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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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