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Bitcoinburg–Who Developed this “Virtual Currency?”

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COMMENT: 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.”

Some of the purposes of the development of bitcoin, as well as the way in which it has been manipulated, will be discussed in a future post.

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.

EXCERPT: . . . 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. . . . .

“Neal J. King”; LinkedIn.com.

EXCERPT: . . . 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. . . .

“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. . . .

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

EXCERPT: . . . 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. . . .

“Golden Gate Capital”; wikipedia.com.

EXCERPT: . . . 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. . . .

“Infineon Technologies”; wikipedia.com.

EXCERPT: 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. . . .

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

EXCERPT: 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. . . .


10 comments for “Bitcoinburg–Who Developed this “Virtual Currency?””

  1. So Deutschland:

    a) outlaws Scientology (competing spy-ops orgs?)

    but …

    b) protects Lyndon and Helga Zepp Larouche in covering up murder of Jeremiah Duggan at their Schiller Institute (co-operating/unified spy-ops orgs?)

    c) 9/11 Hamburg cell (co-operating/unified spy-ops orgs?)

    d) Palantir’s progenitors all Deutsch-y douchey linked by background and education (co-operating/unified spy-ops orgs?)

    e) Every nation-state Eddy the Spook considered for safe landing has modeled their statecraft on post-war evolutionary benefit of Germany.
    – All of fascist South America
    – G.H.W.Bush’s Berlin-wall blast with it’s phoenix~fire rising-from-the-ashes [of humanity] in spirit and flesh, manifestations ultimately subjugating Europe to its economic hegemony (and Russia has a new permanent dictator – Yuri Andropov’s ass-eater “Shirtless” Vlad Putin).

    f) when all else fails, cater to criminality and kill off public-government oversight of economic transactions with complicity and sponsorship of cruel hoax shitcoin.

    Posted by participo | October 11, 2013, 10:25 am
  2. So exactly how secure can Bitcoin be when, even on a thumb drive, you have to plug it into a system with TPM in order to do transactions. Even if the backdoor doesn’t allow the keys to be read, the transaction would still be hacked.

    Posted by Chris | October 12, 2013, 8:32 am
  3. …theft? criminality? oh really?!!

    see point f) above in previous comments ^^^^^^^^^^^^^^


    Mt. Gox Bitcoin Exchange Down Amid $365 Million Theft Claim

    By Carter Dougherty and Pavel Alpeyev – Feb 25, 2014

    Mt. Gox, the Tokyo-based Bitcoin exchange that halted withdrawals this month, went offline as a document surfaced alleging long-term theft of about $365 million in the digital currency.

    A document posted online that appeared to be an internal strategy paper said unidentified thieves stole 744,408 Bitcoins from the exchange — about $365 million at current rates — and that the theft “went unnoticed for several years.”

    “The reality is that Mt. Gox can go bankrupt at any moment, and certainly deserves to as a company,” according to the document.

    The document, which outlines plans for leadership changes, re-branding and a possible move to Singapore, was posted online by blogger Ryan Galt. A person briefed on the situation at Mt. Gox, who asked to remain anonymous because the document is private, said he believed it is authentic.

    Bitcoin fell 5 percent to $517.71 at 4:48 p.m. London time, according to the CoinDesk Bitcoin Price Index, which averages exchange prices. That’s down from as high as $1,151 on Dec. 4.

    Mt. Gox went offline to “protect the site and our users,” according to a statement on its website. “We will be closely monitoring the situation and will react accordingly,” it added.
    ‘Tragic Violation’

    A group of Bitcoin-related companies sought to distance themselves from Mt. Gox, and promised to protect customer funds to promote usage of the currency.

    “This tragic violation of the trust of users of Mt. Gox was the result of one company’s actions and does not reflect the resilience or value of Bitcoin and the digital currency industry,” San Francisco-based Coinbase said in a joint statement on its website with Kraken, BitStamp, Circle and BTC China, other prominent Bitcoin companies.

    Is Bitcoin Real Money?

    “As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today,” the companies said in the statement.

    Efforts to reach the http://www.mtgox.com website earlier today directed users to a blank white page, a day after Mt. Gox Chief Executive OfficerMark Karpeles resigned from the Bitcoin Foundation, an advocacy group for the digital money. At one point today, the site read “put announce for mtgox acq here.”
    ‘Alleged Insolvency’

    “We are shocked to learn about Mt. Gox’s alleged insolvency,” the foundation said in an e-mailed statement.

    Bitcoin was introduced in 2008 by a programmer or group of programmers under the name Satoshi Nakamoto and has since gained traction with merchants around the world. The digital money, based on a peer-to-peer software protocol, has no central issuing authority, and uses a public ledger to verify transactions while preserving users’ anonymity.

    The Bitcoin Foundation said that, despite the troubles at Mt. Gox, the Bitcoin protocol was functioning normally. In recent days, Mt. Gox had stopped withdrawals, citing an alleged flaw in the protocol.

    Since at least 2011, enthusiasts have been trading Bitcoins for dollars and other traditional currencies, and in early 2013 Mt. Gox was one of the biggest exchanges. Mt. Gox said this month that it identified a bug that enables people to withdraw the same Bitcoins more than once, leaving it vulnerable to hackers.

    Prices quoted on the exchange plunged on speculation that account holders wouldn’t be able to get their coins back.

    The troubles at Mt. Gox are the latest setback for Bitcoin after authorities in Russia, China and Israel sought to restrict the digital money, while the U.S. seeks ways to prevent money-laundering and illicit sales without killing the new technology.

    To contact the reporters on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net; Carter Dougherty in Washington at cdougherty6@bloomberg.net

    To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

    Posted by participo | February 25, 2014, 11:34 pm
  4. …nothing to see here, move along now people, move along…

    Head of Online Currency Exchange Found Dead in
    By Javier E. David

    Autumn Radtke, the CEO of an upstart online currency exchange, last week under mysterious circumstances at her home in Singapore.

    Radtke, the U.S.-born head of First Meta, was found dead by local police Feb. 28, with the cause of death yet to be determined. In a statement on its website, First Meta said the company “was shocked and saddened by the tragic loss of our friend and CEO Autumn Radtke.”

    In an interview with The Wall Street Journal, the company’s director and nonexecutive chairman, Douglas Abrams, said the exact cause of Radtke’s death was “still under investigation.”

    Prior to taking the reins at First Meta in 2012, the 28-year-old Radtke had once closely worked with technology giant Apple, to bring cloud-computing software to Johns Hopkins University, Los Alamos Labs and the Aerospace Corp., according to her biography. She then took up business development roles at tech start-ups Xfire and Geodelic Systems, according to information on her LinkedIn profile.

    First Meta bills itself as a clearinghouse for the purchase and exchange of virtual currencies, including bitcoin.

    Her death comes as troubles swirl around the nascent cryptocurrency industry, and amid a rash of suicides in the financial industry as a whole.

    Last week, the world’s largest bitcoin exchange, Mt.Gox, imploded; meanwhile, nearly $500 million in client funds vanished overnight. Elsewhere, untimely demises unrelated to bitcoin have claimed the lives of bankers at JPMorgan, Deutsche Bank and Zurich Insurance Group.

    First published March 5th 2014, 10:09 am
    Javier E. David

    Javier E. David is a reporter for CNBC.com, based in Englewood Cliffs, N.J.

    Posted by participo | March 5, 2014, 3:40 pm
  5. Newsweek appears to have found Satoshi Nakamoto. If they’re correct, Satoshi Nakamoto is, somewhat surprisingly, a guy really named ‘Satoshi Nakamoto’ with a libertarian philosophy and a career working in the US defense industry. That includes contract work working on security for the FAA after 9/11, which is also apparently the time he started working on bitcoin. There isn’t much else known about his past because he’s done a lot of secretive work that he doesn’t share with anyone. So the mystery might be solved with another mystery:

    The Face Behind Bitcoin
    By Leah McGrath Goodman / March 6, 2014 6:05 AM EST

    Satoshi Nakamoto stands at the end of his sunbaked driveway looking timorous. And annoyed.

    He’s wearing a rumpled T-shirt, old blue jeans and white gym socks, without shoes, like he has left the house in a hurry. His hair is unkempt, and he has the thousand-mile stare of someone who has gone weeks without sleep.

    He stands not with defiance, but with the slackness of a person who has waged battle for a long time and now faces a grave loss.

    Two police officers from the Temple City, Calif., sheriff’s department flank him, looking puzzled. “So, what is it you want to ask this man about?” one of them asks me. “He thinks if he talks to you he’s going to get into trouble.”

    “I don’t think he’s in any trouble,” I say. “I would like to ask him about Bitcoin. This man is Satoshi Nakamoto.”

    “What?” The police officer balks. “This is the guy who created Bitcoin? It looks like he’s living a pretty humble life.”

    I’d come here to try to find out more about Nakamoto and his humble life. It seemed ludicrous that the man credited with inventing Bitcoin – the world’s most wildly successful digital currency, with transactions of nearly $500 million a day at its peak – would retreat to Los Angeles’s San Bernardino foothills, hole up in the family home and leave his estimated $400 million of Bitcoin riches untouched. It seemed similarly implausible that Nakamoto’s first response to my knocking at his door would be to call the cops. Now face to face, with two police officers as witnesses, Nakamoto’s responses to my questions about Bitcoin were careful but revealing.

    Tacitly acknowledging his role in the Bitcoin project, he looks down, staring at the pavement and categorically refuses to answer questions.

    “I am no longer involved in that and I cannot discuss it,” he says, dismissing all further queries with a swat of his left hand. “It’s been turned over to other people. They are in charge of it now. I no longer have any connection.”

    Nakamoto refused to say any more, and the police made it clear our conversation was over.

    But a two-month investigation and interviews with those closest to Nakamoto and the developers who worked most frequently with him on the out-of-nowhere global phenomenon that is Bitcoin reveal the myths surrounding the world’s most famous crypto-currency are largely just that – myths – and the facts are much stranger than the well-established fiction.

    Far from leading to a Tokyo-based whiz kid using the name “Satoshi Nakamoto” as a cipher or pseudonym (a story repeated by everyone from Bitcoin’s rabid fans to The New Yorker), the trail followed by Newsweek led to a 64-year-old Japanese-American man whose name really is Satoshi Nakamoto. He is someone with a penchant for collecting model trains and a career shrouded in secrecy, having done classified work for major corporations and the U.S. military.

    Standing before me, eyes downcast, appeared to be the father of Bitcoin.

    Not even his family knew.

    There are several Satoshi Nakamotos living in North America and beyond – both dead and alive – including a Ralph Lauren menswear designer in New York and another who died in Honolulu in 2008, according to the Social Security Index’s Death Master File. There’s even one on LinkedIn who claims to have started Bitcoin and is based in Japan. But none of these profiles seem to fit other known details and few of the leads proved credible. Of course, there is also the chance “Satoshi Nakamoto” is a pseudonym, but that raises the question why someone who wishes to remain anonymous would choose such a distinctive name. It was only while scouring a database that contained the registration cards of naturalized U.S. citizens that a Satoshi Nakamoto turned up whose profile and background offered a potential match. But it was not until after ordering his records from the National Archives and conducting many more interviews that a cohesive picture began to take shape.

    Two weeks before our meeting in Temple City, I struck up an email correspondence with Satoshi Nakamoto, mostly discussing his interest in upgrading and modifying model steam trains with computer-aided design technologies. I obtained Nakamoto’s email through a company he buys model trains from.

    He has been buying train parts from Japan and England since he was a teenager, saying, “I do machining myself, manual lathe, mill, surface grinders.”

    The process also requires a good amount of math, something at which Nakamoto – and his entire family – excels. The eldest of three brothers who all work in engineering and technical fields, Nakamoto graduated from California State Polytechnic University in Pomona, Calif., with a degree in physics. But unlike his brothers, his circuitous career path is very hard to trace.

    Nakamoto ceased responding to emails I’d sent him immediately after I began asking about Bitcoin. This was in late February. Before that, I’d also asked about his professional background, for which there is very little to be found in the public record. I only received evasive answers. When he asked about my background, I told him I’d be happy to elaborate over the phone and called him to introduce myself. When there was no response, I asked his oldest son, Eric Nakamoto, 31, to reach out and see whether his father would talk about Bitcoin. The message came back he would not. Attempts through other family members also failed.

    After that, Nakamoto disregarded my requests to speak by phone and did not return calls. The day I arrived at his modest, single-family home in southern California, his silver Toyota Corolla CE was parked in the driveway but he didn’t answer the door.

    At one point he did peer out, cracking open the door screen and making eye contact briefly. Then he shut it. That was the only time I saw him without police officers in attendance.

    “You want to know about my amazing physicist brother?” says Arthur Nakamoto, Satoshi Nakamoto’s youngest sibling, who works as director of quality assurance at Wavestream Corp., a maker of radio frequency amplifiers in San Dimas, Calif.

    “He’s a brilliant man. I’m just a humble engineer. He’s very focused and eclectic in his way of thinking. Smart, intelligent, mathematics, engineering, computers. You name it, he can do it.”

    But he also had a warning.

    “My brother is an asshole. What you don’t know about him is that he’s worked on classified stuff. His life was a complete blank for a while. You’re not going to be able to get to him. He’ll deny everything. He’ll never admit to starting Bitcoin.”

    And with that, Nakamoto’s brother hung up.

    His remarks suggested I was on the right track, but that was not enough. While his brother suggested Nakamoto would be capable of starting Bitcoin, I was not at all sure whether he knew for certain one way or the other. He said they didn’t get along and didn’t speak often.

    In recent weeks, a revived version of Silk Road as well as one of Bitcoin’s biggest exchanges, Tokyo-based Mt. Gox, shut down and filed for bankruptcy after attacks by hackers drained each of millions of dollars.

    Andresen, a Silicon Valley refugee in Amherst, Mass., says he worked closely with the person “or entity” known as Satoshi Nakamoto on the development of Bitcoin from June 2010 to April 2011. This was before the rise of today’s multibillion-dollar Bitcoin economy, boosted last year by the unexpected, if cautious, endorsement of outgoing Federal Reserve chair Ben Bernanke, who said virtual currencies “may hold long-term promise.”

    Since then, Bitcoin ATMs have been cropping up across North America (with some of the first in Vancouver, British Columbia; Boston; and Albuquerque, N.M.) while the acceptance of Bitcoin has spread to businesses as diverse as Tesla, OkCupid, Reddit, Overstock.com and Virgin Galactic, Richard Branson’s aviation company, which has said it will blast people into space if they cough up enough Bitcoin.

    “Working on Bitcoin’s core code is really scary, actually, because if you wreck something, you can break this huge $8 billion project,” says Andresen. “And that’s happened. We have broken it in the past.”

    For nearly a year, Andresen corresponded with the founder of Bitcoin a few times a week, often putting in 40-hour weeks refining the Bitcoin code. Throughout their correspondence, Nakamoto’s evasiveness was his hallmark, Andresen says.

    In fact, he never even heard Nakamoto’s voice, because the founder of Bitcoin would not communicate by phone. Their interactions, he says, always took place by “email or private message on the Bitcointalk forum,” where enthusiasts meet online.

    “He was the kind of person who, if you made an honest mistake, he might call you an idiot and never speak to you again,” Andresen says. “Back then, it was not clear that creating Bitcoin might be a legal thing to do. He went to great lengths to protect his anonymity.”

    Nakamoto also ignored all of Andresen’s questions about where he was from, his professional background, what other projects he’d worked on and whether his name was real or a pseudonym (many of Bitcoin’s devotees use pseudonyms). “He was never chatty,” Andresen says. “All we talked about was code.”

    Andresen, an Australian who graduated from Princeton with a Bachelor’s in computer science, eventually became Nakamoto’s point person on a growing team of international coders and programmers who worked on a volunteer basis to perfect the Bitcoin code after its inauspicious launch in January 2009.

    Andresen originally heard about Bitcoin the following year through a blog he followed. He reached out to Nakamoto through one of the Bitcoin founder’s untraceable email addresses and offered his assistance. His initial message to Bitcoin’s inventor read: “Bitcoin is a brilliant idea, and I want to help. What do you need?”

    “I got the impression that Satoshi was really doing it for political reasons,” says Andresen, who gets paid in Bitcoins – along with a half-dozen other Bitcoin core developers working everywhere from Silicon Valley to Switzerland – by the Bitcoin Foundation, a nonprofit working to standardize the currency.

    He doesn’t like the system we have today and wanted a different one that would be more equal. He did not like the notion of banks and bankers getting wealthy just because they hold the keys,” says Andresen.

    Holding the keys has also made early comers to Bitcoin wealthy beyond measure. “I made a small investment in Bitcoin and it is actually enough that I could now retire if I wanted to,” Andresen says. “Overall, I’ve made about $800 per penny I’ve invested. It’s insane.”

    One of the first people to start working with Bitcoin’s founder in 2009 was Martti Malmi, 25, a Helsinki programmer who invested in Bitcoins. “I sold them in 2011 and bought a nice apartment,” he says. “Today, I could have bought 100 nice apartments.”

    Communication with Bitcoin’s founder was becoming less frequent by early 2011. Nakamoto stopped posting changes to the Bitcoin code and ignored conversations on the Bitcoin forum.

    Andresen was unprepared, however, for Satoshi Nakamoto’s reaction to an email exchange between them on April 26, 2011.

    “I wish you wouldn’t keep talking about me as a mysterious shadowy figure,” Nakamoto wrote to Andresen. “The press just turns that into a pirate currency angle. Maybe instead make it about the open source project and give more credit to your dev contributors; it helps motivate them.”

    Andresen responded: “Yeah, I’m not happy with the ‘wacky pirate money’ tone, either.”

    Then he told Nakamoto he’d accepted an invitation to speak at the Central Intelligence Agency headquarters. “I hope that by talking directly to them and, more importantly, listening to their questions/concerns, they will think of Bitcoin the way I do – as a just-plain-better, more efficient, less-subject-to-political-whims money,” he said. “Not as an all-powerful black-market tool that will be used by anarchists to overthrow the System.”

    From that moment, Satoshi Nakamoto stopped responding to emails and dropped off the map.

    Nakamoto’s family describe him as extremely intelligent, moody and obsessively private, a man of few words who screens his phone calls, anonymizes his emails and, for most of his life, has been preoccupied with the two things for which Bitcoin has now become known: money and secrecy.

    For the past 40 years, Satoshi Nakamoto has not used his birth name in his daily life. At the age of 23, after graduating from California State Polytechnic University, he changed his name to “Dorian Prentice Satoshi Nakamoto,” according to records filed with the U.S. District Court of Los Angeles in 1973. Since then, he has not used the name Satoshi but instead signs his name “Dorian S. Nakamoto.”

    Descended from Samurai and the son of a Buddhist priest, Nakamoto was born in July 1949 in the city of Beppu, Japan, where he was brought up poor in the Buddhist tradition by his mother, Akiko. In 1959, after a divorce and remarriage, she immigrated to California, taking her three sons with her. Now age 93, she lives with Nakamoto in Temple City.

    Nakamoto did not get along with his stepfather, but his aptitude for math and science was evident from an early age, says Arthur, who also notes, “He is fickle and has very weird hobbies.”

    Just after graduating college, Nakamoto went to work on defense and electronics communications for Hughes Aircraft in southern California. “That was just the beginning,” says Arthur, who also worked at Hughes. “He is the only person I have ever known to show up for a job interview and tell the interviewer he’s an idiot – and then prove it.”

    Nakamoto has six children. The first, a son from his first marriage in the 1980’s, is Eric Nakamoto, an animation and 3-D graphics designer in Philadelphia. His next five children were with his second wife, Grace Mitchell, 56, who lives in Audubon, N.J., and says she met Nakamoto at a Unitarian church mixer in Cherry Hill, N.J., in the mid-1980s. She recalls he came to the East Coast after leaving Hughes Aircraft, now part of Raytheon, in his 20s and next worked for Radio Corporation of America in Camden, N.J., as a systems engineer.

    “We were doing defensive electronics and communications for the military, government aircraft and warships, but it was classified and I can’t really talk about it,” confirms David Micha, president of the company now called L-3 Communications.

    Mitchell says her husband “did not talk much about his work” and sometimes took on military projects independent of RCA. In 1987, the couple moved back to California, where Nakamoto worked as a computer engineer for communications and technologies companies in the Los Angeles area, including financial information service Quotron Systems Inc., sold in 1994 to Reuters, and Nortel Networks.

    Nakamoto, who was laid off twice in the 1990s, according to Mitchell, fell behind on mortgage payments and taxes and their home was foreclosed. That experience, says Nakamoto’s oldest daughter, Ilene Mitchell, 26, may have informed her father’s attitude toward banks and the government.

    A libertarian, Nakamoto encouraged his daughter to be independent, start her own business and “not be under the government’s thumb,” she says. “He was very wary of the government, taxes and people in charge.”

    She also describes her father as a man who worked all hours, from before the family rose in the morning to late into the night. “He would keep his office locked and we would get into trouble if we touched his computer,” she recalls. “He was always expounding on politics and current events. He loved new and old technology. He built his own computers and was very proud of them.”

    Around 2000, Nakamoto and Grace separated, though they have never divorced. They moved back to New Jersey with their five children and Nakamoto worked as a software engineer for the Federal Aviation Administration in New Jersey in the wake of the September 11 attacks, doing security and communications work, says Mitchell.

    “It was very secret,” she says. “He left that job sometime in 2001 and I don’t think he’s had a steady job since.”

    When the FAA contract ended, Nakamoto moved back to Temple City, where for the rest of that decade things get hazy about what kind of work he undertook.

    Ever since Bitcoin rose to prominence there has been a hunt for the real Satoshi Nakamoto. Did he act alone or was he working for the government? Bitcoin has been linked to everything from the National Security Agency to the International Monetary Fund.

    Yet, in a world where almost every big Silicon Valley innovation seems to erupt in lawsuits over who thought of it first, in the case of Bitcoin the founder has remained conspicuously silent for the past five years.

    Mitchell suspects Nakamoto’s initial interest in creating a digital currency that could be used anywhere in the world may have stemmed from his frustration with bank fees and high exchange rates when he was sending international wires to England to buy model trains. “He would always complain about that,” she says. “I would not say he writes flawless English. He will pick up words and mix the spellings.”

    Eric, Nakamoto’s oldest son from his first marriage, says he remains torn over whether his father is the founder of Bitcoin, noting that messages from the latter appear more “concise” and “refined than that of my father’s.”

    Perhaps the most compelling parallel between the two Nakamotos are their professional skill sets and career timeframes. Andresen says Satoshi Nakamoto told him about how long it took him to develop Bitcoin – a span that falls squarely into Dorian S. Nakamoto’s job lapse starting in 2001. “Satoshi said he’d been working on Bitcoin for years before he launched it,” Andresen says. “I could see the original code taking at least two years to write. He had a revelation that he had solved something no one had solved before.

    Satoshi Nakamoto’s three-year silence also dovetails with health issues suffered by Dorian S. Nakamoto in the past few years, his family says. “It has been hard, because he suffered a stroke several months ago and before that he was dealing with prostate cancer,” says his wife, who works as a critical-care nurse in New Jersey. “He hasn’t seen his kids for the past few years.”

    She has been unable to get Nakamoto to speak with her about whether he was the founder of Bitcoin. Eric Nakamoto says his father has denied it. Tokuo and Arthur Nakamoto believe their brother will leave the truth unconfirmed.

    “Dorian can just be paranoid,” says Tokuo. “I cannot get through to him. I don’t think he will answer any of these questions to his family truthfully.”

    For his part, Andresen says he is inclined to respect Nakamoto’s anonymity. “When programmers get together, we don’t talk about who Satoshi Nakamoto is,” he says. “We talk about how we should have invested in more Bitcoin. I mean, we’re curious about it, but honestly, we really don’t care.”

    Calling the possibility her father could also be the father of Bitcoin “flabbergasting,” Ilene Mitchell says she isn’t surprised her father would choose to stay under cover if he was the man behind this venture, especially as he is currently concerned about his health.

    “He is very wary of government interference in general,” she says. “When I was little, there was a game we used to play. He would say, ‘Pretend the government agencies are coming after you.’ And I would hide in the closet.”

    Posted by Pterrafractyl | March 6, 2014, 9:19 am
  6. Curiouser and curiouser…:

    We are sooo getting trolled by Satoshi Nakamoto right now

    The strange saga around the “outing” of Bitcoin’s creator continues to get weirder, leading Crave’s Eric Mack to draw his own surprising conclusion about the identity of the real Satoshi Nakamoto.
    Eric Mack
    by Eric Mack
    March 7, 2014 10:12 AM PST

    The ongoing bitstorm over Newsweek’s claimed outing of mysterious Bitcoin godfather Satoshi Nakamoto, which was later rebuked by the subject of that report, is beginning to resemble a mashup of a futuristic manga thriller and an Andy Kaufman prank. The latest chapter in the crypto-currency commedia dell’arte seems to have the “real” Satoshi Nakamoto behind Bitcoin breaking a years-long silence to also dispute the Newsweek report.

    Newsweek editor Leah McGrath Goodman tracked down a man named Dorian Satoshi Nakamoto living near San Bernardino, Calif., who she believed fit the profile of the person who published this paper as well as this forum post describing Bitcoin back in 2009 under the name Satoshi Nakamoto.

    In a bizarre confrontation outside Dorian S. Nakamoto’s home with local police in attendance, Goodman quoted the man thusly:

    “I am no longer involved in that and I cannot discuss it,” he says, dismissing all further queries with a swat of his left hand. “It’s been turned over to other people. They are in charge of it now. I no longer have any connection.”

    Hours later, Dorian S. Nakamoto took a ride with an Associated Press reporter (while being chased across Los Angeles by a gaggle of other reporters), who videotaped Dorian’s debunking and disbelief of the Newsweek report. He says he was not referring to involvement in Bitcoin in the above quotes. You can watch a clip of the AP’s interview at the end of this post.

    Then, just to top off the weirdness, a new comment from Satoshi Nakamoto appeared late Thursday on the original 2009 forum post introducing Bitcoin. It read simply “I am not Dorian Nakamoto.”

    But is this the same Satoshi Nakamoto? Is Satoshi Nakamoto, the creator of Bitcoin, even a real person? All that seems to be confirmed is that the account on the forum was registered with the email address listed on the original paper on Bitcoin, according to the forum’s creator, Josef Davies Coates.

    The suggestion has gone out on Twitter and elsewhere that Satoshi could sign a message with his known PGP key to verify his identity, but so far that’s not happening.

    Interestingly, if you look at the history of the PGP key for the email address associated with Bitcoin’s creator, you’ll see that it was apparently signed by one Dorian S. Nakamoto on April Fool’s Day of 2013.

    Aha! So Dorian Nakamoto is trolling us! Actually, no, not likely. It seems that those PGP time stamps can be pretty easily spoofed, and that the entry for Dorian doesn’t show up in other recent results for the same query, or in the Google cache, for that matter. So it appears that someone is going to great, geeky lengths to keep trolling poor Dorian Nakamoto. Or Dorian just wants us to think that, because he is the real Satoshi trolling us all with some brilliant, hidden, reverse psychological PGP key manipulation.

    Posted by Pterrafractyl | March 7, 2014, 11:44 am
  7. yep, that’s where most folks misplace $116,000,000.00 – in an “old wallet.”

    Mt.Gox finds 200,000 bitcoins in old wallet

    By Charles Riley @CRrileyCNN March 21, 2014: 1:00 PM ET


    HONG KONG (CNNMoney)
    Embattled exchange Mt.Gox said Friday that it has found 200,000 bitcoins in a “forgotten” digital wallet — a haul worth $116 million at current prices.

    Mt.Gox CEO Mark Karpeles said in a statement that the bitcoins had been uncovered in an old-format wallet that was thought to be empty. Bitcoin wallets allow users to store the digital currency and execute transactions.

    (The dog ate my homework…)

    “On March 7, 2014, Mt.Gox Co., Ltd. confirmed that an old-format wallet which was used prior to June 2011 held a balance of approximately 200,000 BTC,” the statement said.

    Karpeles said that the discovery was reported to lawyers on March 8. The bitcoins were later moved to “offline” wallets.

    Mt.Gox was one of the world’s largest Bitcoin exchanges until last month, when it stopped investors from withdrawing money and blamed the disruption on technical issues and cyber attacks.

    (Boo hoo …)

    The Japan-based company then filed for bankruptcy in Tokyo and the U.S., with debts totaling $64 million.

    At the time of its closure, Mt.Gox said that it was unable to locate 850,000 bitcoins, the vast majority of which belonged to customers. The discovery reduces the number of lost bitcoins to 650,000, but also raises questions about what really happened to the missing currency.

    (Insert image of Ernie Kovac’s three monkeys…)

    While the search for the missing bitcoins will continue, many investors harbor little hope that all will be recovered. Japanese authorities had not regulated the exchange, and no deposit insurance was offered.

    (Which always makes for a good investment vehicle, scheme, fraud…)

    Related: ‘I lost money with Mt.Gox’

    Responding to the wave of doubt generated by the exchange’s failure, several other exchanges and digital wallet providers have sought to reassure investors.

    “This tragic violation of the trust of users of Mt.Gox was the result of one company’s abhorrent actions and does not reflect the resilience or value of Bitcoin and the digital currency industry,” an industry group said in February.

    (Mt. Gox is the Lee Harvey Oswald of Bitcoin exchanges?)

    In related news, the team of volunteer computer developers who manage the Bitcoin software program has fixed some of the technical issues that Mt.Gox initially blamed for its troubles — a quirk in the way Bitcoin works called transaction malleability.

    — CNNMoney’s Jose Pagliery contributed to this report.

    First Published: March 21, 2014: 2:19 AM ET

    Posted by participo | March 21, 2014, 9:58 pm
  8. As one financial regulatory bureaucrat might say in the heat of shitcoin passion, “SERENITY NOW!”

    March 25, 2014, 2:59 pm

    I.R.S. Says Bitcoin Should Be Considered Property, Not Currency (emphasis – participo)



    The Internal Revenue Service announced on Tuesday that Bitcoin should be viewed and taxed as property, giving a little clarity to the shifting regulatory landscape of virtual currency.

    Despite the fact that many users treat Bitcoin like a regulated currency, “it does not have legal tender status in any jurisdiction,” the agency said.

    That means that employers who choose to pay wages in Bitcoins will have to report those wages just like any other payment made with property, and Bitcoin income will be subject to the normal federal income withholding and payroll taxes.

    Shortly after the announcement, Senator Tom Carper, Democrat of Delaware, praised the decision by the I.R.S. “The Internal Revenue Service’s guidance today provides clarity for taxpayers who want to ensure that they’re doing the right thing and playing by the rules when utilizing Bitcoin and other digital currencies,” he said.

    (yes, the notion of “doing the right thing,” and “playing by the rules,” is anathema to this lost generation of narcissistic-sociopathic, video-gamer, drugged-out, sexed-up, social media digital conformists)

    Bitcoin, the computer-driven virtual currency that has gained momentum since it first popped up in 2009, has presented challenges for regulators. It has attracted a growing following of users and merchants, but it has no central bank and no government oversight.

    In the wake of the collapse of one of the largest online exchanges for buying and selling Bitcoin last month, governments around the world have stepped up their efforts to figure out a way to protect consumers against fraud and other illegal activities.

    The I.R.S.’s announcement also included a question-and-answer section:

    Q-1: How is virtual currency treated for federal tax purposes?

    A-1: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.

    Q-2: Is virtual currency treated as currency for purposes of determining whether a transaction results in foreign currency gain or loss under U.S. federal tax laws?

    A-2: No. Under currently applicable law, virtual currency is not treated as currency that could generate foreign currency gain or loss for U.S. federal tax purposes.

    Q-3: Must a taxpayer who receives virtual currency as payment for goods or services include in computing gross income the fair market value of the virtual currency?

    A-3: Yes. A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received. See Publication 525, Taxable and Nontaxable Income, for more information on miscellaneous income from exchanges involving property or services.

    Q-4: What is the basis of virtual currency received as payment for goods or services in Q&A-3?

    A-4: The basis of virtual currency that a taxpayer receives as payment for goods or services in Q&A-3 is the fair market value of the virtual currency in U.S. dollars as of the date of receipt. See Publication 551, Basis of Assets, for more information on the computation of basis when property is received for goods or services.

    Q-5: How is the fair market value of virtual currency determined?

    A-5: For U.S. tax purposes, transactions using virtual currency must be reported in U.S. dollars. Therefore, taxpayers will be required to determine the fair market value of virtual currency in U.S. dollars as of the date of payment or receipt. If a virtual currency is listed on an exchange and the exchange rate is established by market supply and demand, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars (or into another real currency which in turn can be converted into U.S. dollars) at the exchange rate, in a reasonable manner that is consistently applied.

    Q-6: Does a taxpayer have gain or loss upon an exchange of virtual currency for other property?

    A-6: Yes. If the fair market value of property received in exchange for virtual currency exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable gain. The taxpayer has a loss if the fair market value of the property received is less than the adjusted basis of the virtual currency. See Publication 544, Sales and Other Dispositions of Assets, for information about the tax treatment of sales and exchanges, such as whether a loss is deductible.

    Q-7: What type of gain or loss does a taxpayer realize on the sale or exchange of virtual currency?

    A-7: The character of the gain or loss generally depends on whether the virtual currency is a capital asset in the hands of the taxpayer. A taxpayer generally realizes capital gain or loss on the sale or exchange of virtual currency that is a capital asset in the hands of the taxpayer. For example, stocks, bonds, and other investment property are generally capital assets. A taxpayer generally realizes ordinary gain or loss on the sale or exchange of virtual currency that is not a capital asset in the hands of the taxpayer. Inventory and other property held mainly for sale to customers in a trade or business are examples of property that is not a capital asset. See Publication 544 for more information about capital assets and the character of gain or loss.

    Q-8: Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities?

    A-8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.

    Q-9: Is an individual who “mines” virtual currency as a trade or business subject to self-employment tax on the income derived from those activities?

    A-9: If a taxpayer’s “mining” of virtual currency constitutes a trade or business, and the “mining” activity is not undertaken by the taxpayer as an employee, the net earnings from self-employment (generally, gross income derived from carrying on a trade or business less allowable deductions) resulting from those activities constitute self-employment income and are subject to the self-employment tax. See Chapter 10 of Publication 334, Tax Guide for Small Business, for more information on self-employment tax and Publication 535, Business Expenses, for more information on determining whether expenses are from a business activity carried on to make a profit.

    Q-10: Does virtual currency received by an independent contractor for performing services constitute self employment income?

    A-10: Yes. Generally, self employment income includes all gross income derived by an individual from any trade or business carried on by the individual as other than an employee. Consequently, the fair market value of virtual currency received for services performed as an independent contractor, measured in U.S. dollars as of the date of receipt, constitutes self employment income and is subject to the self-employment tax. See FS-2007-18, April 2007, Business or Hobby? Answer Has Implications for Deductions, for information on determining whether an activity is a business or a hobby.

    Q-11: Does virtual currency paid by an employer as remuneration for services constitute wages for employment tax purposes?

    A-11: Yes. Generally, the medium in which remuneration for services is paid is immaterial to the determination of whether the remuneration constitutes wages for employment tax purposes. Consequently, the fair market value of virtual currency paid as wages is subject to federal income tax withholding, Federal Insurance Contributions Act (FICA) tax, and Federal Unemployment Tax Act (FUTA) tax and must be reported on Form W-2, Wage and Tax Statement. See Publication 15 (Circular E), Employer’s Tax Guide, for information on the withholding, depositing, reporting, and paying of employment taxes.

    Q-12: Is a payment made using virtual currency subject to information reporting?

    A-12: A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property. For example, a person who in the course of a trade or business makes a payment of fixed and determinable income using virtual currency with a value of $600 or more to a U.S. non-exempt recipient in a taxable year is required to report the payment to the IRS and to the payee. Examples of payments of fixed and determinable income include rent, salaries, wages, premiums, annuities, and compensation.

    Q-13: Is a person who in the course of a trade or business makes a payment using virtual currency worth $600 or more to an independent contractor for performing services required to file an information return with the IRS?

    A-13: Generally, a person who in the course of a trade or business makes a payment of $600 or more in a taxable year to an independent contractor for the performance of services is required to report that payment to the IRS and to the payee on Form 1099-MISC, Miscellaneous Income. Payments of virtual currency required to be reported on Form 1099-MISC should be reported using the fair market value of the virtual currency in U.S. dollars as of the date of payment. The payment recipient may have income even if the recipient does not receive a Form 1099-MISC. See the Instructions to Form 1099-MISC and the General Instructions for Certain Information Returns for more information. For payments to non-U.S. persons, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities.

    Q-14: Are payments made using virtual currency subject to backup withholding?

    A-14: Payments made using virtual currency are subject to backup withholding to the same extent as other payments made in property. Therefore, payors making reportable payments using virtual currency must solicit a taxpayer identification number (TIN) from the payee. The payor must backup withhold from the payment if a TIN is not obtained prior to payment or if the payor receives notification from the IRS that backup withholding is required. See Publication 1281, Backup Withholding for Missing and Incorrect Name/TINs, for more information.

    Q-15: Are there IRS information reporting requirements for a person who settles payments made in virtual currency on behalf of merchants that accept virtual currency from their customers?

    A-15: Yes, if certain requirements are met. In general, a third party that contracts with a substantial number of unrelated merchants to settle payments between the merchants and their customers is a third party settlement organization (TPSO). A TPSO is required to report payments made to a merchant on a Form 1099-K, Payment Card and Third Party Network Transactions, if, for the calendar year, both (1) the number of transactions settled for the merchant exceeds 200, and (2) the gross amount of payments made to the merchant exceeds $20,000. When completing Boxes 1, 3, and 5a-1 on the Form 1099-K, transactions where the TPSO settles payments made with virtual currency are aggregated with transactions where the TPSO settles payments made with real currency to determine the total amounts to be reported in those boxes. When determining whether the transactions are reportable, the value of the virtual currency is the fair market value of the virtual currency in U.S. dollars on the date of payment.

    See The Third Party Information Reporting Center, http://www.irs.gov/Tax-Professionals/Third-Party-Reporting-Information-Center, for more information on reporting transactions on Form 1099-K.

    Q-16: Will taxpayers be subject to penalties for having treated a virtual currency transaction in a manner that is inconsistent with this notice prior to March 25, 2014?

    A-16: Taxpayers may be subject to penalties for failure to comply with tax laws. For example, underpayments attributable to virtual currency transactions may be subject to penalties, such as accuracy-related penalties under section 6662. In addition, failure to timely or correctly report virtual currency transactions when required to do so may be subject to information reporting penalties under section 6721 and 6722. However, penalty relief may be available to taxpayers and persons required to file an information return who are able to establish that the underpayment or failure to properly file information returns is due to reasonable cause.

    Posted by participo | March 25, 2014, 12:34 pm
  9. Online, internet child abuse expands and flourishes with Bitcoin….resulting in the need/requirement for implementation of virtual panopticon.


    Disturbing new internet child abuse sees toddlers raped and burned live on webcam as paedophiles use Bitcoin to stop being traced, warns police chief

    -Rob Wainwright, director of Europol, warned of depraved new trend
    -Paedophiles pay for sick online ‘shows’ using untraceable Bitcoin
    -Mr Wainwright warned that police and politicians struggle to keep up


    PUBLISHED: 19:52 EST, 21 April 2014 | UPDATED: 05:42 EST, 22 April 2014
    933 shares 388View comments

    One of Europe’s top police officers has warned of a sickening online trade in child torture porn.

    Rob Wainwright, the director of Europol, said offenders are using the untraceable online currency Bitcoin to pay for depraved ‘shows’, performed live on webcams, which see young children raped and burned.

    He said: ‘The level of depravity seems to be descending year on year, frankly, including what seems to be in vogue now, which is live webcam ‘shows’ of toddlers not just being raped but being burnt with cigarettes.

    Scroll down for video

    Sickening: Mark Wainwright warned that online predators were paying to watch children be raped and burned live on webcam

    ‘Sorry, but it’s happening online and it’s extremely difficult for us to identify.’

    Mr Wainwright warned that Bitcoin – a ‘crypto-currency’ based on mathematical formulae and independent of any government or central bank – is propping up a criminal black market.

    He also warned that police and politicians were struggling to keep up with the pace of online crime, thanks to widespread anonymity online, and easy access to encryption technology which can make criminals almost impossible to track down.

    Mr Wainwright warned that the principle that everyone’s online activity should be anonymous by default needs to be challenged in order to police the internet effectively.

    (*further enhancing the requirement for a virtual panopticon – participo)

    He criticised the sluggish response from the police, politicians and big businesses, saying that equivalent levels of crime in the physical world would be ‘front page news.’

    Everything you need to know about bitcoin

    Black market: The Bitcoin cryptocurrency is being used for illegal activities, Mr Wainwright warned

    -Black market: The Bitcoin cryptocurrency is being used for illegal activities, Mr Wainwright warned
    He told The Times: ‘It is frustrating that we are not getting the message out, at least not loud enough for legislators to hear it.’

    The Internet Watch Foundation pressure group has recently claimed to have found evidence of an email scam directing people to underground websites where the sick ‘shows’ could be seen in exchange for Bitcoin.

    Read more: http://www.dailymail.co.uk/news/article-2609971/Disturbing-new-internet-child-abuse-sees-toddlers-raped-burned-live-webcam-paedophiles-use-Bitcoin-stop-traced-warns-police-chief.html#ixzz2zdLbFlLh

    Posted by participo | April 22, 2014, 9:25 am
  10. Peter Thiel’s quest to create a private global reserve currency through his “Stripe” company may be coming a little closer to fruition, albeit indirectly: Stripe recently invested in “Stellar”, a currency/currency exchange based on Ripple, and a German bank just became the first bank in the world to offer wire-transfer services using Ripple:

    Pando Daily
    German’s Fidor bank will begin using Ripple for international wire transfers next week

    Michael Carney_PandoDaily By Michael Carney
    On August 22, 2014

    Germany’s Fidor bank will finally begin completing international wire transfers via the Ripple virtual currency protocol next week, making it the first bank in the world to do so. The two companies first announced a partnership in May, but have evidently spent the time since working on integration. The bank also may have been using the protocol for behind-the-scenes interbank transfers before going live with customer transfers.

    Reddit user Skysailer posted to r/Bitcoin an email that he received from the bank that reads (after translation by Google Translate):

    First we would like to thank you for your loyalty!

    We have continued to work in our services to make banking with Fidor even better: In brief, any time you can easily and quickly check your balance with the mobile Fidor account Motion widget on your Android smartphone. We also allow you soon same day and cost transfers abroad via Ripple. Due to the above-mentioned new products we will generally Expand Terms and Conditions for 27/08/2014. From 27.08.2014 You will be asked to login to your account to accept the new terms and conditions. You will also find a detailed explanation of the changes.

    Best Regards

    Your Fidor Bank Team

    As the letter suggests, fund transfers processed via Ripple will occur same-day, making the protocol in many cases several days faster than traditional international wires. These transfers will also be significantly lower-cost than traditional wires.

    The Fidor relationship is seen as a highly important test for Ripple, which, if successful, could lead to additional relationships with other banks around the world. Of course the opposite is also true and a negative result of this test could stunt Ripple’s continuing adoption.

    For a refresher on Ripple, the protocol and associated XRP virtual currency are designed not as a transactional currency or even as a long-term store of value, but simply as an intermediary currency. For example, if a user in the US has funds in dollars and wants to send those funds to a user in India, where Rupees are the local currency, the traditional process would involve currency conversion fees. Using XRP, the sending user (or their bank) would exchange the dollars for XRP and then find another user on the network looking to exchange Rupees for XRP. With Rupees in hand, the transfer can be completed to the end recipient. All of this happens in seconds or minutes and at fractions of the cost of traditional wire transfers and currency conversions.

    In short, Ripple is the way money transfer and bank settlements would be handled if they were invented today and not subject to decades of legacy technology, systems, and regulations. As I wrote in May:

    When consumers and institutions alike attempt to move money around the world, it typically requires a number intermediary stops along the way, not to mention manual human intervention and far too many pieces of paper for the year 2014.

    The problem is that, maddeningly, each country and each financial institution creates its own rules and its own system for executing such transfers. As a result, transferring money can often take days, costing non-trivial sums of money in the process, and introducing significant risk of fraudulent or failed transfers. The second order effect of this system is that it’s impractical to make small transfers, such as sending $20 from the US to India, for example, because such a transaction will cost more than its value.

    Ripple was invented to address this very problem, offering a decentralized order book relying on open-source peer-to-peer payment protocols that allow financial information to move as quickly and easily as other data.

    That said, Ripple is not the only company looking to solve this problem. Former Ripple co-founder (and before that Mt. Gox founder) Jed McCaleb branched out to start a competing, open source platform called Stellar that promises a similar approach to settlements. Stellar has partnered with payments giant Stripe and secured the backing of former PayPal and Square exec and current Khosla Ventures partner Keith Rabois. It could be argued that competition is ultimately a good thing for spurring innovation, but by the same token it ratchets up the pressure on Ripple’s early integrations to go smoothly.

    Posted by Pterrafractyl | August 22, 2014, 11:09 am

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