.

10. “The Fed­eral Government’s Reac­tion to Bit­coin Is an Acknowl­edge­ment of the Dollar’s Vul­ner­a­bil­ity” by Peter Fer­rara; Forbes; 8/25/2013.

The Sen­ate Home­land Secu­rity and Gov­ern­ment Affairs Com­mit­tee has pri­vate alter­na­tive cur­ren­cies in its crosshairs.  The Chair­man, Sen­a­tor Tom Carper (D-DE) and Rank­ing Mem­ber, Sen­a­tor Tom Coburn (R-OK), sent a joint let­ter to seven fed­eral agen­cies last week ask­ing for feed­back and pol­icy pro­pos­als for reg­u­la­tion of vir­tual cur­ren­cies, like Bitcoin.

Bit­coin has surged in value and pop­u­lar­ity recently as it has come to be embraced by more users across the planet.  In a world of gov­ern­ment fiat cur­ren­cies, Bit­coin is an admirable inno­va­tion.  But in a sense it extends the cur­rent cur­rency frame­work, as opposed to rev­o­lu­tion­iz­ing it.  It was cre­ated out of less than thin air when cybergeeks who saw it as a nat­ural pro­gres­sion of the mod­ern web spec­i­fied the cre­ation and dis­tri­b­u­tion of the new cyber­cur­rency in a paper posted on the Inter­net in 2008.  The vir­tual cur­rency was then launched into oper­a­tion in 2009. . . .

. . . . The econ­omy is already barely grow­ing, if infla­tion is cur­rently mea­sured cor­rectly.  If the Fed fur­ther desta­bi­lizes the econ­omy, the dol­lar will prob­a­bly fur­ther decline, as who will want to buy dol­lars to invest in a declin­ing econ­omy only con­tin­u­ously threat­ened with even higher tax and reg­u­la­tory bur­dens?  But if the Fed redou­bles on its cur­rent poli­cies, the dol­lar will prob­a­bly decline fur­ther under the threat of even­tual infla­tion.  Who will want to hold dol­lars under this increas­ingly nar­row­ing conun­drum?  That is when the world may turn to some­thing different.

It is not Bit­coin that will arise as the alter­na­tive global reserve cur­rency, because as dis­cussed above, it has no inher­ent value either, so it is sub­ject to wide swings in mar­ket value too.  The real threat to the dol­lar is a dif­fer­ent, pri­vate, alter­na­tive cur­rency that can arise, that is based in real com­modi­ties with inher­ent value. . . .

11.  “The Anti­so­cial Net­work” by Paul Krug­man; The New York Times; 4/14/2013.

Bitcoin’s wild ride may not have been the biggest busi­ness story of the past few weeks, but it was surely the most enter­tain­ing. Over the course of less than two weeks the price of the “dig­i­tal cur­rency” more than tripled. Then it fell more than 50 per­cent in a few hours. Sud­denly, it felt as if we were back in the dot-com era.

The eco­nomic sig­nif­i­cance of this roller coaster was basi­cally nil. But the furor over bit­coin was a use­ful les­son in the ways peo­ple mis­un­der­stand money — and in par­tic­u­lar how they are mis­led by the desire to divorce the value of money from the soci­ety it serves.

What is bit­coin? It’s some­times described as a way to make trans­ac­tions online — but that in itself would be noth­ing new in a world of online credit-card and Pay­Pal trans­ac­tions. In fact, the Com­merce Depart­ment esti­mates that by 2010 about 16 per­cent of total sales in Amer­ica already took the form of e-commerce.

So how is bit­coin dif­fer­ent? Unlike credit card trans­ac­tions, which leave a dig­i­tal trail, bit­coin trans­ac­tions are designed to be anony­mous and untrace­able. When you trans­fer bit­coins to some­one else, it’s as if you handed over a paper bag filled with $100 bills in a dark alley. And sure enough, as best as any­one can tell the main use of bit­coin so far, other than as a tar­get for spec­u­la­tion, has been for online ver­sions of those dark-alley exchanges, with bit­coins traded for nar­cotics and other ille­gal items.

But bit­coin evan­ge­lists insist that it’s about much more than greas­ing the path for illicit trans­ac­tions. The biggest declared investors in bit­coins are the Win­klevoss broth­ers, wealthy twins who suc­cess­fully sued for a share of Face­book and were made famous by the movie “The Social Net­work” — and they make claims for the dig­i­tal prod­uct sim­i­lar to those made by gold­bugs for their favorite metal. “We have elected,” declared Tyler Win­klevoss recently, “to put our money and faith in a math­e­mat­i­cal frame­work that is free of pol­i­tics and human error.”

The sim­i­lar­ity to gold­bug rhetoric isn’t a coin­ci­dence, since gold­bugs and bit­coin enthu­si­asts — bit­bugs? — tend to share both lib­er­tar­ian pol­i­tics and the belief that gov­ern­ments are vastly abus­ing their power to print money. At the same time, it’s very pecu­liar, since bit­coins are in a sense the ulti­mate fiat cur­rency, with a value con­jured out of thin air. Gold’s value comes in part because it has non­mon­e­tary uses, such as fill­ing teeth and mak­ing jew­elry; paper cur­ren­cies have value because they’re backed by the power of the state, which defines them as legal ten­der and accepts them as pay­ment for taxes. Bit­coins, how­ever, derive their value, if any, purely from self-fulfilling prophecy, the belief that other peo­ple will accept them as payment.

How­ever, let’s leave that strange­ness on one side, along with the pecu­liar “min­ing” process — actu­ally a process of com­plex cal­cu­la­tion — used to add to the bit­coin stock. Instead, let’s focus on the two huge mis­con­cep­tions — one prac­ti­cal, one philo­soph­i­cal — that under­lie both gold­bugism and bitbugism.

The prac­ti­cal mis­con­cep­tion here — and it’s a big one — is the notion that we live in an era of wildly irre­spon­si­ble money print­ing, with run­away infla­tion just around the cor­ner. It’s true that the Fed­eral Reserve and other cen­tral banks have greatly expanded their bal­ance sheets — but they’ve done that explic­itly as a tem­po­rary mea­sure in response to eco­nomic cri­sis. I know, gov­ern­ment offi­cials are not to be trusted and all that, but the truth is that Ben Bernanke’s promises that his actions wouldn’t be infla­tion­ary have been vin­di­cated year after year, while gold­bugs’ dire warn­ings of infla­tion keep not com­ing true.

The philo­soph­i­cal mis­con­cep­tion, how­ever, seems to me to be even big­ger. Gold­bugs and bit­bugs alike seem to long for a pris­tine mon­e­tary stan­dard, untouched by human frailty. But that’s an impos­si­ble dream. Money is, as Paul Samuel­son once declared, a “social con­trivance,” not some­thing that stands out­side soci­ety. Even when peo­ple relied on gold and sil­ver coins, what made those coins use­ful wasn’t the pre­cious met­als they con­tained, it was the expec­ta­tion that other peo­ple would accept them as payment.

Actu­ally, you’d expect the Win­klevosses, of all peo­ple, to get this, because in a way money is like a social net­work, which is use­ful only to the extent that other peo­ple use it. But I guess some peo­ple are just both­ered by the notion that money is a human thing, and want the ben­e­fits of the mon­e­tary net­work with­out the social part. Sorry, it can’t be done.

So do we need a new form of money? I guess you could make that case if the money we actu­ally have were mis­be­hav­ing. But it isn’t. We have huge eco­nomic prob­lems, but green pieces of paper are doing fine — and we should let them alone.

12. “Bitcoin’s Vast Over­val­u­a­tion Appears Par­tially Caused by (Usu­ally) Ille­gal Price-Fixing” by Rick Falkvinge; Falkvinge.net; 9/2013.

. . . . In secu­ri­ties trad­ing, the expres­sion paint­ing the tape is used for any trad­ing activ­ity that is intended to manip­u­late the trad­ing sta­tis­tics (price, vol­ume, other met­rics) rather than to exe­cute a trade. It is highly ille­gal, jail-time ille­gal, in all civ­i­lized parts of the world. The expres­sion comes from the ancient price ticker tape, and how it could be “painted” with false data.

I’m going to illus­trate how this Shark Squad has oper­ated recently to fix the price in lur­ing other traders of their money and hik­ing the price. (While lur­ing other traders of their money is part of the game, there are legal and ille­gal ways to do so. Insider trad­ing, for exam­ple, is one of the better-known ille­gal ones – our legal frame­work gen­er­ally fights hard to cre­ate a level play­ing field for all traders.) The squad is a small team of col­lab­o­rat­ing traders.

In Step 1 of the cycle, the shark squad makes a large buyup, caus­ing prices to sky­rocket. Illus­trated here, the buyup at 10:00 Euro­pean time on Thurs­day Sep­tem­ber 12, 2013, from USD 135 to 145.9, an instant 8-percent increase. This causes a lot of downward-betting traders to flush out.

In step 2, the shark squad reverses this trend by caus­ing a slow pull­back, caus­ing those who bought in greed to sell off in panic as the mar­ket has reversed and caus­ing more stop losses to trig­ger and peo­ple to sell to the squad‘s bids. Note that I write causes a pull­back – this is not a nor­mal mar­ket pull­back. Let’s look at the big pic­ture first as dis­played by the site bit­coin­wis­dom, which dis­plays much more detail than most sites. You can see the pull­back over Thurs­day lunch-to-afternoon (blue box, right half), and there is also a dis­play of the cur­rent order book (yel­low box) and the recent trans­ac­tions (red box) which we will look at shortly. Note how the recent trans­ac­tions in the indi­cated red box are all red, red, red, indi­cat­ing a mas­sive sell­off – there’s nobody buy­ing at all on cur­sory inspec­tion, only sell­ing, and a lot of selling.

How­ever, let’s take a closer look at the minute details of the recent trans­ac­tions in the bot­tom right cor­ner, dis­play­ing time, price, and amount of the last bit­coin transactions:

Do you see a pat­tern here? All the trans­ac­tions are for exactly one bit­coin, and the trans­ac­tions are spaced exactly five sec­onds apart. This pat­tern can con­tinue for hours, a claim ver­i­fi­able by check­ing the MtGox trans­ac­tion his­tory. This is not mar­ket trad­ing; this is one (1) auto­mated process intended to give the illu­sion of many dif­fer­ent play­ers panic-selling. Fur­ther­more, let’s take a closer look at the order book:

Do you see the num­bers below and to the left of the cur­rent big red price? That’s the bid order book. That’s the cur­rent buy orders. Note how the cur­rently exe­cut­ing buy orders are at 7–8 bit­coin each, placed just 0.0001 (!) bit­coin apart in price, evad­ing detec­tion on most sites. This is coor­di­nated with the sell­ing per­son. Those buy orders keep replen­ish­ing as the sales orders keep tick­ing one bit­coin per five sec­onds; they are coor­di­nated. This is one per­son in the Shark Squad sell­ing to another per­son in the Shark Squad, to give the illu­sion of mar­ket down­ward pres­sure and sell volume.

Both of these activ­i­ties – split­ting an order to give the illu­sion of many trades, and trad­ing within a group to give the appear­ance of increased vol­ume and a cer­tain mar­ket direc­tion – are con­sid­ered paint­ing the tape and highly ille­gal. (I’m going to stop writ­ing “usu­ally ille­gal” now, as it’s ille­gal in prac­ti­cally all coun­tries where you can read this.)

So, how can I state with cer­tainty that the seller and buyer are con­spir­ing? Based on only this screen­shot, the evi­dence could be improved, but hav­ing watched the mar­ket at this level for some two months and seen how these kind of buy and sell orders fol­low each other very closely, it’s obvi­ous there is talk­ing and coor­di­nat­ing within a team ded­i­cated to fab­ri­cat­ing a mar­ket impres­sion. Nor­mally, you would need to see how they moved in lock­step to iden­tify this coop­er­a­tion, but it’s par­tic­u­larly vis­i­ble in this snap­shot. (Besides, the vis­i­ble order-splitting is enough to con­sti­tute tape-painting entirely on its own.)

Here’s the kicker, then: we have observed that the buy orders being exe­cuted – the ones with 7, 7, 7, 7, 7, 8, 8, etc. bit­coin at the moment at a price of 137.64xyz – belong to this shark squad. What hap­pens when a trader sees the (false) image of a mas­sive sell­off going on, and sells in panic? Well, he’s sell­ing his bit­coin into those buy orders to the shark squad, at the price they have set. Here, the price is 137.64. So the obvi­ous ques­tion is, what hap­pens next? Well, a fab­ri­cated price hike, of course, trick­ing other traders to buy those same bit­coin at higher prices from the coor­di­nated shark squad. We’ll be return­ing to when and how that hap­pens in step 4.

In Step 3, the shark squad puts up an enor­mous bid­wall – so large it’s effec­tively a lid on the mar­ket – and lure other traders to sell into it, intend­ing to sell the bought bit­coin at a higher price after the next fab­ri­cated hike. There is plenty of fake trad­ing going on into these bid­walls as vis­i­ble in step 2. We can also see that this lure is effec­tive – look at the trans­ac­tion his­tory of bit­coin around these walls, and you can eas­ily find trades of hun­dreds of coins amid the fake trad­ing. Or per­haps it’s the shark squad sell­ing to itself again with the trans­ac­tions in the hun­dreds. Hard to know – most likely a mix of in-group trad­ing and oth­ers being lured to sell. In any case, unsus­pect­ing traders are sell­ing into the shark squad‘s bid­walls. These lure­walls are eas­ily iden­ti­fi­able in the close-up mar­ket his­tory, as well as when they were removed:

In Step 4, finally, the price is hiked to new highs and the shark squad begins offload­ing its booty at higher prices, and the cycle repeats with them trad­ing in-between them­selves to give the appear­ance of mar­ket activ­ity. That price hike hap­pened at 15:25 Thurs­day, Euro­pean time, up to 145 USD for this cycle, as also vis­i­ble in the image above.

This cycle has repeated very vis­i­bly at least five times in the past weeks, and likely since much ear­lier in a vari­ant version:

This – this ille­gal activ­ity – is very trou­bling for the bit­coin ecosystem. . . .

13. “Dark Wal­let: A Rad­i­cal Way to Bit­coin” by Michael del Castillo; The New Yorker; 9/24/2013.

. . . . Wil­son believes Bit­coin should remain the back­bone of a sep­a­rate econ­omy that under­mines the government’s abil­ity to col­lect taxes and to con­trol the value of currency—not be sub­sumed into the main­stream economy.

“The state is basi­cally allowed because we have all cho­sen to use these cer­tain insti­tu­tions to chan­nel our activ­ity and com­merce,” he told me. “But when we are enabled, through alter­na­tive means and tech­nolo­gies, to chan­nel our com­merce as we will, chan­nel our pro­duc­tion as we will, the state sim­ply disappears.”

Not every­one agrees, of course, that soci­ety would ben­e­fit from the dis­ap­pear­ance of gov­ern­ments. Wil­son used the Lib­er­a­tor to make the point that the gov­ern­ment shouldn’t reg­u­late the flow of infor­ma­tion; he wants to use Bit­coin to help build an econ­omy out­side of the government’s reach.

But his ide­ol­ogy, taken to its log­i­cal con­clu­sion, would also leave ser­vices like roads, libraries, fire fight­ing, and polic­ing in the hands of the pri­vate sector—whose inter­ests may not be aligned, Wilson’s crit­ics argue, with those of the pub­lic at large.

Wil­son knows that he could see blow­back for his stance against the foun­da­tion: as a self-described “crypto-anarchist,” per­haps he shouldn’t be so con­cerned with who is or isn’t deter­min­ing the currency’s future. And if the U.S. gov­ern­ment attempts to reg­u­late the cur­rency, which seems likely, Wil­son will also find him­self once again in direct oppo­si­tion to the government. . . .

14. “For­mer Pay­Pal CEO Signs Off on Bit­con” by Sam Bid­dle; Val­ley­Wag; 5/16/2013.

Before he was one of the most pow­er­ful VCs in the world, Peter Thiel cre­ated Pay­Pal, which deals in real dol­lars and boomed accord­ingly. If you think this might make him wary of unreg­u­lated inter­net funny money, you’re wrong: $2,000,000 wrong.
Thiel’s Founders Fund just wrapped a $2 mil­lion round for Bit­Pay, which helps other com­pa­nies accept Bit­coin payments—namely for things “like elec­tron­ics, pre­cious met­als, and other low-margin prod­ucts,” says TechCrunch.

The cash infu­sion comes only a week after Fred Wil­son led a $5 mil­lion round in another com­pany that does pretty much the exact same thing, and at a time when the most pow­er­ful Bit­coin exchange in the world is get­ting its ass kicked by the US gov­ern­ment. [This is a ref­er­ence to Silk Road–D.E..] . .

15. The broad­cast high­lights some of the shady par­tic­i­pants in Bain Cap­i­tal, Mitt Romney’s firm.

On his Can­non­fire blogspot, Joseph Can­non gives us a wor­thy post afford­ing an overview of sev­eral recent sto­ries about The VerMITTler’s off­shore deal­ings. As we have seen, “off­shore” is as insid­i­ous as it gets–it is where ter­ror­ists, orga­nized crime syn­di­cates, transna­tional cor­po­ra­tions, intel­li­gence ser­vices and fas­cist con­spir­a­tors park their funds in order to escape taxes and the scrutiny of law enforce­ment and those they victimize.

A num­ber of arti­cles cited by Can­non indi­cate that just such sin­is­ter ele­ments lurk in the shad­ows of The VerMITTler’s off­shore finan­cial deal­ings. Read­ers are encour­aged to exam­ine these over­lap­ping sto­ries from The NationVan­ity Fair and Sky­danc­ing.

In con­nec­tion with this post, there are a num­ber of points that come to mind, including:

  • The Ver­MIT­Tler con­tin­ues to be paid by Bain Cap­i­tal more than ten years after he left the firm. Why?
  • The VerMITTler’s trusts don’t appear to be nearly as “blind” as they are rep­re­sented as being.
  • One of the orig­i­nal investors in Bain Cap­i­tal was the late Robert Maxwell, who had strong con­nec­tions with Israeli intel­li­gence. (In the past, we’ve noted The VerMITTler’s links to Ben­jamin Netanyahu and the Israeli right-wing. The Maxwell asso­ci­a­tion with Bain may be part of the same polit­i­cal relationship.)
  • The Poma fam­ily of El Sal­vador also counted among the orig­i­nal Bain investors.
  • The Pomas–one of the 14 fam­i­lies that owned El Salvador–were promi­nent back­ers of the late Roberto D’Aubuisson.
  • King­pin of the ARENA Party, D’Aubuisson presided over the death squads that blood­ied El Sal­vador on behalf of that country’s fas­cist own­ers and with direc­tion from ele­ments of U.S. intel­li­gence. (D’Aubuisson was nick­named “Blow­torch Bob” by U.S. acquain­tances because of his pen­chant for tor­tur­ing cap­tives with a blowtorch.)
  • Lis­ten­ers seek­ing back­ground on the gen­e­sis of Latin Amer­i­can death squads and their links to inter­na­tional fas­cism and ele­ments of U.S. intel­li­gence are referred to AFA #15.
  • The avail­able evi­dence sug­gests that Bain may well have served as a money-laundering vehicle.

16. “Bain, Rom­ney, Spooks and Death Squads” by Joseph Can­non; Can­non­fire; 7/5/2012.

. . .  The ques­tion before us is a sim­ple one: What is Bain? This post won’t offer a defin­i­tive answer, but it will offer a start­ing point to any­one who wants to research a star­tling pos­si­bil­ity: Bain began life as a money laun­dry for the CIA. . . .

. . . Dirty money. Let’s get back to the Nation piece. Here’s where things get really weird. (I’ve added para­graph breaks to aid readability.)

“Did Bain serve as a tax haven for for­eign crim­i­nals? As Shax­son explains, ‘Pri­vate equity is one chan­nel for this secrecy-shrouded for­eign money to enter the United States, and a fil­ing for Mitt Romney’s first $37 mil­lion Bain Cap­i­tal Fund, of 1984, pro­vides a rare win­dow into this.

One for­eign investor, of $2 mil­lion, was the news­pa­per tycoon, tax evader, and fraud­ster Robert Maxwell, who fell from his yacht, and drowned, off of the Canary Islands in 1991 in strange cir­cum­stances, after loot­ing his company’s pen­sion fund.

The Bain fil­ing also names Eduardo Poma, a mem­ber of one of the ‘14 fam­i­lies’ oli­garchy that has con­trolled most of El Salvador’s wealth for decades; oddly, Poma is listed as shar­ing a Miami address with two anony­mous com­pa­nies that invested $1.5 mil­lion between them.

The fil­ings also show a Geneva-based trustee over­see­ing a trust that invested $2.5 mil­lion, a Bahamas cor­po­ra­tion that put in $3 mil­lion, and three cor­po­ra­tions in the tax haven of Panama, his­tor­i­cally a favored des­ti­na­tion for Latin-American dirty money—’one of the filth­i­est money-laundering sinks in the world,’ as a US Cus­toms offi­cial once put it.” . . .

. . . . Even­tu­ally, ARENA came to power in 1988, and insti­tuted a mur­der­ous cam­paign against left­ists, intel­lec­tu­als, priests and nuns; the party ruled with the prover­bial iron first for two decades.

Accord­ing to a 1985 CIA intel­li­gence assess­ment, “Behind ARENA’s legit­i­mate exte­rior lies a ter­ror­ist net­work led by D’Aubuisson hench­men and funded by wealthy Sal­vado­ran expa­tri­ates resid­ing in Guatemala and the United States.” One of the pow­ers behind ARENA was and is bil­lion­aire Ricardo Poma, a rel­a­tive of Eduardo, listed above. Ricardo runs the Grupo Poma, which owns much of El Sal­vador. From Wikipedia:
Ricardo Poma is a close friend of Mitt Rom­ney and was an early investor in Bain Capital.

From a speech that Rom­ney gave in 2007:

“I owe a great deal to Amer­i­cans of Latin Amer­i­can descent. When I was start­ing my busi­ness, I came to Miami to find part­ners that would believe in me, and that would finance my enter­prise. My part­ners were Ricardo Poma, Miguel Due­nas, Pan­cho Soler, Frank Kar­don­ski, and Diego Ribandinarea. . . .”

17. Alumni of Bain Cap­i­tal formed Golden Gate Cap­i­tal, joint part­ners with Lantiq.

A follow-up story gives more insight into the nature of those at Bain. Note Cannon’s caveat about some of the sites from which his infor­ma­tion is derived.

As indi­cated in our pre­vi­ous dis­cus­sion, inter­ests that place money “off­shore” do not do so for altru­is­tic rea­sons. The “off­shore” milieu unites tax evaders, arms traf­fick­ers, drug traf­fick­ers, ter­ror­ists and orga­nized crime syn­di­cates. Off­shore is also the province of intel­li­gence ser­vices. These ele­ments seem to be present at Bain.

Can­non notes the many links run­ning between Bain and the milieu of the late Howard Hughes, whose oper­a­tions were inex­tri­ca­bly linked with the doings of the intel­li­gence com­mu­nity and God only knows who else. Taken together, these links paint a pic­ture of a syn­the­sis of the over­world and the underworld.

With Hughes hav­ing become a recluse decades before his death and then remain­ing under the direc­tion of his “Mor­mon mafia” secu­rity con­tin­gent, we view Hughes’ state of affairs as open to conjecture–how much do we REALLY know about the guy?

With regard to the large num­ber of peo­ple and inter­ests over­lap­ping both Bain Cap­i­tal and Hughes’ oper­a­tions, we may be look­ing at a per­pet­u­a­tion of covert action capa­bil­ity and insti­tu­tional con­ti­nu­ity between the inter­ests lurk­ing behind the Hughes facade and ele­ments oper­at­ing within the Bain mantle.

Obvi­ously, the Mor­mon con­nec­tion may fig­ure into this as well.

In addi­tion to the ele­ments cited in the first of Cannon’s posts about Bain, the VerMITTler’s busi­ness and its par­tic­i­pants bring a num­ber of things to mind in con­nec­tion to Bain-linked ele­ments, which include:

  • Miguel Due­nas, scion of another of El Salvador’s 14 families.
  • Pan­cho Soler, another mem­ber of the El Sal­vado­rian elite and alleged to be linked to the Howard Hughes milieu.
  • Diego Rib­adeneira, a for­mer Ecuado­rian for­eign min­is­ter (Always remem­ber the CIA’s pro­found con­nec­tions to Latin Amer­ica, as well as the over­lap­ping links of the Under­ground Reich.)
  • Frank Kar­don­ski, a native of Panama and heav­ily involved with pro­mot­ing that country’s busi­ness inter­ests, inter­ests that are inex­tri­ca­bly linked with money laun­der­ing and other ques­tion­able activ­i­ties. Kar­don­ski bought Key Bis­cayne Bank from Nixon crony Bebe Rebozo. That bank has been alleged to have been a vehi­cle for con­tri­bu­tions to Nixon’s cam­paigns from Howard Hughes. In light of the real pos­si­bil­ity that Bain is a front for “Funny Money,” we note that Paul Man­ning notes that Rebozo’s bank was also a laun­der­ing vehi­cle for Bor­mann cap­i­tal net­work money. ” . . . . . . . The German-South Amer­i­can group also had direct access to the Nixon White House through their rep­re­sen­ta­tives in Wash­ing­ton, and were proud of the fact that Bebe Rebozo was Pres­i­dent Nixon’s clos­est friend. For, know­ingly or unknow­ingly, Rebozo processed mil­lions of their dol­lars through his Florida bank as part of nor­mal com­mer­cial oper­a­tions. . . .” (Mar­tin Bor­mann: Nazi in Exile by Paul Man­ning; p. 275.)
  • Orit Gadeish, a for­mer assis­tant to Israeli for­eign min­is­ter Ezer Weitz­man. (Like the pres­ence of for­mer Israeli intel­li­gence asset Robert Maxwell, this con­nec­tion may be part of the same polit­i­cal dynamic that binds Rom­ney to Ben­jamin Netanyahu.)
  • Frank William “Bill” Gay and Robert C. Gay. The for­mer was Howard Hughes’ chief of staff, the lat­ter his son and man­ag­ing direc­tor of Bain Capital.
  • Frank Morse, a for­mer attor­ney for Howard Hughes and some­one alleged to be on good terms with the CIA.
  • Robert Ben­nett, asso­ciate and infor­mant for Bob Wood­ward dur­ing the Water­gate “inves­ti­ga­tion” and some­one with links  to the CIA and the Howard Hughes milieu.

“Bain, Rom­ney, the CIA and (God Help Us) Howard Hughes (UPDATED–A Mys­tery Solved)” by Joseph Can­non; Can­non­fire7/12/2012.

. . . We have already dis­cussed Poma. He was one of the founders of the fas­cist ARENA party of Roberto D’Aubuisson — a party that ran the death squads which ruth­lessly mur­dered any­one who chal­lenged the oligarchy’s con­trol. The CIA aided — arguably con­trolled — the death squads.

Miguel Due­nas hailed from another of the 14 fam­i­lies [that run El Sal­vador]; in fact, the Due­nas clan may have been the worst thing ever to hap­pen to El Sal­vador. It turns out that Miguel Due­nas — I pre­sume that we’re deal­ing with the same fel­low — ran the Banco Com­meri­cial of El Savador, which deter­mined which farm­ers would and would not get credit. A nice lit­tle arrange­ment, this was; the Due­nas fam­ily used it to con­trol a mas­sive share of the country’s cot­ton and cof­fee pro­duc­tion. In a coun­try where small farm­ers had once been allowed to own and work their own land, the Due­nas clan expro­pri­ated their fields and reduced the farm­ers to near-slavery. The National Guard kept the serfs in line.

One of the most inter­est­ing names on our list is the late Frank Kar­don­ski. Born in Panama, he cre­ated the Panamin­ian Stock Exchange, owned Tower Bank, and did much to pro­mote Panama as a place of for­eign invest­ment. Of course, dur­ing this period (the 1980s), Panama became a haven for any­one hop­ing to laun­der drug loot.

Here’s the bit I like best:

In 1990, Kardonski’s fam­ily bought Key Bis­cayne Bank from Charles “Bebe” Rebozo, a long­time Key Bis­cayne res­i­dent and long­time friend of for­mer Pres­i­dent Richard Nixon.

Bebe Rebozo was the president’s hideously mobbed up pal, and his bank was a noto­ri­ous haven for mafia money. Is the bank still used for such pur­poses? I don’t know. Per­haps read­ers in Florida can tell me more.

(A younger man named Frank Kar­don­ski — who may be related to Romney’s old pal, judg­ing from the facial resem­blance — runs an air­line that oper­ates between Florida and Cen­tral Amer­ica. Read­ers of Daniel Hop­sicker will no doubt raise an eyebrow.)

“Diego Riban­d­inarea” should actu­ally be spelled Diego Rib­adeneira. I believe that Romney’s ref­er­ence goes to the Diego Riban­d­inarea who became Ecuador’s ambas­sador to Peru and pre­vi­ously served as for­eign min­is­ter. I’ve seen no deroga­tory infor­ma­tion about this guy. Of course, the CIA has a long his­tory in Ecuador; see here and here. In 2008, the pres­i­dent of Ecuador, Rafael Cor­rea, charged that that the CIA con­trols that country’s mil­i­tary intel­li­gence ser­vice and much of the police. Judg­ing from the brief bio here, Rib­adeneira seems to have devoted his life to diplo­matic ser­vice, not busi­ness — so it’s a lit­tle odd to see Rom­ney men­tion him as the co-founder of an Amer­i­can ven­ture cap­i­tal firm. (Could we have the wrong Diego...?)

The only online ref­er­ence to Pan­cho Soler — another off­spring of the El Sal­vado­ran aris­toc­racy — occurs in this rather wild tale, set in the 1970s, when Pan­cho was a young Har­vard grad and good friend to the son of the bru­tal (CIA-backed) Nicaraguan dic­ta­tor Anas­ta­sio Somosa. The story con­cerns Howard Hughes, who made a bizarre jour­ney to Nicaragua after being “kid­napped” from his infa­mous Las Vegas hideaway.

(Sources dif­fer as to whether Hughes left vol­un­tar­ily. At roughly the same time he changed lodg­ings, the Bond film “Dia­monds Are For­ever” was shot in Vegas. In that movie, bad guys kid­nap a mil­lion­aire obvi­ously mod­eled on Hughes. In other words, life and art imi­tated each other simultaneously.) . . . .

. . . .1. Soler. Bain Cap­i­tal co-founder Pan­cho Soler appar­ently had some­thing to do with arrang­ing Hughes’ sojourn in Nicaragua in the 1970s. (Side note: Did you know HH was there for the big 1972 earth­quake? A long time ago, the L.A. Times claimed that the poor old guy rode out the big one bounc­ing around in the back seat of a car parked on a Man­agua side street.)

2. Kar­don­ski. Another Rom­ney part­ner, Frank Kar­don­ski, took over Bebe Rebozo’s old mafia bank in Key Bis­cayne. As this bio puts it:
One of the ways that Rebozo helped Nixon was to obtain large cam­paign con­tri­bu­tions from Howard Hughes.
Long story there. You already have the gist of it.

3. The Gays. As noted, Bain’s Man­ag­ing Direc­tor was the son of the guy who man­aged Hughes’ busi­ness affairs — dur­ing the time when Amer­i­can spooks were qui­etly tak­ing over the day-to-day run­ning of Hughes’ com­pany. As we shall see, Frank “Bill” Gay con­trolled much of Hughes’ money after the old man’s death. The impor­tance of this fact will soon become clear.

But before we get to that, let’s add to our list of Romney/Hughes links:

4. Morse. Frank Morse ran a Bain com­pany. He is — not to mince words — a CIA-friendly attor­ney who rep­re­sented Howard Hughes dur­ing the key period described above. After that stint, Morse worked for Adnan Kashoggi and Larry Kolb, the agent for Miles Copeland who got close to both Khashoggi and Muhammed Ali. (I’ve cor­re­sponded a bit with Kolb, who describes his adven­tures in a fas­ci­nat­ing book called Over­world; see these pre­vi­ous posts. An inter­est­ing guy, to say the least.) Nowa­days, Morse is work­ing with Robert C. Gay.

5. Ben­nett. Robert Ben­nett, now a Sen­a­tor, has close links to Mitt Rom­ney, as dis­cussed in this pre­vi­ous post. Ben­nett pre­vi­ously was a CIA guy, run­ning a front com­pany called Mullen & Co.

The famous (or should-be-famous) Lukoskie memo, uncov­ered by writer Jim Hougan and pub­lished in his book Secret Agenda, reveals that Ben­nett was a source of Watergate-related infor­ma­tion for Bob Wood­ward — who, suit­ably grate­ful, kept the CIA out of the Wash­ing­ton Post’s Water­gate cov­er­age. (The CIA’s fin­ger­prints are all over Water­gate, if you look closely.) Hougan thinks that at least some of the “Deep Throat” infor­ma­tion came from Ben­nett, not Mark Felt. To this day, Wood­ward doesn’t like to talk about his inter­ac­tions with the spook who became a senator.

Ben­nett, almost need­less to say, played a key role in the saga of Howard Hughes. When given the oppor­tu­nity to work for Hughes, Ben­nett shut down Mullen & Co. in less time than it took you to read this sentence. . . .

...well, I’m still not entirely sure what Ben­nett did on a day-to-day basis. Although Ben­nett held the title of Pub­lic Rela­tions Direc­tor for Summa, Hughes’ com­pany, he seems to have done a remark­ably lousy job. The only pub­lic­ity Hughes got in those days was neg­a­tive. Evi­dence indi­cates that Ben­nett helped to arrange Project Azo­rian, which used a Hughes ship, the Glo­mar Explorer, to raise a sunken Soviet nuclear sub­ma­rine.
There are even more Romney/Hughes con­nec­tions. Right now, though, you must be ask­ing: What does it all mean?

To be hon­est, I’ve not been able to dope out the rea­son why so many Romney/Bain asso­ciates have his­to­ries going all the way back to the weird world of Howard Hughes. Maybe we’re look­ing at a sur­real chain of coin­ci­dences. But one guy has tried to cob­ble together a the­ory that ties it all together: The afore­men­tioned Paul Drockton.

As noted ear­lier, I’m quite wary of con­spir­acy buffs like Drock­ton; he inhab­its a world in which I do not feel com­fort­able. That said, we must give credit where due: His The­ory of Rom­ney — or should we call it a The­ory of Hughes? — just may hold water. At the very least, I hope his work will inspire fur­ther research. [Update: Turns out it doesn’t hold water very well at all. Please see the addi­tional mate­r­ial at the end of this post.]
That the­ory — which you can read here — is pretty sim­ple: The Mor­mon Mafia looted Howard Hughes’ hold­ings after the old man died. Bain may have pro­vided a mech­a­nism for the Big Howard Hughes Snatch Job.

In 1953, Hughes — hop­ing to do an end run around the IRS — trans­ferred his stock in Hughes Air­craft to the char­i­ta­ble Howard Hughes Med­ical Insti­tute. In 1985, GM bought Hughes Air­craft from the Insti­tute for more than five bil­lion dollars.

You’d think that Hughes Med­ical would now be one very well-heeled char­ity. But you’d be wrong. Ten years ago, its hold­ings had dwin­dled to $15.8 mil­lion. Dur­ing that time, the Insti­tute was under the man­age­ment of our old friend Bill Gay, who died in 2007.
A lot of dough seems to have slipped through that guy’s fin­gers. Oops.

Drock­ton asks: “How much of the Med­ical Institute’s money was man­aged by Bain Cap­i­tal?” It’s a fair ques­tion. As you may recall, dur­ing this time period the man­ag­ing direc­tor of Bain was Robert C. Gay, Bill Gay’s son. It’s not out of the ques­tion to sup­pose that Dad invested the money with sonny-boy.

18. Despite press cov­er­age rep­re­sent­ing Ron Paul and Mitt Rom­ney as oppo­nents, the two are close polit­i­cal allies.

“For Paul and Rom­ney, a Strate­gic Alliance between Estab­lish­ment and Out­sider” by Amy Gard­ner; Wash­ing­ton Post; 2/1/2012.

. . . Despite deep dif­fer­ences on a range of issues, Rom­ney and Paul became friends in 2008, the last time both ran for pres­i­dent. So did their wives, Ann Rom­ney and Carol Paul. The for­mer Mass­a­chu­setts gov­er­nor com­pli­ments the Texas con­gress­man dur­ing debates, prais­ing Paul’s reli­gious faith dur­ing the last one, in Jack­sonville, Fla. Imme­di­ately after­ward, as is often the case, the Pauls and the Rom­neys grav­i­tated toward one another to say hello.

The Romney-Paul alliance is more than a curi­ous con­nec­tion. It is a strate­gic part­ner­ship: for Paul, an oppor­tu­nity to gain a seat at the table if his long-shot bid for the pres­i­dency fails; for Rom­ney, a chance to gain sup­port from one of the most vibrant sub­groups within the Repub­li­can Party.

“It would be very fool­ish for any­body in the Repub­li­can Party to dis­miss a very real con­stituency,” said one senior GOP aide in Wash­ing­ton who is famil­iar with both camps. “Ron Paul plays a very valu­able part in the process and brings a lot of vot­ers toward the Repub­li­can Party and ulti­mately into the vot­ing booth, and that’s some­thing that can’t be ignored.” . . .

19. The pro­gram con­cludes with more exam­i­na­tion of Peter Thiel, the bankroller of Ron Paul’s Super PAC. Thiel is a big backer of bit­coin.

20. Thiel is also a finan­cial angel for Sen­a­tor Ted Cruz.

In FTR #‘s 758759, we looked at the pro­found con­nec­tions between the GOP fis­cal ter­ror­ists of the “Paulis­tin­ian Lib­er­tar­ian Orga­ni­za­tion” and the milieu of Eddie Snow­den. It should come as no sur­prise that Peter Thiel is a major backer of Ted Cruz.

Cruz, of course, is the GOP Sen­a­tor from Texas who was at the fore­front of the “shut­down milieu.”

Thiel is inex­tri­ca­bly linked with Palan­tirRon Paul, the seast­eading move­ment and Face­book.

In our dis­cus­sions of Thiel, NEVER for­get that he explic­itly rejects democ­racy, in no small mea­sure because he doesn’t think women should be allowed to vote.

“Reminder: Peter Thiel Is Ted Cruz’s Gay Bil­lion­aire Ally” by Sam Bid­dle; Val­ley Wag; 9/2/2013.

Where does a man like Ted Cruz get the con­fi­dence to IRL troll the United States Sen­ate for 21 hours? Know­ing that Pay­Pal bil­lion­aire and Sil­i­con Val­ley king­pin Peter Thiel has his back surely helps. . . .


11 comments for “FTR #760 Bit[coin]burg–The Rebels Without a Clue”

  1. You sound bet­ter and bet­ter with each pro­gram and I am really glad about that. But try­ing to keep up with you is like try­ing to keep up with the road run­ner on speed. what I need is some­thing like SPITFIRELIST FOR DUMMIES. because one read­ing does not do it for me to get all this infor­ma­tion in my head. it is hard to believe that you are just one guy. but I am sure glad you are doing what you are doing, even if I have trou­ble keep­ing up with you.

    Posted by David | October 31, 2013, 3:26 pm
  2. One of the inter­est­ing aspects about the bit­coin phe­nom­ena is that the more peo­ple that start using bit­coin the greater the defla­tion­ary pres­sure on the value of the bit­coins. That’s because there’s a fixed max­i­mum of 21 mil­lion bit­coins that can ever exist, so the greater the demand for bit­coins the more each bit­coin will cost in other cur­ren­cies. With the Chi­nese mar­ket now warm­ing up to bit­coin, and all those new poten­tial users, we might see a fas­ci­nat­ing exam­ple of a hyper­de­fla­tion­ary vir­tual gold bub­ble:

    Bit­coin Climbs to Record on Wider Accep­tance, China Trade
    By Olga Kharif — Nov 6, 2013 5:38 PM CT

    Bitcoin’s price hit a record at $265 on the Bit­Stamp online exchange, dri­ven by wider accep­tance of the vir­tual currency.

    The dig­i­tal money, which can be used to pay for goods and ser­vices on the Inter­net, has risen 20-fold so far this year, as trad­ing activ­ity has increased. Bit­coins were trad­ing at $251.36 apiece at 6:30 p.m. in New York on Bit­Stamp, one of the more active Web-based exchanges where Bit­coins are traded for dol­lars, euros and other currencies.

    The rally comes a month after the clos­ing of the “Silk Road Hid­den Web­site,” where peo­ple could obtain drugs, guns and other illicit goods using Bit­coins. The vir­tual cur­rency lost a third of its value in the days after the web­site was shut down. Bit­coins are becom­ing increas­ingly pop­u­lar, par­tic­u­larly in China, said Ugo Egbunike, direc­tor of busi­ness devel­op­ment at Index­U­ni­verse, an index-fund researcher.

    “I thought Silk Road is going to do some dam­age to the price,” Egbunike said. “But with BTC China buy­ing this up — they seem to have picked up the slack.”

    BTC China is now the world’s largest Bit­coin exchange, Nicholas Colas, a Con­vergEx Group ana­lyst, wrote in a Nov. 5 report.

    The vir­tual cur­rency exists as soft­ware that’s designed to be untrace­able, mak­ing it an attrac­tive ten­der for those seek­ing to trade anony­mously via the Web. There are about 30 trans­ac­tions per minute, at an aver­age amount of 16 Bit­coins, accord­ing to a report today by the Fed­eral Reserve Bank of Chicago.


    Since any­one could con­ceiv­ably cre­ate a com­pet­ing ver­sion of bit­coin with dif­fer­ent fea­tures, it’ll be inter­est­ing to see how long the bit­coin bub­ble will last. For instance, what hap­pens if some­one devel­ops a dig­i­tal cur­rency where the trans­ac­tions are much more anony­mous than bitcoin’s. Or lower com­pu­ta­tion costs? The value of most money is backed by a gov­ern­ment run­ning an econ­omy that the money can be spent in but bit­coins are sup­posed to be desir­able for their util­ity (like anonymity) and the 21 mil­lion cap that pre­vents the hyper­in­fla­tion­ary hor­rors of fiat cur­rency. Will bit­coin have a point any­more if a bet­ter anony­mous dig­i­tal sys­tem comes? Can exist­ing bit­coins be upgraded to a bet­ter sys­tem or will they be stuck as a low-tech pseudo-anonymous crap cur­rency? That seems like a big ques­tion that needs to be answered by bit­coins long-term investors.

    Posted by Pterrafractyl | November 7, 2013, 12:29 pm
  3. It would be pretty hilar­i­ous if Bit­coin, a cur­rency cher­ished by haunted by hyper­in­fla­tion­ary fears, because an object les­son in the dan­gers of defla­tion. But it’s hard to see how this les­son will be avoided if Bit­coin ever really caught on because one of the main fea­tures of the the cur­rency is that it’s capped out at 21 mil­lion coins but you can divide each coin up into smaller and smaller pieces. There­fore, the rea­son­ing goes, Bit­coin has defeated the infla­tion beast while still main­tain­ing the scal­a­bil­ity required to han­dle the vol­ume of trans­ac­tions in vir­tu­ally any sized econ­omy! Rev­o­lu­tion awaits! And this is sort of true of Bit­coins but the vic­tory over infla­tion also comes at the cost of built-in defla­tion cor­re­lated to the growth of the Bit­coin econ­omy (imag­ine if dol­lars grew more expen­sive with the growth of the US econ­omy). So the more Bit­coin grows in pop­u­lar­ity the greater the defla­tion, the greater the pay­out to the ear­li­est bit­coin investors, and the greater the temp­ta­tion to keep hold­ing onto those Bit­coins:

    Busi­ness Insider
    If You Believe In Bit­coin, You Should Never Buy Any­thing In Bit­coin
    Joe Weisen­thal Nov. 10, 2013, 5:42 PM

    Many Bit­coin believ­ers think that the dig­i­tal cur­rency will one day become the pre-eminent cur­rency of the inter­net. They basi­cally see it becom­ing the internet’s ver­sion of gold in that it’s nat­u­rally scarce, inde­pen­dent, vir­tu­ally impos­si­ble to manip­u­late, and cru­cially suited for a dig­i­tal world when money ought to be able to be moved seam­lessly and at no cost.

    Well here’s a tip: If you think that this is true, then never use Bit­coin in a transaction.

    As more peo­ple have got­ten into Bit­coin, the price has gone way up.

    Vir­tu­ally every­one who has ever bought any­thing in Bit­coin has been a huge loser, who would have been bet­ter suited just hold­ing onto the Bit­coins instead.

    Remem­ber the pizza that was pur­chased for $25 in Bit­coins years back? Had the per­son not bought that pizza, it would be worth nearly $3 mil­lion. That pur­chase was a cat­a­strophic deci­sion, as that was prob­a­bly the most expen­sive pizza of all time.

    Of course this presents a Catch-22. How can Bit­coin become a real cur­rency if it’s not used in trans­ac­tions? And why would any­one use it in trans­ac­tions if becom­ing a real cur­rency offers so much more price appre­ci­a­tion? This con­tra­dic­tion is a core prob­lem, and it’s a rea­son why it’s prob­a­bly doomed to fail (real cur­ren­cies don’t have this issue, since cen­tral banks pre­vent rapid price appre­ci­a­tion, and they man­date that the cur­rency be used).

    But really, if you’re think­ing that Bit­coin is going to be huge, it’d be insane and irre­spon­si­ble to buy any­thing with it.

    Part of what makes Bit­coin an extra fas­ci­nat­ing pyra­mid scheme to watch unfold is that, unlike most pyra­mid schemes, Bit­coin could con­ceiv­ably func­tion as a viable cur­rency but only if it’s not act­ing like a pyramid-scheme. It can’t do both at once. But it can poten­tially oscil­late back and forth between the two...at least until a more anony­mous com­peti­tor comes along and steals the entire market.

    Posted by Pterrafractyl | November 11, 2013, 3:56 pm
  4. The Win­klevoss twins, big Bit­coin investors, have a “bull case” sce­nario value for the entire 21 mil­lion Bit­coin econ­omy: $400 bil­lion, which is 100 times more than the cur­rent $4 bil­lion cap­i­tal­iza­tion. That’s ~$19,050/coin. At that point it’ll pre­sum­ably be one big sta­ble bub­ble:

    The Win­klevosses: Bit­coin worth 100 times more
    Pub­lished: Tues­day, 12 Nov 2013 | 9:19 AM ET
    By: Matthew J. Belvedere | Pro­ducer, CNBC’s “Squawk Box”

    The Win­klevoss twins are scream­ing bulls on bitcoin.

    Cameron and Tyler Winklevoss—big investors in the dig­i­tal currency—said Tues­day that bit­coin should be worth 100 times more than it’s val­ued today.

    “The bull case sce­nario is a $400 bil­lion mar­ket cap. So the mar­ket cap is around $4 bil­lion right now,” Tyler Win­klevoss said in an inter­view at the Deal­book con­fer­ence that aired on CNBC’s “Squawk Box.”

    The twins, who famously bat­tled Mark Zucker­berg over the ori­gins of Face­book, brought $11 mil­lion worth of bit­coin in April, when the vir­tual cur­rency hit record highs of $266. It then plummeted.

    But bit­coin has surged into record ter­ri­tory again, hit­ting $385 in early Tues­day trad­ing on Mt. Gox—one of the many exchanges for the dig­i­tal currency.

    Cameron Win­klevoss said he views their invest­ment in bit­coin as a gold 2.0-play but also a bet on the tech­nol­ogy: “The idea that pay­ments are increas­ingly going to use a net­work like the bit­coin net­work to move money around the world.”

    The Win­klevosses want to cre­ate a bit­coin exchange traded fund (ETF), acces­si­ble to all investors. “We filed an amended S-1 in Octo­ber. And we’re just still going through the process,” Cameron said.

    He explained how bit­coin works: “Min­ers mint bit­coins every 10 min­utes. It’s basi­cally a com­puter algo­rithm.” He said the com­put­ers built to mine are so spe­cific “you couldn’t really do it as a hobbyist.”


    Last month, bit­coin plunged after U.S. author­i­ties shut down the Silk Road site, an accused online pur­veyor of drugs and other ille­gal ser­vices. Bit­coin had been hit by the per­cep­tion that it was used pri­mar­ily for trans­ac­tions on Silk Road, and many had expected demand to dry up after the web­site was closed.

    But Tyler Win­klevoss said those con­cerns were never real­ized: “Prices are dou­ble what it was before Silk Road was shut down. So the demand to use bit­coin for illicit activ­ity was clearly almost zero.”

    Main­stream mer­chants are slowly adopt­ing bit­coin. Cameron pointed out that e-commerce plat­form Shopify announced it will accept bit­coin, and so has China por­tal Baidu.

    The dig­i­tal cur­rency has even made steps into the phys­i­cal realm, with ATM man­u­fac­turer Robo­coin launch­ing the first bit­coin ATM in a Van­cou­ver cof­fee shop.

    $19k Bit­coins, here we come!

    And there they go...

    Hong Kong Bit­coin trad­ing plat­form van­ishes with millions

    Sum­mary: As much as 30 mil­lion yuan (US$5 mil­lion) of invest­ment could be lost in limbo as a Hong Kong-based Bit­coin trad­ing plat­form vanishes.

    By Liu Jiayi for View from China | Novem­ber 12, 2013 — 02:18 GMT (18:18 PST)

    When ardent Chi­nese Bit­coin investors found that they could no longer access the web­site of Global Bond Lim­ited (GBL) in the early morn­ing of Octo­ber 26, it was already too late.

    One investor under the pseu­do­nym of South Amer­i­can Vicuna orga­nized an online group for the los­ing traders and told IT Times on Mon­day that more than 30 mil­lion yuan from 500 investors, many of whom sold homes to get in the vir­tual cur­rency trade, could never be retrieved.

    Accord­ing to the Vicuna, after the GBL’s web­site shut­down, it left only one mes­sage, say­ing that the site was com­pro­mised and investors who want to get back their invest­ment data shall trans­fer money to a des­ig­nated account. Now all con­tacts are not respond­ing, and the com­pany office in Hong Kong is as empty as the traders’ pockets.

    GBL self-proclaimed that the local gov­ern­ment had approved vir­tual cur­rency exchange back on June 8, and lured buy­ers in with high lever­age rate and high yield. How­ever, the too-obvious-to-ignore trad­ing loop­hole in its trad­ing sys­tem raised con­cerns, but the “always-winning” traders were too obsessed to get out, accord­ing to Vicuna.

    Vicuna, who is also the admin­is­tra­tor of btcmini.net, another Bit­coin trad­ing plat­form, is now help­ing vic­tims scav­enge evi­dence, if there was any­thing substantial.

    Many investors in Shang­hai tried to ask the local police to inves­ti­gate but failed. “When I told them GBL’s dis­ap­pear­ance, the police asked me what is Bit­coin, and how many coin could peo­ple buy with one yuan,” said an investor to IT Times.

    Vicuna said that at the moment vic­tims could only pro­vide screen cap­tures of trans­fers, account details, and IP addresses, none of which would be use­ful with­out police investigation.


    Yikes! Still, unscrupu­lous Bit­coin exchange oper­a­tors are known dan­ger to unreg­u­lated Bit­coin design. A new, greater dan­ger for Bitopia might be emerg­ing: Unscrupu­lous Bit­coin “min­ers” that become Bit­coin monop­o­lists. Researchers have found that there is a math­e­mat­i­cal advan­tage to “self­ish min­ing” (Bit­coin min­ing coop­er­a­tive) and it doesn’t require many miner work­ing “self­ishly” to under­mine the sys­tem. Con­sid­er­ing that Bit­coin is, in part, a cel­e­bra­tion of Lib­er­tar­ian ideals it would be some­what ironic if self­ish­ness kills Bit­coin:

    MIT Tech­nol­ogy Review
    Emerg­ing Tech­nol­ogy From the arXiv
    Novem­ber 8, 2013

    Bit­coin Vul­ner­a­bil­ity Could Allow Mali­cious Min­ers to Seize Control

    One of Bitcoin’s big advan­tages is that it is decen­tralised with nobody in over­all con­trol. But now a sim­ple strat­egy has emerged that could allow almost any group to take over, say com­puter secu­rity analysts.

    The dig­i­tal cur­rency Bit­coin is one of the zeit­geist phe­nom­ena of our time. Since 2009, it has grown from a dig­i­tal curios­ity to an online phe­nom­e­non. There are now some 11.5 mil­lion Bit­coins in cir­cu­la­tion and each one is worth over $300.

    The Bit­coin sys­tem is specif­i­cally designed to over­come one of the seri­ous flaws of pre­vi­ous dig­i­tal currencies—the pos­si­bil­ity of dou­ble spend­ing; that two peo­ple could spend two copies of the same cur­rency at the same time. It is also decen­tralised so that no sin­gle organ­i­sa­tion or organ­ised group of indi­vid­u­als can con­trol the cur­rency and pre­vent cer­tain types of transactions.

    But Bit­coin may not be quite as secure as every­body thought. Today, Ittay Eyal and Emin Gun Sirer at Cor­nell Uni­ver­sity in Ithaca say they’ve dis­cov­ered a flaw that allows any organ­ised group of Bit­coin min­ers to take over the cur­rency. And they say that some groups today are already big enough to do the job.

    First some back­ground. Per­haps Bitcoin’s biggest advan­tage is its unique approach to pre­vent­ing dou­ble spend­ing. It does this by record­ing every trans­ac­tion in a sin­gle log known as a blockchain. An indi­vid­ual account can only spend a Bit­coin if the blockchain records that it owns the Bit­coin in the first place.

    This log is pro­tected by cryp­top­uz­zles that can only be solved by large scale num­ber crunch­ing. When any­body solves such a puz­zle, they can record new trans­ac­tions and are rewarded with a fee in the form of new Bitcoins.

    Hence the emer­gence of Bit­coin min­ers. These are peo­ple who devote com­put­ing power to solve cryp­top­uz­zles and are paid for their work in Bitcoins.

    If you’re think­ing of a career as a Bit­coin miner, you’ll imme­di­ately run into a prob­lem. The cryp­top­uz­zles are so dif­fi­cult that the chances of solv­ing one by your­self is tiny. So Bit­coin min­ers work together in groups so that they can solve the prob­lems more quickly. If any one of them solves a puz­zle, they all share the proceeds.

    There are lots of groups to join and there’s no advan­tage in join­ing one over another. The received wis­dom is that this keeps the min­ing decentralised.

    But now Eyal and Sirer say that’s not true and have worked out how a self­ish group of min­ers could take over the cur­rency. “We show that the con­ven­tional wis­dom is wrong,” they say.

    The trick is to mine for Bit­coins but to keep the results secret. This cre­ates a fork in the blockchain so that one half of the fork is pub­lic and the other half is secret.

    The Bit­coin sys­tem has a way of resolv­ing these kinds of forks, which occur by acci­dent from time to time. It requires min­ers to join the longest fork. The trans­ac­tions in the other fork are then resub­mit­ted for resolution.

    If the self­ish min­ers make their fork longer than the pub­lic one, it becomes the cho­sen chain.

    The prob­lem is that the num­ber crunch­ing done on the fork that is aban­doned is wasted. So the self­ish min­ers end up get­ting more than their fair share of Bit­coins. This “enables pools of col­lud­ing min­ers that adopt it to earn rev­enues in excess of their min­ing power,” say Eyal and Sirer.

    Hav­ing skewed the sys­tem in favour of self­ish min­ers, other min­ers see that they can make more Bit­coins by join­ing this group. The result is a tip­ping point in which the Bit­coin min­ing sys­tem sud­denly becomes dom­i­nated by a sin­gle group. And this group can exer­cise what­ever con­trol it likes over how trans­ac­tions are recorded.

    Of course, self­ish min­ing only reaches a tip­ping point if the self­ish group con­sists of a cer­tain frac­tion of Bit­coin min­ers. Groups that are smaller than this can­not force the sys­tem to tip.

    The key result that Eyal and Sirer have cal­cu­lated is that the tip­ping thresh­old is close to zero zero. So almost any group could adopt the self­ish min­ing strat­egy and end up con­trol­ling the system.

    Eyal and Sirer have a solu­tion of sorts. This involves a chang­ing the sys­tem so that it chooses one fork over another at ran­dom (rather than choos­ing the loner one). When this choice is ran­dom, then it is harder for the self­ish min­ers to take control.

    But not that much harder. Eyal and Sirer cal­cu­late that this raises the tip­ping thresh­old to groups that con­trol around 25 per cent of all Bit­coin min­ing. “Even with our pro­posed fix that raises the thresh­old to 25 per cent, the out­look is bleak: there already exist pools whose min­ing power exceeds the 25%,” they point out.


    Inter­est­ingly, if this is true, the investors try­ing to cre­ate Bitcoin’s com­peti­tors (like Peter Thiel who is bet­ting both for and against Bit­coin) actu­ally have an incen­tive to start their own Bit­coin Bankster car­tel in order to under­mine their exist­ing Bit­coin com­peti­tor. But if you were able to cre­ate a Bit­coin Bankster car­tel, would you even want to kill it? It’s kind of a Golden Goose at that point.

    Posted by Pterrafractyl | November 12, 2013, 10:18 am
  5. Finally, an econ­omy wor­thy of Bitcoin’s awe­some­ness: Galt’s Gulch is for sale and they’re accept­ing Bit­coins:

    Galt’s Gulch Chile Becomes First Lib­er­tar­ian Com­mu­nity Accept­ing Bit­coin
    Galt’s Gulch Chile, a Lib­er­tar­ian real estate project in Chile, has become the first real estate project of its kind to accept bit­coin. Designed as a res­i­den­tial organic farm­ing com­mu­nity with clean waters, organic foods, and renew­able energy, the project raises the ques­tion: What can’t you buy with bit­coin now?

    San­ti­ago, Chile (PRWEB) Novem­ber 13, 2013

    As a philoso­pher and inven­tor, it is likely John Galt would have hap­pily accepted bit­coin for the Galt’s Gulch depicted in Ayn Rand’s land­mark novel “Atlas Shrugged”.

    Although Galt’s char­ac­ter did not know of bit­coin, his vision has become a real­ity with the Lib­er­tar­ian– fash­ioned com­mu­nity, Galt’s Gulch Chile. Today Galt’s Gulch Chile becomes the world’s first Lib­er­tar­ian real estate project to accept bitcoin.

    Galt’s Gulch Chile is a self-sustaining organic farm­ing com­mu­nity located within the mild Mediter­ranean micro­cli­mate of cen­tral Chile. This real­iza­tion of John Galt’s vision holds title to over 11,000 acres of pris­tine land with nearly 800 liters per sec­ond of reg­is­tered under­ground and sur­face water rights. Galt’s Gulch Chile presents, for the first time, the oppor­tu­nity to pur­chase real estate with the rev­o­lu­tion­ary new vir­tual cur­rency bitcoin.

    Bit­coin has soared past all-time highs in recent weeks, reach­ing a price of nearly $400 in early Novem­ber. Many ana­lysts have repeated that one bar­rier to bitcoin’s main­stream accep­tance is one’s inabil­ity to spend it on prac­ti­cal things.

    Along­side hun­dreds and thou­sands of other bit­coin busi­nesses, Galt’s Gulch Chile has changed that.

    Galt’s Gulch Chile spokesper­son Jeff Berwick, founder of Stock­House, TDV Media & Bit­coinATM, has played a sig­nif­i­cant role in the early stages of bit­coin Berwick has been on Fox News, CNBC & Bloomberg to dis­cuss the rise of bitcoin.

    “I can think of no bet­ter way to invest bit­coins than on real estate, espe­cially legally pro­tected land with clean water and organic farm­land in quickly devel­op­ing mar­kets, like Chile” explained Berwick at a recent Spring Event at Galt’s Gulch Chile.

    “Just like bit­coins, I think land in emerg­ing mar­kets will only increase in value over the com­ing years. The US dol­lar and other fiat cur­ren­cies will con­tinue to col­lapse and we rec­om­mend those hold­ing dol­lars to divest them­selves of those dol­lars as soon as pos­si­ble. We also want to show our com­mit­ment to bit­coin and accept it very hap­pily as pay­ment for land at Galt’s Gulch.”

    With archi­tec­tural and eco­log­i­cal mas­ter plan design under­way, Galt’s Gulch Chile has already invested many months of effort into mak­ing Galt’s Gulch a true non-fiction reality.

    Please refer to the GGC web­site for fur­ther details on the project and also reg­is­ter for on-going updates and oppor­tu­ni­ties for liv­ing in the community.

    Posted by Pterrafractyl | November 13, 2013, 7:36 pm
  6. Sweet! There are about to be two more bub­bles to invest your Bit­coins in: China’s hous­ing bub­ble and DC’s moral­ity bub­ble.

    Posted by Pterrafractyl | November 15, 2013, 12:35 am
  7. Anony­mous online mar­ket­place that replaced Silk Road VANISHES... tak­ing $100MILLION of users’ money with it

    Read more: http://www.dailymail.co.uk/news/article-2517244/Illegal-online-marketplace-replaced-Silk-Road-VANISHES–taking-100MILLION-users-money-it.html#ixzz2mUE3J7zp

    Posted by Vanfield | December 3, 2013, 10:52 pm
  8. On a side note, it looks like Golden Gate Cap­i­tal did well for itself in the US frack­ing boom:

    Decem­ber 8, 2013 5:21 pm
    Golden Gate Cap­i­tal sells US Sil­ica stake

    By Ed Ham­mond in New York

    Golden Gate Cap­i­tal is sell­ing its stake in US Sil­ica in a deal that will make the San Francisco-based pri­vate equity group close to 10 times its ini­tial invest­ment.

    Golden Gate, which has been work­ing with Jos A Bank on its bid to take over rival suit retailer Men’s Wear­house, dis­posed of the remain­ing 8.5 per cent of US Silica’s shares that it had not already sold, accord­ing to a Fri­day filing.

    The pri­vate equity com­pany bought US Sil­ica, which pro­vides sand and other chem­i­cals needed for frack­ing, for $120m in 2008. The sale of its remain­ing stake takes its total pro­ceeds to $1.15bn.

    Golden Gate has also teamed up with fel­low pri­vate equity group Bain Cap­i­tal to con­sider mak­ing a bid for Com­puware, the busi­ness soft­ware maker, in a deal that could cre­ate a $9bn tech­nol­ogy busi­ness

    Posted by Pterrafractyl | December 14, 2013, 6:51 pm
  9. It’s worth not­ing that the CEO of But­ter­fly Labs, one of the main bit­coin min­ing hard­ware com­pa­nies, appears to back the the­ory that Satoshi Nakamoto is really the cre­ation of a group of peo­ple affil­i­ated with the finan­cial sec­tor and prob­a­bly from Europe:

    Inter­na­tional Busi­ness Times
    Bit­coin Inven­tor Satoshi Nakamoto is Anonymous-style Cell from Europe
    Expert says a group, with strong foot­ing in finan­cial sec­tor, could be behind Bit­coin phenomenon

    By Vasude­van Srid­ha­ran | Decem­ber 16, 2013 08:16 AM GMT

    As the mys­tery sur­round­ing the iden­tity of Satoshi Nakamoto, the cre­ator of the dig­i­tal cur­rency Bit­coin, con­tin­ues to grow, it is believed that the ‘inven­tor’ could infact be the cre­ation of a com­puter col­lec­tive, IBTimes UK understands.

    Josh Zer­lan, the Chief Oper­at­ing Offi­cer of But­ter­fly Labs and a per­son famil­iar with the Bit­coin net­work, has said it is highly likely that Nakamoto could be a group of peo­ple work­ing the finan­cial sec­tor.

    Speak­ing to IBTimes UK on the side­lines of a Global Bit­coin Con­fer­ence in Ban­ga­lore, India, Zer­lan said: “One of the pre­vail­ing the­o­ries, I think has cred­i­bil­ity, is that it was some group of peo­ple from finan­cial sec­tor that cre­ated this. They released it and stepped back and let it go. So, Satoshi Nakamoto is a group of peo­ple, I think, is a rea­son­able possibility.”

    When quizzed where the group of peo­ple might be based, Zer­lan indi­cated they could prob­a­bly be from the Euro­pean continent.

    How­ever, Zer­lan from But­ter­fly Labs, which is involved in sup­ply­ing hard­ware for min­ing Bit­coins, con­ceded: “Nobody knows who he really is. The name ‘Satoshi Nakamoto’ is more like John Smith in Eng­lish. So, it’s kind of a generic name.”

    He added that the recent spec­u­la­tion that Nakamoto could be the Japan­ese blog­ger and pro­gram­mer Nick Szabo does not seem plau­si­ble, con­sid­er­ing the style of writ­ing.

    Posted by Pterrafractyl | December 17, 2013, 1:53 pm
  10. @Pterrafractyl–

    Don’t fail to note the lat­est FTR show, #764, fol­low­ing up on bitcoin.

    I’m pro­duc­ing shows on an almost weekly basis, so the “Update on For The Record Pro­duc­tion” posts have been discontinued.

    Check the bot­tom of the front page of the web­site for the lat­est FTR programs.

    765 should be up soon.



    Posted by Dave Emory | December 17, 2013, 6:11 pm
  11. @Dave: Yep, I didn’t see 764 all last week and just noticed it over the week­end. Excel­lent con­tent in 764 ;).

    Another inter­est­ing fun-fact about Satoshi Nakamoto: who­ever they are they have a lot of bit­coins. About 1 mil­lion of them:

    Who Owns the World’s Biggest Bit­coin Wal­let? The FBI

    By Robert McMil­lan
    6:30 AM

    Who owns the sin­gle largest Bit­coin wal­let on the inter­net? The U.S. government.

    In Sep­tem­ber, the FBI shut down the Silk Road online drug mar­ket­place, and it started seiz­ing bit­coins belong­ing to the Dread Pirate Roberts — the oper­a­tor of the illicit online mar­ket­place, who they say is an Amer­i­can man named Ross Ulbricht.

    The seizure sparked an ongo­ing pub­lic dis­cus­sion about the future of Bit­coin, the world’s most pop­u­lar dig­i­tal cur­rency, but it had an unfore­seen side-effect: It made the FBI the holder of the world’s biggest Bit­coin wal­let.

    The FBI now con­trols more than 144,000 bit­coins that reside at a bit­coin address that con­sol­i­dates much of the seized Silk Road bit­coins. Those 144,000 bit­coins are worth close to $100 mil­lion at Tuesday’s exchange rates. Another address, con­tain­ing Silk Road funds seized ear­lier by the FBI, con­tains nearly 30,000 bit­coins ($20 million).

    That doesn’t make the FBI the world’s largest bit­coin holder. This honor is thought to belong to bitcoin’s shad­owy inven­tor Satoshi Nakamoto, who is esti­mated to have mined 1 mil­lion bit­coins in the currency’s early days. His stash is spread across many wal­lets. But it does put the fed­eral agency ahead of the Cameron and Tyler Win­klevoss, who in July said that they’d cor­nered about 1 per­cent of all bit­coins (there are 12 mil­lion bit­coins in circulation).

    In the fun house world of bit­coin track­ing, it’s hard to say any­thing for cer­tain. But it is safe to say that there are new play­ers in the Bit­coin world — although not as many peo­ple are buy­ing bit­coins as one might guess from all of the media attention.

    Satoshi stores his wealth in a large num­ber of bit­coin addresses, most of them hold­ing just 50 bit­coins. It’s a bit of a logis­ti­cal night­mare, but most savvy Bit­coin investors spread out their bit­coins across mul­ti­ple wal­lets. That way if they lose the key to one of them or get hacked, all is not lost.

    “It’s eas­ier to keep track of one address, but it’s also most risky that way,” says Andrew Rennhack, the oper­a­tor of the Bit­coin Rich List, a web­site that tracks the top addresses in the world of bitcoin.

    Accord­ing to Rennhack, the size of the bit­coin uni­verse has expanded over the past year, but the total num­ber of peo­ple on the planet who hold at least one bit­coin is actu­ally pretty small — less than a quarter-million peo­ple. Today, there are 246,377 bit­coin addresses with at least one bit­coin in them, he says. And many peo­ple keep their bit­coins in more than one address. A year ago, that num­ber was 159,916, he says.


    Posted by Pterrafractyl | December 18, 2013, 10:20 am

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