The root cause of the implosion is centralization – and this has been a long time coming. If you are more into crypto prices – as measured by fiat currency – you are going to love this one.

How can you win a bet on the end of the Western financial system?

Simple – cryptocurrencies!

Unfortunately, this is about a lot more than a Lambo and a villa in Marbella. The collapse that we are in the early stages of will rewrite how we see society, and how we develop as a global human race.

Why AI Isn’t A Big Deal – But The End Of Cheap Labor Is

AI doesn’t matter because productivity was a lie.

If you ask an economist about the modern Western economy – they are going to talk a lot about productivity. It is total bull$hit. The global economy of the last 40 years was built on cheap labor and fairly cheap energy in the global South and East Asia. It is that simple.

Western consumers (remember that word) were able to maintain their standard of living for far longer than would have been possible otherwise because of cheap imports, and relatively low-cost energy. The modern West was no longer a society of producers, and it needed cheap labor in places like China, Vietnam, and Indonesia to keep the USD, EUR and GPB relatively strong.

The rise of cheap AI (looking your way ChatGPT) isn’t a big deal because it can’t impact physical industries. AI won’t make base level labor any cheaper (there is nowhere left to go globally), it won’t make seaborne freight any safer (ask anyone who has to sail past the Houthis about that), and AI certainly won’t fix the wildly corrupt global oligarchy that is entrenched in every major power structure.

Today people don’t see that the level of global centralization we created after the European Renaissance created to biggest social inflection point in world history. Centralization (central planning) is making it harder for people to survive. Because the ‘system’ the central planners are attempting to control is actually multiple, interconnected complex systems, it is well beyond the control of any group – even if they have ChatGPT.

Centralization is dangerous!

When Chairman Mao decided to kill off all the sparrows in China to boost  agricultural yields, it had the opposite effect – in a big way. Some estimates say that as many as 70 million people died as a result of Mao’s move to kill off the sparrows, and the terrible impact it had on agricultural production in the coming years.

https://www.thevintagenews.com/2016/09/26/1958-mao-zedong-ordered-sparrows-killed-ate-much-grain-caused-one-worst-environmental-disasters-history/

Centralization creates dangerous crackpots!

In the beginning money was gold. The great thing about gold is that the idea of its value was decentralized. People all over the world thought that gold had value, so wherever you went, you could use your gold as money.

It didn’t matter what some crackpot like Mao said – gold was money.

There was no way for a centralized authority to augment or otherwise impinge on the psychological value of gold. Today the global oligarchy has seized control of the Western monetary system via the central banks – and the value of money is suffering.

The Finest Clothes Are Being Ripped To Shreds

Sorry all you HODL true believers out there – PEPE isn’t amazing. None of the memecoins are. Even Bitcoin – poor Bitcoin – isn’t that great. Bitcoin is an amazing proof-of-concept. That’s about it. The memecoins that are worth billions today aren’t interesting – but they are limited in supply – just like Bitcoin.

The real problem is the state of the global socioeconomic system. The Western monetary system is falling apart – and the world’s biggest default (in known history) is prevented by creating trillions in new debt. That is why Bitcoin is going north of $500,000 USD.

Hell – Bitcoin might go to $5,000,000 – or even higher.

Choose a number you like!

The reason why cryptocurrencies are going higher – yes – even the humble PEPE token – is that the USA is creating $1 trillion in new debt every 100 days, and that amount will go higher. What is true for the US is true across the Western world.

Inflation will bite hard into the US, EU and British monetary zones as unthinkable amounts of new debt is created and spent (currency is debt) into a flagging global economy. Today there is no way to offset the new currency creation via cheap labor. We also don’t know if seaborne freight coming out of East Asia will be cost-efficient in a decade.

The finely tuned global economic machine built by Western interests after WW2 is falling into tatters – it is an expensive problem!

Existential Is A Fancy Way To Say Survival

In plain language an existential crisis is similar to asking “…are we going to f****** die?”

Everyone dies by the way – and all cause mortality (excess deaths) is on the rise.

In this situation we have to question what will survive over the coming years and decades. The US dollar is done. At least as a store of value. It may continue to act as a means of clearing transactions until businesses can get their hands on enough PEPE or CUMMIES to do business in a sound (defined as limited in quantity) currency.

The idea that somehow the world is going to trust a CBDC sponsored by Russia and China is absurd. People in Russia or China may have to use it – but being forced into horrible situations isn’t new to them. Just ask anyone in China about Mao and the sparrows.

The problem is you can’t. And this speaks to the dangers of centralization. The CCP won’t talk about Mao and the sparrows. Most global governments won’t talk about rising all cause mortality. No one seems to want to discuss the COVID19 vaccine deaths.

We wonder if it will be legal to talk about the coming inflation and currency collapse. If it isn’t legal, we assume that it will be lethal. Or as a great leader (not the kind in North Korea) once said – “Those who make peaceful revolution impossible will make violent revolution inevitable.”

https://www.oxfordreference.com/display/10.1093/acref/9780191843730.001.0001/q-oro-ed5-00006245

Back then, the USA was on the gold standard (fixed at $35/troy oz).

The post Op-Ed: Centralization And The Existential Question appeared first on Blockonomi.

TLDR

• Newly published emails show Satoshi didn’t invent the term “cryptocurrency” and wanted to downplay Bitcoin’s anonymity
• Satoshi foresaw the risks of misinformation around anonymity enabling backlash if not properly managed
• Emails reveal Satoshi’s concerns over central banks breaching public trust via currency debasement
• Satoshi highlights how assets with finite supply tend to be used as money, with value perception mattering more than utility
• Contradictions between emails and Wright’s claims, like incorrectly recalling details about Malmi, cast further doubt on his Satoshi assertions

First referenced in the contentious Kleiman v Wright lawsuit to discredit Craig Wright’s claims of being Satoshi, the messages were publicly released by Malmi on GitHub last week. Spanning over 100 pages from Bitcoin’s formative months in 2009, these private exchanges open a unique portal into the ideations, motivations and early technical workings integral to the protocol’s initial success.

My email correspondence with Satoshi in 2009-2011: https://t.co/jyoX8gXckp

— Martti Malmi (@marttimalmi) February 23, 2024

Per one particular email from June 2009, Satoshi confirms not having coined the term “cryptocurrency” himself when asking Malmi if it appropriately describes Bitcoin’s digital, decentralized nature. This discovery dispels prevailing assumptions that Satoshi was sole progenitor of the now-ubiquitous descriptor.

The correspondence also demonstrates Satoshi’s keen awareness of the fine line between anonymity and pseudonymity regarding Bitcoin even over a decade ago. Emphasizing the need for transparency around privacy limitations to avoid backlash, he advises against positioning Bitcoin as “automatically anonymous” given user identities can still be deciphered via transaction analysis.

This prescient concern over misrepresenting anonymity echoes through to today, with regulated entities in crypto now mandated to collect customer information during transactions. Satoshi further predicted advanced blockchain surveillance would unravel previously hidden data patterns, necessitating caution around setting inaccurate privacy expectations.

Additional insights relate to Satoshi’s worries around central banks breaching public trust through wanton currency debasement over history, contrasted against Bitcoin’s verifiable scarcity. He underlines how assets with finite supply tended to evolve into money, with a currency’s success relying more so on perception of value rather than mere utility.

On Bitcoin being traded as an investment, Satoshi was markedly conservative, asking Malmi to remove suggestions to that effect owing to legal considerations. This indicates Satoshi’s intention to position Bitcoin as a decentralized commodity rather than a speculative asset, sidestepping the complex securities law compliance landscape.

The messages also capture behind-the-scenes discussions on founding Bitcoin’s inaugural exchange with Satoshi advising on technical architecture, while highlighting his insistence on avoiding unnecessary complexity that could hamper early user uptake.

Other salient topics include candid debates around the environmental impact of mining, the inevitability of rising transaction fees as adoption grows, and the possibility for Bitcoin’s timestamped data to enable future use cases.

While the emails offer no obvious clues to Satoshi’s real-world alter-ego, experts believe inconsistencies between the exchanges and Wright’s past recollection of details undermine his claims as Bitcoin’s creator.

For proponents though, the substantive glimpse into Nakamoto’s philosophy and pragmatism provided by these long-lost messages sufficiently enhances the Satoshi legend.

The post Lost Satoshi Emails From Bitcoin’s Early Days Resurface After Over a Decade appeared first on Blockonomi.

On January 10, 2024, the Securities and Exchange Commission (SEC) gave the green light to over a dozen companies seeking to launch spot bitcoin ETFs in the US.

Keypoints

• The SEC has officially approved several spot bitcoin ETFs, allowing them to begin trading as soon as Thursday. This is a historic moment as spot bitcoin ETFs have been trying to launch for over a decade.
• The approvals came after the SEC suffered a court loss in 2023 that forced them to revisit their previous rejections of spot bitcoin ETFs. The court said the SEC failed to adequately explain its reasoning.
• The approved ETFs are from major asset managers like BlackRock, Ark Invest, Fidelity, Franklin Templeton, Grayscale, Invesco, VanEck, Valkyrie and others.
• The ETFs will charge management fees ranging from 0% to 1.5%, with some managers waiving fees temporarily to attract assets. The fees are as low as 0.12% for BlackRock.
• Bitcoin rallied leading up to the approval, rising from around $27,000 in September to over $45,000 by early January as optimism built around an ETF approval.

It’s a monumental moment over 10 years in the making. The asset management industry has tried repeatedly to launch spot bitcoin ETFs since 2013, when Cameron and Tyler Winklevoss first applied for the Winklevoss Bitcoin Trust ETF. But the SEC consistently denied or delayed applications, citing concerns over potential manipulation and lack of regulation around bitcoin trading.

That changed when the tide turned in 2023. Grayscale Investments took the SEC to court over the rejection of its bitcoin trust conversion to an ETF, and won. The court ruled that the SEC failed to adequately explain its disapproval reasoning. Essentially forced back to the drawing board, the SEC surprisingly moved forward with approvals for not just Grayscale, but a slate of other issuers that reads like a who’s who of the biggest names in finance.

The approved spot bitcoin ETF roster includes famous brands like BlackRock, Ark Invest, Fidelity, Franklin Templeton, Valkyrie and VanEck. Crypto-centric firms also made the cut, including Grayscale, Galaxy Digital, 21Shares, Bitwise and Hashdex. With the regulatory barriers finally lowered, these firms are ready to unleash spot bitcoin ETFs upon the eager investors of America.

And competition to gather assets will be fierce, as these issuers disclosed temptingly low management fees in their recent filings. BlackRock leads the pack with a miniscule 0.12% annual fee, while Bitwise and Ark Invest both waived fees entirely for the first 6 months or until gathering $1 billion in assets. Others like Fidelity and Invesco Galaxy are waiving fees for around half a year as well. It seems these issuers are betting that luring investor money early will allow their ETFs to reach sufficient scale.

Of course, this is first and foremost a big win for bitcoin. With the SEC seal of approval, spot bitcoin ETFs are expected to usher a flood of fresh institutional money into the crypto markets. Analysts estimate first-year inflows ranging from $2 billion to as high as $14 billion. That’s a lot of new bitcoin buying frenzy!

And the price paid attention. As the likelihood of approval rose through 2023 into 2024, bitcoin entered the start of a new bull market. The crypto rallied from around $27,000 last September to over $45,000 by early January, then surging near $47,000 right after the official SEC announcement.

While some expect short-term profit taking, bitcoin still seems poised to reach dazzling new heights throughout 2024 and beyond. Spot ETFs provide easy exposure to reputable bitcoin trading for both Wall Street and retail investors alike. The SEC stamp of approval also bolsters bitcoin’s credibility as a maturing digital asset class.

Of course, believers will say the power of bitcoin was always destined to prevail over all regulatory hurdles in due time. But at long last, the financial gatekeepers in suits have decided to officially let the people trade bitcoin how they want.

And that’s cause for celebration not just among crypto anarchists, but institutional investors, Robinhood traders and 401k holders nationwide!

The Bitcoin party has finally arrived—many years late—but just in time for bitcoin’s sweet 2024 bull run.

And before we sign off, let’s give thanks to Satoshi and Hal….

Hal Finney

The computer scientist Hal Finney was a pioneering cryptographer and longtime cypherpunk who made major early contributions to the development of digital cash and privacy-enhancing technologies.

He is most famously known in the Bitcoin community for receiving the very first Bitcoin transaction from the still unidentified creator Satoshi Nakamoto on January 12, 2009.

On this day, January 10th, in 2009, Finney tweeted that he was “running bitcoin” – referring to the fact that he had successfully downloaded the original Bitcoin software, compiled it, and was operating a node on the fledgling Bitcoin network.

This tweet from Finney goes down in Bitcoin lore and provides proof that he was one of the first people besides Satoshi himself running the Bitcoin protocol software around its release in January 2009.

Running bitcoin

— halfin (@halfin) January 11, 2009

Just two days after tweeting on January 10th, Finney received the historic first Bitcoin transaction from Satoshi Nakamoto on January 12th as a test of the network. For this reason, Finney is considered the first Bitcoin recipient.

Thanks Satoshi and Hal. Here’s to many more years and the fulfillment of a vision …

The post Start of a New Era: Victory For Bitcoin Believers As SEC Approves Spot BTC ETF Filings appeared first on Blockonomi.

In recent years, some anons have pondered whether Sergey Nazarov, the founder of the decentralized oracle network Chainlink could be Satoshi himself.

Sergey undoubtedly possesses the technical skills and background to have plausibly created Bitcoin. But beyond that, his timeline during Bitcoin’s formation and series of coincidences have led many to speculate if he could be the mastermind behind it all.

From registering domains associated with Nakamoto’s areas of interest before the white paper’s release to possible ties with the Russian proxy server used by Satoshi, Nazarov emerges as a possible candidate.

This article will delve into the tantalizing clues that point to Sergey Nazarov actually being the pseudonymous Satoshi Nakamoto.

While no smoking gun exists, the evidence makes a compelling case and if proven true, it would solve Bitcoin’s greatest mystery and provide insight into the ideology of the man responsible for starting it all.

Let’s go deep…

4chan: The Genesis of an Idea

Much of the speculation around Sergey Nazarov originally stemmed from anonymous users on 4chan, the infamous imageboard. 4chan has a deep connection with and affection for Chainlink, which likely inspired the detective work to link Nazarov to Nakamoto.

4chan is definitely the most uncredible source and you should never trust anything said there. But at the same time, its also one of the most honest and raw websites created – who can argue with weaponized autism?

The coincidences and details the anons unearthed are intriguing.

One of the first puzzles is the timeline of Nazarov’s activities, which lines up suspiciously well with Nakamoto’s. A possible smoking gun is Nazarov’s registration of the domain name smartcontract.com  (Which now redirects to https://chainlinklabs.com) on October 25, 2008 – just 6 days before Satoshi published the Bitcoin whitepaper and introduced the world to blockchain technology.

Smart contracts were a central part of Nakamoto’s vision for the future of Bitcoin, so it’s a strange coincidence that Nazarov had the foresight to register the smartcontract.com domain 6 days before the whitepaper’s release.

Additionally, Nazarov registered several other domains related to companies such as QED Capital around the same period Nakamoto was active.

Beyond the domain evidence, both figures have a connection to Russia. Satoshi appeared to use a Russian proxy server to hide his identity, while Sergey was born in Russian before moving to the US.

In a 2020 interview Sergey accidentally admits he has been in the blockchain space for over 10 years before catching himself and downplaying the timeline. This would mean Nazarov was working in the industry during Bitcoin’s formative period from 2008-2010 when Nakamoto was still involved before disappearing.

The moment Sergey realised he almost just outed himself as Satoshi. $LINK@ChainLinkGod @ChainlinkP @permabulltard @ChainlinkBull @ChainlinkoracIe pic.twitter.com/Hj9cnY5FEQ

— David Levinson (@david__levinson) October 18, 2020

SideNote: 4Chan, Chainlink, Assblaster, Sloppy Jobs & Meme Culture

Before we dig deeper, lets establish a little backstory between 4chan and Chainlink.

4Chan has a long and storied history with Chainlink, it would be impossible to go into every detail here but I will try and convey their special relationship as best I can.

• Chainlink ICO: Chainlink held it’s ICO back in 2017 and had a 300ETH minimum to enter the presale, early anons on 4chan realizing its potential arranged to pool together their ETH to participate in the ICO and distribute LINK among themselves.
• Theories & Speculation: After the ICO concluded, there were daily threads on 4chan about Chainlink discussing it’s potential and how it could unlock the “Fourth Industrial Revolution”.
• Assblaster: At this time there was one poster who stood out by a mile, going by the moniker “ASSBLASTER” the poster seemed to have insider knowledge about Chainlink and it’s connections to banking and specifically SWIFT. There was something different about this person which stood out: Educated, articulate and with a seeming wealth of inside information that some people thought he might be part of the Chainlink team, or even Sergey himself. A lot of the information is lost due to the nature of 4chan, here is a typical thread though. Image version here (4.6MB) if that disappears.
• FUD & Reddit: After deciding that 4chan had found the God Protocol, Solved the Oracle problem and identified the key to generational wealth, the next part of the mission was to accumulate as much LINK as possible while also making sure that no Redditors were able to join the ride. A campaign of FUD and disinformation was waged, quite successfully to the point that most Redditors to this day still probably think Chainlink is a scam perpetuated by anonymous frogs.
• WTFWT: The 2018-2019 bear market was kind to Chainlink holders, the LINK token defied everything and stood out among a sea of red and steadily rose in price based on fundamentals, Google blog posts and endless partnerships.
  
• The Power of Memes: 4chan has long been an originator of some of the most famous memes which then filter down to Reddit, Twitter, 9Gag and other websites. The Link marines weaponized the power of memes to promote LINK with inside jokes, rare Sergeys and other images which have become part of Chainlink lore.
  
• Sloppy Job Simeon: Zeus Capital and the FUD Report: Around 2020 an unknown company named “Zeus Capital” released a report titled “The chainlink Fraud Exposed”, surprisingly still online. ( Uploaded here if it’s deleted). It was a well produced piece of content full of nonsense. 4chan being 4chan quickly worked to find out who was behind it and debunk it. It didn’t take long. The report was connected to NEXO, who seemingly had a large LINK short open which they needed to protect. Although never proven, evidence strongly pointed to the report being created by Simeon Rusanovof NEXO. Using the same typeform links as the NEXO website and containing a link in the PDF pointing to a users local computer using the hyperlink “file:///C:/Users/Simeon/Desktop/Chainlink/NAME_OF_REPORT”. A good breakdown is seen here from ChainLinkGod:

I tried to stay neutral during this whole @NexoFinance being @ZeusCapitalLLP debate, but we may have just found the smoking gun, ontop of all the other evidence found

They leaked themselves in the site's typeform source code, screenshots below, I checked it my self$LINK https://t.co/9hjn3zk8LQ pic.twitter.com/ii7U8GsXos

— ChainLinkGod.eth (@ChainLinkGod) July 19, 2020

I could go on, but I think that covers some of the history of 4chan and chainlink.

I’ll leave you with an Assblaster quote.

I can’t reveal how much the other firms put in, but we put down 14MM USD executed when the price was around 16 cents, under the counter negotiations for bulk sum we basically got 100MM of the LINK. In essence the firm I work for PERSONALLY got 10% of all the LINK.
ASSBLASTER

Nazarov and Nakamoto: Personalities

There are subtle ways in which Sergey Nazarov mirrors the persona of Satoshi Nakamoto. Despite his accomplishments, Nakamoto intentionally remained a mysterious figure – known only by a pseudonym and communicating sporadically.

Similarly, Nazarov maintains a low profile and reveals little about his personal life, he seems driven and focused on work. Both men value privacy and anonymity, shunning the spotlight. This aligned mindset extends to how they present themselves and interact with the public.

SN=SN

Nazarov and Nakamoto also share the same first initial and last initial, a coincidence maybe, but worth noting.

When directly questioned in interviews if he is in fact Satoshi, Nazarov denies the claims but refuses to speculate on Nakamoto’s true identity.

Some interpret this caginess as an indirect way of hiding the truth. After all, if he definitively knew he wasn’t Satoshi, why not just provide thoughts on who the real one could be? This evasiveness echoes Nakamoto’s own disappearance when pressed for more personal details.

Both figures seem to want to let their work speak for them, rather than engaging in excessive publicity or personal brand building.

The Russian Proxy Connection

Some of the most compelling technical evidence linking Nazarov to Nakamoto comes from Bitcoin’s early code itself. When examining the code for Bitcoin v0.1.0 released in January 2009, oddities stand out in the file “irc.cpp” on line 212.

• This line appears to contain a cipher that decrypts to a Russian proxy IP address, suggesting Satoshi was utilizing a Russian proxy at the time.
• The proxy was provided by the now defunct Russian technology company Anders Telecom.
• Experts debate the true meaning of the cipher, but many find it a credible sign of Nakamoto’s attempts to obscure his identity and location.
• The motivation to use a Russian proxy service suddenly makes sense if the Russian-born Nazarov was behind Bitcoin’s creation.

The Hotel Review

The cipher used in the irc.cpp file produces an IP address: 87.251.146. From CoinTelegraph –

Searching for this IP address yields results in Iran. However, due to IPv4 address exhaustion, global IP addresses have been reassigned since 2009. We did find a user named Sergey, posting reviews of hotels in Vietnam in December 2008 and January 2009, logging into the site with the same proxy as Satoshi.

So this shows a Russian user named “Sergey” posting from the same proxy around the time Nakamoto was active. The user posted a review of a hotel in Vietnam.

Interestingly, one part of the review mentions the poor internet service at the hotel and how he had to “fix some glitches myself”

The hotel has internet on a computer next to the reception. Few of the staff understand it, I even had to fix some glitches myself: don’t take their word for it that the Internet doesn’t work! Check that the network connection is marked enabled!)))))) Computers are not Russified – therefore communication is only through transliteration.
There is free wi-fi on the territory, as well as on the only street along the coast.
“Sergey”: otzyv.ru Review of Ocean Star Resort

It’s interesting that someone who shared an IP address with Satoshi Nakamoto at some point deemed it necessary in a hotel review to mention the poor internet connection and had to personally fix some problems with it, suggesting a technical background.

The Boat Photo

Another piece of evidence is that the same Satoshi IP address (87.251.146) was also used to review a cruise trip from Russia, via Finland & Sweden to Tallinn in Estonia,  by a user named “Sergey”.

There also happens to be a photo of a young Sergey Nazarov taken on a boat with the Estonia flag behind him.

This one is a maybe a stretch as the cruise ship would probably fly the Russian flag and Sergey is wearing short sleeves which would indicate the photo is not taken around Christmas in northern Europe.

The language used in this review also doesn’t seem to line up with Satoshi’s. You can read a full archive of his communications online here.

Who is Sergey Nazarov?

Sergey Nazarov was born in Russia before immigrating to the United States as a child with his family in the 1990s. He studied philosophy and business at New York University before entering the entrepreneurial world.

After formative business experiences at QED Capital and other firms, Nazarov founded Chainlink in 2017. Chainlink has grown into the most widely used decentralized oracle network, providing critical off-chain data to blockchain applications.

Despite his outward success, Nazarov remains an enigma to most. He operates quietly (unlike a lot of founders!), letting his technology speak for itself.

His consistent avoidance of the spotlight seems to hint at a desire to let his work do the talking.

Nazarov possesses the ideal background to have plausibly led Bitcoin’s creation during his early ventures. The intellectual philosopher turned innovator may have left more than a legacy of oracle networks, but rather the entire crypto space as we know it.

If Nazarov has perpetuated one of history’s greatest mysteries simply out of a wish to stay anonymous and eschew fame, it would be perfectly in character.

Conclusion

The cumulative evidence makes a compelling case that Sergey Nazarov could indeed be the man behind the Satoshi Nakamoto pseudonym. While no singular smoking gun exists, the pattern of coincidences could point to his involvement in Bitcoin from the very start.

Nazarov’s prescient domain registrations before the whitepaper release, use of Russian infrastructure mirroring Satoshi, accidental timeline admissions, and strategic avoidance of publicity demonstrate more than just random chance. He possesses the ideal background and philosophical beliefs to have pioneered decentralized technology motivated by anonymity.

Perhaps the greatest testimony rests in Chainlink itself – a project that embodies the ideals of connectivity, transparency and trust that Satoshi originally envisioned…

The post Does SN = SN? 4chan & The Case for Sergey Nazarov Being Satoshi Nakamoto, Creator of Bitcoin appeared first on Blockonomi.

Anyone who was using Mt. Gox lost access to their assets, and it has been a cautionary tale for crypto investors. While the assets weren’t all lost, anything that was left has been frozen for years.

Now, it looks like things might be turning a corner, but there are still many unknowns. Before we talk about how there could be a resolution on the horizon, let’s look at how we got here in the first place.

The victim of a massive hack, Mt. Gox lost about 740,000 bitcoins (6% of all bitcoin in existence at the time), valued at the equivalent of €460 million at the time and over $3 billion at October 2017 prices. An additional $27 million was missing from the company’s bank accounts.  Although 200,000 bitcoins were eventually recovered, the remaining 650,000 have never been recovered.

This post will discuss the rise and fall of Mt. Gox, the aftermath of the hack and the resulting (and ongoing) investigation and will consider whether it could happen again.

For a long time it looked like the creditors of Mt. Gox could be left empty handed, but there have been some new developments that may mean a return of capital to crypto traders who were left holding the bag when Mt. Gox went bust.

Quick Facts

• Mt. Gox was the largest bitcoin exchange handling 70% of transactions in early 2014
• It was hacked in 2014 resulting in the loss of 740,000 bitcoins worth $3B+
• Only 200,000 bitcoins have been recovered leaving 650,000 still missing
• Mt. Gox filed for bankruptcy protection in 2014
• Investigations found the exchange was hacked as early as 2011
• The hack drained the hot wallets and cold storage
• CEO Mark Karpeles was arrested in 2015 but has pleaded not guilty
• A new civil rehabilitation process began in 2019 to repay creditors
• The repayment deadline has been extended to Oct 31, 2024

The Rise of the Mt Gox Exchange

Launched in 2010 by US programmer Jed McCaleb (who later went on to found Ripple), Mt Gox expanded rapidly to become by far the most popular bitcoin exchange in the world after being purchased by French developer and bitcoin enthusiast Mark Karpelés in March 2011. Rather bizarrely the name Mt Gox stood for  “Magic: The Gathering Online eXchange”.

In June 2011 the Mt. Gox exchange was hacked, most likely as a result of a compromised computer belonging to an auditor of the company. On that occasion, the hacker used their access to the exchange to artificially alter the nominal value of bitcoin to one cent and then transfer an estimated 2,000 bitcoins from customer accounts on the exchange, which were then sold.

In addition, an estimated 650 bitcoins were purchased from the exchange at the artificially low price by Mt. Gox customers, none of which were ever returned.  As a result of this hack Mt. Gox took a number of security measures, including arranging for a substantial amount of its bitcoin to be taken offline and held in cold storage.

In spite of the June 2011 hack, by 2013 Mt. Gox had established itself as the largest bitcoin exchange in the world, in part as a result of increased interest in bitcoin as the price of the coins increased rapidly (jumping from $13 dollars in January 2013 to a peak of more than $1,200).

However, behind the scenes all was not well.

The Struggles behind the scenes

Although Mt. Gox had quickly expanded to become the largest bitcoin exchange in the world by 2013, behind the scenes it was struggling.

Since its collapse, a number of Mt. Gox employees have spoken about how Mt. Gox was operating, with a picture being painted of a disorganized and discordant organization, with poor security procedures, serious issues relating to the source code of the website and a number of serious issues arising in relation to the operation of the business.

In May 2013, a former business partner of Mt. Gox called Coinlab sued the company for $75 million, claiming breach of contract. The two companies had signed an agreement under which Coinlab would take over Mt. Gox’s American customers but, according to Coinlab’s lawsuit, the deal failed to materialize due to Mt. Gox breaching a clause of the contract.

In addition, the US Department of Homeland Security was investigating claims that a subsidiary of Mt. Gox operating in the US was not licensed and was therefore operating as an unregistered money transmitter. As a result of this investigation, more than $5 million was seized by the US government from the company’s bank accounts.

As a result of the US investigation, Mt. Gox had announced a temporarily suspension of withdrawals in US dollars. Although this suspension only nominally lasted for one month, many customers were experiencing delays of up to 3 months in withdrawing cash from their accounts and few US dollar withdrawals were being successfully completed.

All these delays resulted in Mt. Gox losing its place as the largest bitcoin exchange in the world by the end of 2013, falling to third.

However, as it turned out, these issues were the tip of the iceberg. Underneath the hood, Mt. Gox had much bigger problems than it realized. It had been the victim of an ongoing hacking for over two years.

The Mt. Gox hack

• On 7 February 2014, Mt. Gox stopped all bitcoin withdrawals, claiming that it was merely pausing withdrawal requests “to obtain a clear technical view of the currency process.”
• After a number of weeks of uncertainty, on 24 February 2014, the exchange suspended all trading and the website went offline.
• That same week, a leaked corporate document claimed that hackers had raided that Mt. Gox exchange and stole 744,408 bitcoins belonging to Mt. Gox customers, as well as an additional 100,000  bitcoins belonging to the company, resulting in the exchange being declared to be insolvent.
• On 28 February Mt. Gox filed for bankruptcy protection in Japan, and in the US two weeks later.
• Subsequent investigations have shown that the massive hack of Mt. Gox had begun as early as September 2011.

As a result of all this, Mt. Gox was operating while technically insolvent for almost two years and had practically lost all of its bitcoins by mid-2013. Additional evidence has suggested that Mt. Gox was already missing up to 80,000 bitcoins from its exchange even before Mark Karpelés purchased the exchange in 2011.

Although it remains an ongoing investigation and the facts remain unclear at this time, it is presumed that most of the bitcoins that were stolen from Mt. Gox were taken from its online (or hot) wallets, including all of the currency being held in cold storage, due to a “leak” in the hot wallet.

An online cryptocurrency wallet is a web-based wallet used to store secure digital codes, known as private keys that show ownership of a public digital code, known as a public key, that can be used to access the currency addresses and it is this information that is stored in a wallet.

Prior to September 2011, the Mt. Gox private key was unencrypted and it would appear that it was stolen via a copied wallet.dat file, either by hacking or perhaps through an insider.

Once the file was hacked, the hacker(s) were able to access and cipher bitcoins gradually from the wallets associated with Mt. Gox’s private keys without the hack being detected.

The shared keypool of the copied file led to address re-use, which meant that the company appeared to be oblivious to the theft, with the Mt. Gox systems interpreting the transfers as deposits apparently being moved to more secure addresses.

Whenever the wallets emptied, the Mt Gox system’s interpretation of the theft as deposits resulted in an additional 40,000 extra bitcoins being credited to multiple user accounts.

The Aftermath

In March 2014, Mt. Gox reported on its website that it had found 200,000 bitcoins in old-format digital wallets that had been used by the exchange prior to June 2011.  These bitcoins remain held on trust for creditors while the company remains under bankruptcy protection.

Mark Karpelés was arrested in Japan in August 2015 and charged with fraud and embezzlement, although none of these charges directly relate to the theft. He was imprisoned until July 2016, when he was released on bail.

He has pleaded not guilty to the charges and his trial is ongoing.

Mt. Gox remains under bankruptcy protection, with the case still being under investigation. In addition, the litigation with CoinLab remains outstanding and distribution to creditors cannot occur until that lawsuit is settled.

Where did the money go?

650,000 bitcoins remain unaccounted for as a result of the Mt. Gox hack. A number of online theories have been developed as to where the missing coins are.

Some have suggested that Mt. Gox never had the amount of coins that it claimed, and that Karpelés had manipulated the numbers to make it appear that Mt. Gox held more bitcoin than it in fact held.

In respect of how the hacker was able to access the bitcoins that Mt. Gox held in cold storage, the theories range from suggestions that the storage may have been compromised by an individual with on-site access to suggestions that the cold storage coins were gradually deposited into the Mt. Gox exchange system when a hot wallet ran low, and that a lack of accountability among staff simply meant that there was no awareness that the wallets were being drained by hackers.

In July 2017, a Russian national named Alexander Vinnik was arrested by US authorities in Greece and charged with playing a key role in the laundering of bitcoins stolen from Mt. Gox. In additional Vinnick was charged by Greek authorities for laundering of approximately $4 billion in bitcoin.

Vinnick is alleged to be associated with BTC-e, a well-established bitcoin exchange, which was raided by the FBI as part of the investigation.

The BTC-e site has been shut down and the domain & web hosting accounts seized by the FBI, the first time the US government has seized a foreign exchange on foreign soil.

Investigations by Wizsec, a group of bitcoin security specialists, had identified Vinnik as the owner of the wallets into which the stolen bitcoins had been transferred, many of which were sold on BTC-e.

With the trial of Mark Karpelés ongoing in Japan and the indictment against Vinnik, it would appear that the separate strands of the investigation into the Mt. Gox hack are finally coming together.

Whether any of this will result in the recovery of all or any of the stolen bitcoins remains to be seen, but it does appear that we will have at least some clarity into the Mt. Gox hack in the near future.

“GoxRising”-A New Path Forward

In February of 2019, TechCrunch reported that a movement called GoxRising was working to pursue an alternative to bankruptcy for Mt. Gox.

The idea behind GoxRising is simple: instead of use the bankruptcy courts to hand over Mt. Gox’s assets to the owners of the company, it is using civil rehabilitation law to return the most it can to the creditors of the company.

It would appear that GoxRising has been successful in its efforts, as Tokyo lawyer Nobuaki Kobayashi has been appointed by Japanese courts to handle the civil rehabilitation process. This is good news for anyone who lost their assets in the Mt. Gox failure, as they will likely gain much more as a result of civil rehabilitation.

There is also another potential upside for Mark Karpeles, the embattled CEO of Mt. Gox.

If the bankruptcy process had continued to move forward, it is likely that Karpeles would’ve ended up with a lot of Mt. Gox’s assets. He owned around 80% of the company when it went bust, putting him in pole position for a massive payout under Japanese bankruptcy law.

Karpeles knows that if he ended up with most of the Mt. Gox stash, his life would be in limbo. First, he would face a barrage of civil suits from Mt. Gox creditors who had lost everything to him. Bitcoin prices are much higher today than they were in 2014, which would just add insult to injury.

Also, jilted investors may not be satisfied with simply suing Karpeles. People have been killed for far, far less than what Karpeles would have done, if he ended up walking away with a massive pile of Bitcoins after everyone who trusted him got burned.

Needless to say, the civil rehabilitation process seems like a winning idea for everyone involved, and it looks like it is moving forward. Kobayashi was put into his position earlier this year, and the  civil rehabilitation is expected to take 3-5 years, according to reports in the media.

Civil rehabilitation is still a time-consuming process, but it does look a lot better than bankruptcy!

Lessons Learned

The pivot to civil rehabilitation is emblematic of how much different the crypto world is from the established financial system. Bankruptcy law was a terrible framework to address the failure of Mt. Gox, and would’ve created an unjust situation that may have led to massive amounts if litigation, and potentially illegal acts.

It is highly unlikely that Karpeles was actually planning to defraud people who were using Mt. Gox, and his life has been rough since the exchange went belly-up. He has faced multiple lawsuits already, can’t leave Japan, and also did some jail time before getting released into the land of the rising sun on a limited basis.

Not a lot of fun for anyone!

Now, it looks like there is a way forward that would get Karpeles out of his unenviable situation, and make sure anyone whose assets assets were frozen in 2014 got them back.

The clear lesson to the crypto community is that there need to be better structures in place for when the worst happens, as it is absurd that people are still waiting to gain access to their property.

The Centralized Crypto Exchange Dilemma

Crypto assets lend themselves to decentralized networks. Despite that, the exchanges that offer the best prices and deepest liquidity are almost universally centralized. While the centralized nature of the exchanges isn’t inherently an issue, the fact they they act as custodians isn’t ideal.

Once an entity takes ownership over an asset, the potential for a Mt. Gox-esque scenario exists. Given the kind of laws that govern bankruptcy in the established financial system, the way cryptos are traded does appear to be less-than-perfect.

There are decentralized exchanges that offer a wide range of trading services, but they are unlikely to be able to match centralized crypto exchanges, especially when it comes to inter-exchange interface.

The ability to trade directly with other centralized crypto exchanges is a big advantage, and it is difficult to see how that could happen without custodianship.

A Horror Story for Institutional Investors

Custodial issues are one of the biggest issues for institutional investors when it comes to cryptos. Far from being paranoid speculation, the Mt. Gox situation gives any money manager who is being pressured to invest in cryptos a terrible example that could scare anyone out of the sector.

The idea that a hack could turn an entire exchange illiquid and keep any of the traders from accessing their assets isn’t going to win cryptos many proponents in the investment banking community. If cryptos are going to grow, the ‘Custodial Question’ has to be addressed.

Unfortunately, the crypt world grew out of boot-strapped platforms and business structures that were never intended to appeal to the world of high-finance. Now that more people are interested in cryptos, these sub-par systems are holding back the industry in a big way.

It doesn’t matter how professional a trading interface looks, the back office is what really matters when it comes to attracting the big money. If chain-of-custody and ownership can’t be established quickly, and by an outside auditor, nothing else really matters.

Could it happen again?

The short answer is that yes, it could.

There are many bitcoin exchanges operating at present, some of which are more reputable than others. Popular exchanges such as Coinbase and Binance are relatively transparent about their operations, as well as offering insured deposits, and are backed by reputable venture capitalists.

However, they are also going to be the targets of the best hackers, who will be only too happy to exploit any security gaps.

Decentralized exchanges generally don’t act as a custodian for you assets, which means Mt. Gox couldn’t happen to you.

In addition, there are many smaller exchanges currently trading that aren’t as clear about how they operate. That does not mean that such exchanges are operating a hack or disreputable in any way.

When it comes to cryptocurrency trading, it is recommended that you use the more reputable exchanges, if only for your own peace of mind, unless you have the means to absolutely guarantee the legitimacy of any smaller exchange that you are dealing with.

And if the above isn’t enough to scare you, my one last word of advice would be to make sure that you don’t store your bitcoins on any exchange. See our post on cryptocurrency wallets for more details on how to store your bitcoins.

MT Gox Update 2023

As of 2023, The long-running Mt. Gox saga continues, as trustees for the hacked cryptocurrency exchange have announced a deadline extension for repaying creditors. Originally ordered to finish distributions by October 31, 2023, the trustee now has until October 31, 2024 to complete the repayment process.

This marks the second major deadline extension, as creditors have waited nearly a decade to recoup losses from the infamous 2014 hack.

While around 200,000 of those coins have since been recovered, creditors are still owed around 650,000 BTC from the hack. With bitcoin’s value exponentially higher now compared to 2014, that stolen sum is worth close to $23 billion today.

The Tokyo-based trustee managing distributions cites technical and administrative delays as reasons for pushing the deadline back another full year. This includes time spent hunting for more of the missing bitcoin and organizing the process for evaluating creditor claims.

The repayment is slated to proceed in both BTC and fiat currency at creditor’s request. Analysts expect the release of tens of thousands of bitcoins may impact prices to some degree, though markets are much more liquid today.

For Mt. Gox victims, the deadline extension provides closure on any hopes of receiving funds in 2023. But it also promises progress by finally making creditors whole after years of waiting.

We will update as the story progresses.

The post The History of the Mt Gox Hack: Bitcoin’s Biggest Heist appeared first on Blockonomi.

In its most basic sense, the idea of an airdrop is a marketing ploy wherein free tokens are distributed to new/existing users of a project in order to generate more interest in it. To elaborate, an airdrop takes place when a project transfers a designated amount of tokens into wallets that have been whitelisted by its devs — i.e. the addresses satisfy all of the project’s regulatory/governance requirements.

Moreover, it bears mentioning that the tokens are usually doled out in return for a small service wherein the recipients might be needed to retweet a post made by the project or follow its social media handles.

In this article, we will delve into some of the most prominent airdrops to ever hit the digital asset market. So, without any further ado, let’s get to the heart of the matter.

Uniswap

Being one of the largest players within the decentralized finance (DeFi) arena, there was no surprise when word of the now-concluded Uniswap airdrop quickly transformed into one of the most awaited crypto events of 2020.

Uniswap is an automated digital asset exchange built atop the Ethereum network, which makes use of its very own governance token ($UNI) to facilitate various internal transactions.

And, on Sept 17th, 2020, more than 250k wallet addresses linked with the platform received free $UNI tokens as part of the airdrop. Moreover, within a month, nearly 91% of the available assets had been claimed by eligible addresses

That said, three years removed from the airdrop, there are still over 30,000 wallets that have not yet staked a claim on the remaining tokens — leaving a little over $84 million worth of $UNI up for grabs.

Stellar

The second entry on our list is Stellar, an open-source, decentralized finance protocol that allows users to facilitate cheap, seamless, cross-border crypto-to-fiat transfers. Back in June 2017, the project distributed a sizable $1,000 worth of XLM tokens per Bitcoin (BTC) — which, at the time, worked to nearly 19% of the project’s total token supply. Following this, in November 2018, the company airdropped $125 million worth of XLM tokens to addresses that had been whitelisted by its dev team.

Arbitrum

Over the last couple of years, Ethereum has transformed into one of the most popular layer-1 blockchains in the world. However, the project has time and again been faced with severe transactional bottlenecks, including high gas fees. As a result, a number of scaling solutions have emerged, with Arbitrum being one of them.

Through its use of optimistic rollups, Arbitum is able to not only reduce gas fees in a big way but also help alleviate congestion on the Ethereum main chain. Therefore, it was only natural that when the platform decided to airdrop its native cryptocurrency, $ARB, a lot of people were interested.

The airdrop was opened up to only those users who had interacted with the network before December 31, 2022. The event commenced on January 13, 2023, with users being able to claim anywhere between 10 and 10,000 ARB (as per their level of interaction with the Arbitum network). In total, a whopping 1.162 billion ARB were designated for the airdrop.

Sweat Wallet

This is the first airdrop on our list that has yet to take place. Since its market debut in 2015, Sweatcoin and its primary Web3 offering, the Sweat Wallet, have piqued the interest of fitness enthusiasts across the globe, as evidenced by the application’s 7M+ users to date and 800k+ monthly on-chain active users.

This growth can be attributed to the fact that Sweat Wallet rewards its users for performing everyday activities such as running, walking, etc — allowing them to either exchange their earned $SWEAT tokens for other digital assets or physical rewards.

On September 12, $SWEAT will be airdropped to users in the United States as well as eight other countries in proportion to their sweatcoins (accrued via the Web2 Sweatcoin app). A sizable sum of 690M $SWEAT tokens have been set aside for this, and those interested in participating need to sign up before Sept 12.

Shardeum

Another airdrop that has yet to take place but has made it to our list is for a project called Shardeum, a decentralized protocol allowing users to create and deploy shards across any network of their choice. In brief, shards are small pockets of data that are created to help decongest a blockchain. They run in parallel with each other and can communicate using cross-shard transactions.

Naturally, when Sharedeum announced earlier in 2023 that it is airdropping a sizable 5% of its total $SHD supply, a lot of people became interested. The event is open to only those individuals who had created or joined shards on the protocol before April 30, 2023, and is set to commence during the second half of 2023.

The post The Past, Present, and Future — A Look at the Biggest Crypto Airdrops Ever appeared first on Blockonomi.

But despite all its openness, one grand mystery remains unsolved:

Who Created Bitcoin and Who exactly is Satoshi Nakamoto?

Finding an answer to this question isn’t easy. We know that all the code that created Bitcoin originated with Satoshi Nakamoto, but that is about all we know. Satoshi Nakamoto didn’t work alone on launching Bitcoin.

Some of the early Bitcoin devs have been pointed to as possible Satoshis, but there are numerous issues when it comes to proving that any specific person was the creator of Bitcoin.

The Bitcoin Code

First, let’s detail what is known for certain. The first step was taken in 2007, when Nakamoto wrote the Bitcoin code. In November 2008, Satoshi Nakamoto published his now famous White Paper, which laid the groundwork for the Bitcoin protocol.

On January 3rd, 2009, the first ever Bitcoin block was mined, marking the creation of the cryptocurrency, it bore the message :

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks

Satoshi was heavily involved with the Bitcoin community, and collaborated with them in order to modify the underlying bitcoin protocol. After two years of involvement, Nakamoto handed the reins to Gavin Andresen, and seized involvement with the Bitcoin project in December of 2010.

In the Spring of 2011, Nakamoto returned to leave a final message, stating in a post that he had “moved on to other things,” and that Bitcoin was “in good hands with Gavin [Andresen] and everyone.” That was the last the world heard of the secretive Bitcoin creator.

The mystery behind Nakamoto’s identity has only grown, as the Bitcoin community eagerly speculates who it could potentially be. Satoshi Nakamoto claims to be Japanese, born on April 5, 1975. To this day, it is unknown whether Nakamoto is male or female, or whether Nakamoto is even a single person or a group of individuals.

Some Early Devs Could be Nakamoto

Today most people are familiar with digital currency, thanks to the epic crypto rally of 2017. Back in 2008 when this was all getting started, the cryptocurrency world was a lot smaller. We know for sure that some of the people we talk about below knew each other.

In the case of David Kleiman and Craig Wright, there is solid evidence that the two worked together to get bitcoin off the ground, and both had substantial amounts of the tokens. There is an ongoing saga between Kleiman’s estate and Wright, alleging that there could have been some kind of graft, and that Wright ended up with bitcoins that were rightfully Kleiman’s.

You might notice that we wrote ‘Kleiman’s estate’ and not ‘Kleiman.’ The sad fact is that some of the people who could be Satoshi Nakamoto have died, which makes a positive identification much harder.

When the first bitcoins were being mined, basically nobody cared about them. The first bitcoin transaction was a trade of 10,000 BTC for two pizzas, which should give you some idea of how playful some of the early devs were with their project. There are a lot of questions surrounding the origins of Bitcoin, and as time goes on, they may become harder to answer.

Are They British ?

While Nakamoto’s identity remains unknown, This has not stopped enthusiasts from investigating his background and drawing up conclusions.

Nakamoto’s use of perfect English in his posts and his publication of the White Paper has raised skepticism as to his Japanese origin. Furthermore, his occasional use of British English in the code and comments has fueled speculation that he is a native English speaker of commonwealth origin.

Additionally, Stefan Thomas, a Swiss coder and active member in the Bitcoin community, graphed the time stamps of Nakamoto’s more than 500 posts, showing his or her complete absence of posts between midnight am and 6 am Greenwich Time, further informing investigators as to his potential whereabouts.

Nick Szabo

To date, there are several potential individuals suspected of being the mysterious Bitcoin creator. One of the first suggestions was Nick Szabo, a decentralized currency enthusiast who published a paper on “Bit Gold” considered to be a precursor to the first cryptocurrency.

By running a reverse textual analysis, internet researcher Skye Grey found dozens of unique phrases that linked Szabo’s writing style to that of the original whitepaper. This evidence is only circumstantial, however, and Szabo has repeatedly denied that he is the creator of Bitcoin.

Despite all the denials, the research into how the Bitcoin whitepaper was written shows remarkable similarities between how Szabo writes, and also what was omitted. One of the most curious things is that Satoshi Nakamoto made numerous references to ideas that had been used by Bit Gold, but never talked about Bit Gold directly.

Omitting the origin of relevant ideas strange, unless Szabo was deliberately trying to cover up his tracks. None of this is hard evidence, and to date Szabo has flatly denied being the key driver of Bitcoin’s launch.

Nick Szabo, Image from The-Blockchain

Dorian Prentice Satoshi Nakamoto

Another possibility is a Japanese American man living in California, named Dorian Prentice Satoshi Nakamoto, birth name Satoshi Nakamoto. First brought up in a March 2014 Newsweek article, Leah McGrath Goodman pointed to Nakamoto’s training as a physicist at Cal Poly University in Pomona and libertarian background as potential indicators of his identity.

Goodman’s biggest piece of evidence was his response to a question regarding Bitcoin: “I am no longer involved in that and I cannot discuss it. It’s been turned over to other people. They are in charge of it now. I no longer have any connection.”This led to a wild media frenzy, which even included a car chase.

However, in a later interview, he recanted his previous position, stating that he had misunderstood the reporter’s question, thinking it was related to his previous classified work as a military contractor.

Dorian Prentice Satoshi Nakamoto, Image from The Verge.

David Kleiman

David Kleiman had an interesting life, and was certainly involved in the beginnings of Bitcoin. His involvement with Bitcoin goes back to its earliest days, and he was one of the first Bitcoin miners.  Kleiman had a long standing interest in computer security, and had designed systems that were used by the highest levels of the US government to secure their digital systems.

After becoming a paraplegic in a motorcycle accident, Kleiman went barreling into the world of cryptography. He was on the Metzdowd list, which may be where he first came in contact with the Bitcoin whitepaper.

Another theory puts him and Craig Wright at the center of the project. Gizmodo cites an email that allegedly came from Wright that states,

“I need your help editing a paper I am going to release later this year. I have been working on a new form of electronic money. Bit cash, Bitcoin…” and also, “You are always there for me Dave. I want you to be a part of it all.”

The email is alleged to predate the release of the Bitcoin whitepaper by a few months, which would make it a key piece of evidence in the search for Satoshi Nakamoto’s true identity.

Sadly, Kleiman died in 2013 under mysterious circumstances, which effectively eliminates him as a future source of information. Given his aptitude for data security, whatever digital information he left behind is also probably going to be difficult to access.

David Kleiman, Image from Gizmodo

Hal Finney

Hal Finney is another potential candidate to be the mysterious Satoshi Nakamoto. Finney was a pre-bitcoin cryptographic pioneer and was only the second person – after Nakamoto himself – to make use of the software, file bug reports, and suggest improvements.

Finney was the first to ever receive Bitcoin, stating in an interview that “ [he] was the recipient of the first bitcoin transaction, when Satoshi sent ten coins to [him] as a test.”

Forbes journalist Andy Greenberg speculated after requesting aid from writing analysis consultancy Juola & Associates that Greenberg may have been the ghostwriter for Satoshi Nakamoto.

Further adding to the speculation that Finney was involved with the creation of Bitcoin was his correspondence with the aforementioned Nick Szabo, and the fact that he lived only blocks apart from Dorian Prentice Satoshi Nakamoto.

At the time of his death on August 28, 2014, only circumstantial evidence pointed to Hal Finney being the original Satoshi Nakamoto.

Hal Finney, Image from Wired.

Craig Wright

Yet another possible contender to be Satoshi Nakamoto is the Australian academic, computer engineering expert, and entrepreneur, Craig Wright.

In early November of 2015, Gizmodo received an anonymous email (referenced above) from an individual stating that not only did he know that Craig Wright was the creator of Bitcoin, but that he had also worked for him.

On December 9, hours after Wired certified that Wright was indeed Nakamoto, the Australian Federal Police raided his home, and afterwards stating the “[the] matter is unrelated to recent media reporting regarding the digital currency Bitcoin.”

Afterwards, Wright deleted his internet presence until May of 2016, when he stepped forward and revealed himself on Twitter as the creator of the digital currency Bitcoin, and claimed he had the proof to back up his statement. Then, amid a torrent of skepticism, Wright retracted his statement and did not offer the “extraordinary proof” he claimed to have, stating that he did “not have the courage” to prove his identity.

Craig Wright, Image from CCN.

Satoshi Nakamoto Net Worth

In an era where information is widespread, Satoshi Nakamoto has managed to maintain his identity a complete secret. So why is uncovering Nakamoto’s identity so important? If Nakamoto is indeed a single individual, then he or she owns approximately 5% of the world’s Bitcoin supply, placing him or her as the 52nd richest person in the world as of December 12th.

The implications of this wealth are considerable, beyond even the real world implications. If Satoshi Nakamoto were ever to sell the rumored 980,000 Bitcoins in his or her possession (currently worth over $3.9 billion at today’s price, as of 18th March 2019 ), the price of Bitcoin could potentially become more volatile than it already is.

Powerful Potential Enemies

A quote that is attributed to Mayer Amschel Rothschild goes like this, “Permit me to issue and control the money of a nation, and I care not who makes its laws!”

Like many famous quotes, the authenticity of the above statement is questionable.

On the other hand, the idea expressed is rock-solid. The ‘power-of-the-purse’ is one of the most important ideas in modern political ideology. Being able to control the issuance of a popular currency gives the controller extreme amounts of power.
Bitcoin undermines the idea of a central bank, or the involvement of centralized authorities at their most basic level. As the last decade has shown, the idea of decentralized money or political systems has been met with extreme opposition by many established organizations.

Satoshi Nakamoto wrote,

“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts,” in their now-famous 2009 whitepaper.

In 2008 no one would have seen Satoshi Nakamoto as a threat to global socioeconomic system. Today, that probably isn’t true. Nations like China have banned cryptos outright, and the Western central banking cartel has been vocal in its opposition to widespread use of cryptos.

Whoever Satoshi Nakamoto is, they are likely wise to have dropped off the radar when they did. The idea that fiat money could be replaced with a system that marginalizes central authorities is extremely dangerous to the people that currently hold power.

Anyone who could act as a lightening-rod for a global decentralized society would probably face some pretty nasty blowback.

The Scaling Debate

Furthermore, there is significant debate as to the future of Bitcoin. Heated discussions have arisen due to some of the growing pains surrounding Bitcoin, particularly the issue of how to deal with an increase in transaction volume in the Bitcoin network. As the number of blocks increases, the Bitcoin network runs the risk of becoming overloaded.

One side of the debate wants to fundamentally change the Bitcoin node by increasing the block size, in order to allow the system to process transactions more quickly. The other side of the debate sees this as a betrayal of the original concept behind Bitcoin, arguing that this would lead to increased centralization.

Identifying Bitcoin’s true creator would create more certainty and could potentially lay down the following steps in Bitcoin’s ever growing development.

Conclusion

The Bitcoin community will be forced to coexist with the enigma that is Satoshi Nakamoto, whether they like it or not. There are a few ways that Satoshi Nakamoto could show that they are, in fact, the creator of Bitcoin, but convincing the entire crypto community will be a challenge.

Even if a plausible Satoshi came forward, they would probably have to deal with ongoing doubts from within the crypto community, and untold difficulties from the global power structure. The raid on Craig Wright by the AFP is a small taste of the legal morass that the real Satoshi Nakamoto would find themselves facing.

Ultimately, identifying Bitcoin’s creator may be a quixotic endeavor. His or her complete silence since the Spring of 2011 means it is likely we will never hear from them again. Nevertheless, Bitcoin, the open source digital currency created nearly a decade ago, will continue to in spite of this mystery.

References

1. https://cointelegraph.com/news/who-created-bitcoin-long-story-short
2. https://www.thebalance.com/bitcoin-pioneer-satoshi-nakamoto-391266
3. https://cointelegraph.com/news/who-created-bitcoin-long-story-short
4. https://bitconnect.co/bitcoin-information/7/who-is-satoshi-nakamoto
5. https://www.wired.com/2011/11/mf_bitcoin/all/
6. https://likeinamirror.wordpress.com/2013/12/01/satoshi-nakamoto-is-probably-nick-szabo/
7. http://www.newsweek.com/2014/03/14/face-behind-bitcoin-247957.html
8. https://www.coinworld.io/learn/unbelievable-story-bitcoin/
9. https://www.washingtonpost.com/news/the-switch/wp/2014/01/03/hal-finney-received-the-first-bitcoin-transaction-heres-how-he-describes-it/
10. https://www.forbes.com/sites/andygreenberg/2014/03/25/satoshi-nakamotos-neighbor-the-bitcoin-ghostwriter-who-wasnt/
11. https://gizmodo.com/this-australian-says-he-and-his-dead-friend-invented-bi-1746958692
12. https://www.theguardian.com/technology/2015/dec/09/bitcoin-founder-craig-wrights-home-raided-by-australian-police
13. https://www.newyorker.com/business/currency/we-need-to-know-who-satoshi-nakamoto-is
14. http://mashable.com/2017/12/12/bitcoin-satoshi-trillionaire/
15. https://www.newyorker.com/business/currency/we-need-to-know-who-satoshi-nakamoto-is

The post Who is Satoshi Nakamoto? We Look at The Possible Candidates appeared first on Blockonomi.

Strangely, enough the most outspoken critic of government-issued currencies; former International Monetary Fund (IMF) Chief Economist Kenneth S. Rogoff, is also a foe of cryptocurrency. Rogoff even wrote a book; The Curse of Cash, in which he recommended governments abolish paper cash completely.

Rogoff’s argument is that cash is draining money away from legitimate free enterprise and into the black market. He also accuses the world’s central banks of promoting the black market by profiting from the sale of paper bills.

“And all this cash is facilitating growth mainly in the underground economy, not the legal one,” Rogoff charged in a Project Syndicate editorial. He noted that the $100 bill; which average Americans almost never see makes up 80% of the U.S. money supply. The $100 bill is the favorite medium of exchange of the world’s criminals.

Paper currency encourages violent crime by making robbery pay off and drug dealing and illegal immigration profitable; by giving criminals an easy to use means of payment, Rogoff pointed out. In The Curse of Cash; he noted that the Swedish government greatly reduced the number of bank robberies by simply lowering the amount of cash in circulation, which made such crimes less profitable.

Ironically, this is a claim that is leveled at Bitcoin and other Cryptocurrencies, that they facilitate crime when it reality cash is by far the largest method or exchange for criminals.

Is Paper Currency Obsolete?

Rogoff is the same man who denounced Bitcoin (BTC) as “Crypto Fool’s Gold” in a 9 October Project Syndicate column. Rogoff; a Professor of Public Policy at Harvard University, is no fan of cryptocurrency but he thinks present-day fiat currencies are worse.

Interestingly enough, Rogoff believes governments will scrap present-day fiat currencies; and replace them with national cryptocurrencies (he uses the term digital currencies), in the near future. His belief seems to be that paper cash is an obsolete technology that should be abolished.

“But the long history of currency tells us that what the private sector innovates, the state eventually regulates and appropriates – and there is no reason to expect virtual currency to avoid a similar fate,” Rogoff wrote at Project Syndicate.

His prediction is that governments will simply takeover cryptocurrency. Historically, paper currencies were first printed by banks – but eventually adopted by governments because they were a superior payment technology.

The Danger when Cash Goes Away

One person who agrees with Rogoff is India’s Prime Minister Narendra Modi. On November 8, 2016, Modi demonstrated all the problems with fiat currencies by declaring 86% of the cash in his country worthless.

Modi simply went on television and told the Indian people that their two largest bills; the 500 rupee ($7.50 or £5.40) and 1,000 ($15 or £10.81) notes were instantly worthless, CNN Money reported. Not surprisingly, the Prime Minister’s action created instant panic and an immediate cash shortage.

Over the next 50 days, tens of millions of Indians learned what it was like to live without cash. Some businesses resorted to barter, while some people were sleeping in lines outside banks and ATMs rumoured to have cash. Such chaos occurred because 98% of all consumer transactions in India are conducted in cash.

Modi showed the world why cash is such a lousy payment mechanism; it can be instantly destroyed or taken away. Just as a person who keeps all of her money in bills under the mattress can lose everything to theft or fire. An entire nation can lose its buying power to one government action.

The Hyperinflation Menace

A major problem with Fiat currency is the inflation problem, governments can print as much new money as they like which devalues the money already in supply. For example, after the financial crisis in 2008, the bank of England created £375billion of new money. This is an ongoing concern and one of the problems that cryptocurrencies solve completely – for example, we know that there will only ever be 21 million Bitcoin in existence.

The residents of Venezuela are experiencing the other grave danger from government currencies: hyperinflation.

Prices in Venezuela may have risen by 12,875% during 2017 and by 85% during December 2017, Johns Hopkins University economist Steve Hanke told The Economist. Hanke thinks that prices in Venezuela are doubling every 52 days.

If Hanke is right that would place Venezuela among the worst cases of hyperinflation in history. The International Monetary Fund forecast that inflation might increase by 13,000% in Venezuela during 2018.

The Venezuelan government is now printing a 100,000 bill in its fiat currency the Bolivar, The Economist reported. That bill might be worth less than 50¢ (£0.36) in US Dollars. The black market exchange rate for one US dollar (£0.72) in Venezuela is 228,000 Bolivars, Reuters reported.

Average Venezuelans are feeling the pain, an egg now costs 10,000 Bolivars; or a day’s pay in the nation’s minimum wage, on the country’s streets, The Havana Times reported. Eggs have apparently replaced Bolivars as one of the favoured mediums of exchange in Venezuela. A single carton of eggs now costs 60,000 Bolivars – or six days the minimum wage.

The Bolivar is worthless because Venezuela’s President Nicholas Maduro destroyed the economy, and wasted the entire nation’s oil money. Not surprisingly, many Venezuelans; including Maduro himself, have become cryptocurrency geeks out of necessity.

Cryptocurrency vs. Hyperinflation

Thousands of Venezuelans are using the country’s super-cheap electricity to mine Bitcoin (BTC) and Ethereum (ETH), The Atlantic reported in September 2017. A Venezuelan can make around $500 (£359.56) or 125.4 million Bolivars a month mining Bitcoin.

Venezuelans like Bitcoin because police, criminals, or soldiers cannot seize it at gunpoint. They can also use Bitcoin to pay for items from e-commerce companies in Miami and have them shipped to the South American nation. It is even possible to buy Visa and MasterCard gift cards; that can be used at Amazon, with Bitcoin or Ethereum.

This enables some Venezuelans to purchase essential items like food, medicine, and diapers online, Atlantic reporter Rene Chun discovered. These people can live a better life than their neighbors who are bartering eggs for consumer goods in the street.

Bitcoin is now so valuable in Venezuela; that corrupt police are seizing mining rigs and rebooting them at their stations, Chun wrote. The only way cops can get paid; and feed their families, is to mine Bitcoin.

Letting Politicians Loot the Nation’s Wealth

The country’s newest cryptocurrency geek is Maduro himself; who announced the creation of an oil-backed altcoin he calls the Petro in December 2017, Al Jazeera reported. Maduro even has plans to try and get the Organization of Petroleum Exporting Countries (OPEC) to issue an altcoin.

“I am going to officially propose to all OPEC and non-OPEC producing countries that we adopt a joint cryptocurrency mechanism backed by oil,” Maduro said.

The Petro probably will not help average Venezuelans; but it will make it easy for Maduro and his henchmen to move all the oil money out of the country, before the revolution. Whether the international community will let Maduro get away with looting Venezuela’s wealth is not clear.

The fate of Venezuela reveals what might be the greatest flaw in government fiat currencies; they make it real easy for corrupt or incompetent leaders to loot the nation’s wealth. All the dictator has to do to get more cash is to run the printing press.

The victims are average citizens who have no choice but to accept the worthless paper. The dictator and his cronies have the option of selling assets for other currencies with value and moving it to overseas bank accounts. Disturbingly, it is in the interest of the dictator to print more money; because he can exchange it for currencies with value, making the cash even more worthless.

Venezuela Demonstrates why Cryptocurrency will Supplant Fiat Currencies

Average people are at the mercy of this horrendous system because they cannot spend the tyrant’s worthless paper outside the nation. Nor do they have a good means of moving cash outside the nation, because nobody else accepts their national paper.

Cryptocurrencies enable average people to bypass government-issued Fiat which is subject to their whims – which is what makes them so valuable. The true advantage of cryptocurrency is that it allows average people the ability to make cross-border transactions with no exchange rate. That gives them spending power and money transfer capabilities once only reserved for the rich.

Rogoff and Modi are absolutely right, the problems with fiat currency will kill it off in the near future no matter what governments do. Like it or not, cryptocurrency is the future of money, and governments will ether be forced to adopt it or try to ban it which will prove futile due to it’s decentralized nature.

China’s Digital Currency Plans

Reports coming out of China say the country’s central bank is making progress with its plans to create a sovereign digital currency. However, the People’s Bank of China (PBOC) is yet to release any official timetable for the roll-out of the proposed digital yuan.

Meanwhile, commentators continue to assert that China’s digital currency plans are part of efforts to prevent the widespread adoption of public cryptos like bitcoin (BTC) as well as private virtual currencies like Facebook’s Libra. Several central banks are also making efforts to launch their own state-issued digital currencies.

No Launch Date Set for China’s Digital Currency

According to the South China Morning Post, the PBOC issued a statement on January 5, 2019 declaring that progress was being made on the development of digital yuan currency. The statement was part of the central bank’s annual work conference detailing the PBOC’s activities for the last year.

Despite providing proof of ongoing work on the proposed central bank digital currency (CBDC), the PBOC did not elaborate on a likely timeframe for the release of the digital yuan. Back in 2019, reports stated that China’s digital currency would likely launch in November 2019 but those rumors turned out to be false.

Also, details about China’s digital currency remain scarce with inside sources so far declining from providing concise commentaries about the project.

Back in 2018, Blockonomi reported that the PBOC was recruiting digital currency specialists.

Beijing Wants to Combat Bitcoin and Libra Adoption in China

Despite the dearth of details about China’s proposed digital currency, one thing is clear — Beijing wants to counter cryptos like bitcoin and Libra. One key evidence for this assertion is that chatter about the project increased in intensity following the release of the Libra white paper back in mid-2019.

China was among the first nations to criticize the project citing monetary control concerns. At the time, Beijing railed against Libra’s plan to create a stablecoin backed by a basket of fiat currencies, saying such a digital currency could contribute to capital flight from mainland China.

The heightened chatter around China’s digital currency plans also came at a time when the government was actively promoting blockchain technology adoption. President Xi Jinping declared in October 2019 that blockchain will become a “core” technology in the country. Critics of China’s pro-blockchain stance said the country will not seek to promote the more decentralized aspects of the technology.

Various state and pollical media organizations were also waxing lyrical about blockchain utilization in China. However, this wave of positive blockchain sentiment did not extend towards crypto with the country’s government firmly maintaining its “blockchain, not crypto stance.”

As previously reported by Blockonomi, the renewed crypto crackdown saw five cryptocurrency exchanges being forced out of business. This fresh virtual currency prohibition seemed to focus on over-the-counter (OTC) digital asset trading desks.

China did remove Bitcoin mining from a list of prohibited industrial activities. However, several provinces in the country are demanding that crypto miners reduce their energy consumption during the dry season months to allow for ample power supply for retail consumers.

Central Banks Looking at Sovereign Digital Currencies

Several central banks have also come out to confirm or deny reports of developing their own CBDCs.

Stakeholders at the European Central Bank (ECB) and the European Union (EU) as a whole have also called for the creation of a digital Euro. Some policymakers argue that such a move is necessary to not only combat private cryptos like Libra but to also stay apace with China in the emerging digital economy landscape.

Escaping the Dollar: China, Russia & Others Mull Shared Digital Currency

Leaders from the countries constituting the BRICS bloc — China, Russia, India, Brazil, and South Africa — have discussed the creation of a shared digital currency that would be aimed at trade settlements and further moving the participating nations away from the long shadow of the U.S. dollar.

Reported by Russian media outlet RBC, the discussions arose out of one of the economic and political bloc’s business council meetings this week, wherein BRICS officials formally considered such an effort for the first time.

No concrete plans resulted from the dialogue, so would-be specifics are lacking for now and it’s possible the project will never take off or will do so much later after considerable changes. So don’t call it digital money just yet.

“It will not be money, we can say that it will be a paperless document flow to facilitate transactions,” argued Nikita Kulikov, who was present at the council meeting.

Whatever happens, it is significant that the BRICS nations have even considered the possibility of creating their own blockchain settlement system, as they comprise some of the world’s most influential emerging economies and are collectively home to more than 3 billion people. If BRICS has considered a shared digital currency, then others will too, and the consequences of that could be deep and long-lasting.

Dawn of De-Dollarization: Russia as Case Study

Efforts to “de-dollarize” have been growing on the world stage recently, and nowhere has that dynamic been clearer than in Russia, with the country’s participation in the aforementioned BRICS discussions being just the latest happening in its campaign to transcend the dollar’s significance.

For example, various proposals for state-backed digital currency efforts have been put forth in Russia over the past two years, all of them made against the backdrop of Russia’s top leaders wanting ways to give the country more freedom from USD and Western trade sanctions.

Last summer, Andrey Kostin, the head of major Russian bank VTB, charted out a path for how the nation could use fewer dollars in international transactions. Since then, related ideas have rolled in from Russian officials about how cryptocurrency tech could play a role in the country’s de-dollarization drive. Proposals have ranged from gold or oil-backed crypto to a stablecoin pegged to the Russian ruble.

“[A]n oil-backed cryptocurrency would allow oil producing countries to avoid any financial and trade restrictions that have become excessive in recent years,” former Russian energy minister Igor Yusufov said in October 2018. One month later, State Duma finance committee chairman Anatoly Aksakov proposed the creation of the “crypto-ruble” that would be backed by Russia’s central bank.

Relatedly, Russian officials have also participated in discussions with colleagues from the Eurasian Economic Union (EEU), which Russia heads up along with Armenia, Belarus, Kazakhstan, and Kyrgyzstan, to create a shared digital currency for the bloc that could be launched as early as 2020.

As Alexey Moiseyev, Russia’s deputy finance minister at the time, explained of the EEU initiative:

“The number of [domestic firms] currently under sanctions keeps increasing, and we hear threats that more sanctions will be introduced. So we have to react by creating reliable systems of international payments that are not pegged to the U.S. dollar.”

In a similar vein, Chinese officials have said a large motivation behind their ongoing digital yuan effort is to further entrench China’s monetary sovereignty — an implicit swipe at the specter of the U.S. dollar.

Between even just Russia and China then, there is certainly the political will within BRICS to push ahead on work that could help them move away from USD. It remains to be seen if the bloc will take the matter forward, but the entire affair could be a key geopolitical thread to watch going forward.

Central Bank Digital Currency Efforts Explode Ahead of China Crypto Launch

If you told someone on Wall Street or a central bank official ten years ago that there would be sovereign digital currencies, they likely would’ve laughed. But, these digital currencies are becoming reality. And quick.

Central Banks Going All-In On Crypto?

CoinDesk reported that the Banque de France has just doubled down on its digital asset ambitions. A job opening published in the middle of last month mentioned the central bank’s need for an analyst with experience in crypto-economics, game theory and public or private blockchain.

The report also noted that France’s monetary authority is looking for an individual to research the use of blockchain in traditional banking.

The same CoinDesk released the abovementioned report, the Bank for International Settlements (BIS) revealed that it would be onboarding a key individual: Benoit Coeure, outgoing member of the executive board of the European Central Bank.

Coeure, who previously called Bitcoin an “evil spawn of the financial crisis,’ will be leading the BIS’ Innovation Hub, which is a new branch of the banking entity that has made cryptocurrencies one of its primary focuses.

While the BIS announcement regarding this news made no mention of cryptocurrency, the BIS has supported central bank digital currencies in the past. Agustín Carstens, the head of BIS, said earlier this year:

“Many central banks are working on it; we are working on it, supporting them.”

These latest tidbits of news come just a few weeks after a report revealed that Canada is considering its own cryptocurrency. Per previous reports from this outlet, an internal slide deck presented to Bank of Canada Governor Stephen Poloz revealed a proposed central bank digital currency project.

The proposed coin would be widely available,” an eventually mandatory alternative to paper fiat, would be able to collect information about consumers, and would combat the “direct threat” of Bitcoin and other decentralized and “unbacked” money systems.

Response to China

While it may be a coincidence that all this work towards central bank/fiat-backed digital currencies is happening at once, it seems that it’s in response to those that are currently ahead of the game: the Chinese government and the People’s Bank of China.

Just last month, China’s President Xi Jinping told the Chinese people that they should start adopting blockchain as a “core technology” to bolster an array of industries, including healthcare and finance.

Also, the past months have seen reports reveal that China is on the verge of launching a dual-layered digital money system that may have the potential to become the nation’s primary medium of exchange.

The Race for Digitization

It is likely that we’re going to see a sort of “blockchain arms race” take place over the next couple of years, which will see countries and companies all over the globe duke it out for how best to use this technology.

There will likely be a focus on centralized cryptocurrencies due to the value they provide; the aforementioned Bank of Canada slide deck mentioned that banknotes are quickly becoming obsolete and expensive, while decentralized cryptocurrencies have begun to pose a threat to monetary policy.

This impending arms race will be of utmost importance, analysts have asserted, with Anthony Pompliano, formerly of Facebook and currently of cryptocurrency investment firm Morgan Creek Digital asserting that the United States would “gain a [monetary/economic] advantage” and “capture the imagination of hundreds of millions of people” if it launched a digital money system before China did.

The post The Problems with Fiat Currency & How It’s About to Go Digital appeared first on Blockonomi.

Where Binance has really made its impact known is with its penchant for innovation and pushing the boundaries of what services an exchange can offer. Exchanges are polarizing in the crypto sphere, and rightfully so, but Binance has not only produced one of the best market performing cryptocurrencies — its native BNB coin — but recently launched a DEX on its native Binance Chain — the exchange’s own blockchain.

Coinciding with recent moves like CZ Zhao’s public delisting of BSV, the controversial ‘Bitcoin Satoshi’s Vision’ run by polarizing figure Craig Wright, the launch of their Singapore exchange, and its mainnet swap of the BNB token from Ethereum to the Binance Chain, Binance’s new blockchain is an intriguing development for one of cryptocurrency’s flagship firms.

Binance is rarely out of the news, after their recent hack and announcement of soon-to-be margin trading, we thought we would take a closer look at the company and their impact on the industry.

The Binance Chain and Competing With Public Blockchains

Binance officially announced the ‘Binance Chain,’ a public blockchain focusing on the exchange of digital assets, early last year. Since then, the concept has undergone some optimizations and changes that have transformed the public blockchain into a token launching and trading platform, reportedly attempting to lure crypto projects away from Ethereum and to its Binance Chain — with the hopes that its massive trading business can prove an attractive bait.

The draw of Binance’s exchange business does have some explicit advantages. Recent projects that have launched on the exclusive ‘Binance Launchpad’ have raised millions of dollars in mere minutes. For example, BitTorrent’s sale on the launchpad raised $7.2 million in under 15 minutes, and more obscure project, Fetch.AI, hauled in $6 million in 22 seconds.

The Binance Chain has some gravitational effects of its own on market prices. Recently, Mithril, an Ethereum-based social media platform, announced it was migrating its tokens onto the Binance Chain, sparking a 66 percent surge in the token’s price.

Effects on market prices and crowdfunding draw aside, Binance Chain and the recent launch of the much-anticipated DEX on the chain ahead of schedule is indicative of Binance’s vision for the future. Binance intends for Binance Chain and its DEX to become the foremost option of crypto platforms and traders for decentralized swapping of tokens, fueled by its BNB ecosystem.

Read: Our Review of the Binance DEX

However, the chain is not truly decentralized yet, and the consensus is formed via a federation of large validators and an eventual move to proof-of-stake.

Many industry observers view decentralized exchanges (DEXs) as the inevitable future of token swaps considering the endemic problems of centralized exchanges, but DEXs have negligible trading volumes to their centralized counterparts still.

Binance Chain and its DEX are explicitly designed for speed and performance of trades, not smart contracts to compete on the broader perspective taken by Ethereum. While the emerging competition on platforms like Ethereum — such as Airswap — are competitors to Binance’s DEX, Binance seems to be banking on the fact that incentives and their trading dominance should enable the Binance Chain to mitigate any potential market share loss should token swaps transition to DEXs in the long-term.

Binance will also face rising competition from other exchanges looking to build DEX platforms. Both OKEx and Huobi have discussed standalone DEXs as part of their future plans, with OKEx, who is also based in Malta, set to launch their platform in the early summer.

As exchanges look to put the well-founded concerns of their centralized models and security risks behind them, DEXs present a compelling solution. Centralized exchanges models are not going away anytime soon, but we may be seeing the early stages of an expansive trend towards more decentralized trading and financial platforms.

Extending Their Fiat-to-Crypto Services, KYC/AML, and Looking Ahead

Binance has not stopped exclusively with the development of Binance Chain. They are pushing into new jurisdictions, launching a fiat gateway in Singapore and providing credit/debit card purchases for users on its main exchange using Simplex as the payment processor.

Binance has even partnered with blockchain forensics analysis companies CipherTrace for improved KYC/AML processes as part of its most recent compliance push. The exchange also works with real-time blockchain analysis company Chainalysis and KYC firm IdentityMind.

Add in other facets of Binance’s business such as strong project backing with its Binance Labs incubator, such as with Nym Technologies, and the exchange’s work with its Blockchain Charity Foundation and Binance’s widening focus in the industry becomes more clear.

The embark into a DEX-focused business model in the long-term has several advantages for Binance also. Binance DEX does not hold customer assets, and Binance Chain supports a suite of other wallets outside of its TrustWallet — such as several hardware wallets. Binance did not receive VC funding either, which has granted them broad freedom to pursue the path that they want, fueled by the exchange’s climbing profits.

Additionally, Binance occupies a unique position regarding regulatory developments. With its home firmly in the crypto haven island of Malta, Binance can operate with more flexibility than most exchanges today. However, the regulatory landscape around the world is still uncertain at best, and Binance’s push into its DEX may prove a prudent business decision for multiple reasons — one of them being the growth of their exchange business without the centralized liabilities of its current form, such as security threats of being a custodial exchange for customer funds.

Binance deftly circumvented trading fiat currency pairs in the early stages of the cryptocurrency boom following late 2017, enabling them to remain outside of the jurisdictional ire of governments, particularly the U.S. Combined with its push into better compliance, and Binance seems well-positioned to avoid any regulatory catastrophes anytime soon.

What’s clear is that Binance has an unconventional approach to traditional notions of Silicon Valley class startups. Speculation has highlighted how Binance may eventually transition their DEX to the control of BNB users, and as cited by Pete Rizzo in Coindesk, would be a ‘viable crypto-native exit strategy’ different from building the business until an eventual IPO.

Whatever the case may be, Binance has solidified itself as a mercurial case study in a business model not because it is a powerhouse with an unconventional approach, but because it is a peculiar company in an even more obscure market — cryptocurrencies.

The post The Binance Powerhouse: A Look at Their Flurry of Moves & Future Progress   appeared first on Blockonomi.

Nowadays, Bytecoin can be found on most major exchanges. But the prehistory of this proto-privacy coin contains a microcosm of the industry as a whole. Therefore, it might give clues as to the direction cryptocurrency will take in the future.

The Prehistory of Bytecoin

To talk about the origins of Bytecoin, we first have to talk about the origins of its much more famous and wealthy cousin, Bitcoin. In the white paper authored by the still-unknown entity Satoshi Nakamoto in 2008, Bitcoin is laid out as a populist alternative to the traditional system of using trusted third parties, like banks, to move money from person to person. Indeed, this new Bitcoin was designed to be a purely peer-to-peer system, eschewing trusted third parties for rules written directly into the code. In theory, at least, Bitcoin could be transferred fairly anonymously from one person to another, with only the blockchain and the folks involved knowing about it.

This conjures up images of cypherpunks trading revolutionary secrets and building neo-hippie communes, linked together by love and peace and many, many wires.

The reality was quite a bit different. Bitcoin’s original huge use case was as the currency of choice for the Silk Road online black market. Here, Bitcoin could be traded anonymously – at least, in theory – for drugs, weapons, and other illegal fare.

The ultimate failure of Silk Road (and its successors) and the U.S. government’s confiscation of millions of dollars in Bitcoin revealed that the allegedly untraceable Bitcoin wasn’t so untraceable after all. With a little bit of sleuthing, it was possible to link Bitcoin addresses and payments to online identities. Those online identities could then be linked to the real folks behind the screen, leading to arrests and confiscations.

Enter CryptoNote

CryptoNote was an attempt to address these privacy coins within Bitcoin. The 2013 CryptoNote white paper explicitly compared itself to Bitcoin, presenting itself as the pro-privacy alternative due to its use of multiple signatures instead of Bitcoin’s simpler ledger system.

Under significant amounts of complicated coding, the problem comes down to Bitcoin’s linkable addresses. CryptoNote directly solves this problem.

“Classic Bitcoin addresses, once being published, become unambiguous identifiers for incoming payments, linking them together and tying to the recipient’s pseudonyms. If someone wants to receive an ‘untied’ transaction, he should convey his address to the sender by a private channel. If he wants to receive different transactions which cannot be proven to belong to the same owner he should generate all the different addresses and never publish them in his own pseudonym,”

The CryptoNote developers explained.

“We propose a solution allowing a user to publish a single address and receive unconditional unlinkable payments. The destination of each CryptoNote output (by default) is a public key, derived from recipient’s address and sender’s random data. The main advantage against Bitcoin is that every destination key is unique by default (unless the sender uses the same data for each of his transactions to the same recipient). Hence, there is no such issue as ‘address reuse’ by design, and no observer can determine if any transactions were sent to a specific address or link two addresses together.”

The Birth of Bytecoin

Bytecoin was the first cryptocurrency to adopt the CryptoNote standard, immediately presenting itself as the pro-privacy Bitcoin alternative.

Early Bytecoin developer Harry Ullman told CCN in an interview – conducted via email, of course, to preserve his privacy – that Bitcoin’s algorithm was tweaked using CryptoNote as a base to create CryptoNight. The ultimate goal was completely unlinkable transactions.

“[Bitcoin’s] blockchain is a ledger open to anyone, which makes any payment traceable and linkable,” Ullman said. “However, we believe that financial privacy is an important feature of electronic cash. Your transactions history should not be accessible to third parties, no matter if it’s government or marketers. To address this issue Bytecoin has made sophisticated adjustments to the original cryptocurrency design. We were first to introduce both ring signature and one-time private keys.”

The Real Birth of Bytecoin

Here’s where things get sticky. There is disagreement in the privacy coin community as to exactly when Bytecoin was created and by whom and what the developers’ ultimate goals were. This is complicated by the very nature of Bytecoin as a privacy-focused coin.

In a 2014 Reddit thread, The creator of rival privacy coin Monero, Riccardo Spagni, using the handle fluffyponyza outlined the highlights of the debate thus far.

The Bytecoin blockchain allegedly began in 2012, during which time more than 80 percent of the coin was pre-mined – 151 billion of 184 billion possible coins.

How is this possible, given that the CryptoNote white paper was only published in October 2013?

There are several possibilities…

The Bytecoin blockchain could have been falsified, or the CryptoNote developers could have formed Bytecoin in secret, pre-mined it, and then released the open-source technology to the rest of the world with a hefty head start in 2014.

“The blockchain was not publicly observable or observed for those two years,” fluffyponyza wrote. “We have no reason to believe it is true, and even if it was true it still means that ~151 billion of the 184 billion BCN (82%) were mined prior to its public release.”

The developer added that there are more questions surrounding who exactly wrote what, when, and why.

“Had the BCN network started in November (2013) nobody would be questioning it. Rather, it stands to reason, by all accounts, that the individual(s) behind the CryptoNote whitepaper either wrote the initial code and gave it to the Bytecoin developer(s) who then ran with this, falsified a blockchain (trivial), and released it publicly in March after blockchain falsification was complete,”

fluffyponyza said.

“The BCN mining code shipped purposely crippled, presumably as a way of making the falsified blockchain seem legitimate. Not just weird or written by a cryptographer who doesn’t know how to optimise, but purposely crippled for slow mining…Did nobody care to optimise the hashing code in two years, not even to improve the amount of time it takes to download and verify a blockchain from scratch? I find that unlikely.”

Bytecoin, Today and Tomorrow

As of February 2019, Bytecoin carries a per-coin price of $0.000586 with a total market cap of just over $107 million. Its most famous competitor, Monero, is priced at $43.74 with a market cap of nearly $733 million.

This tells a story, and it’s surprisingly not about Bytecoin’s somewhat shady past or Monero’s recent dominance. It describes a market where coins aimed at transferring money anonymously command sums measured in millions and even billions of dollars. Whether the controversy surrounding Bytecoin is deserved remains an open question. However, it’s clear that privacy coins have carved out a significant niche in the crypto world, and their influence is only going to continue to grow.

References

1. Bitcoin: A Peer-to-Peer Electronic Cash System, Bitcoin.org
2. https://www.coindesk.com/bitcoin-milestones-silk-road-goes-dark-bitcoin-survives-its-biggest-markets-demise/
3. https://cryptonote.org/whitepaper.pdf
4. https://www.ccn.com/interview-harry-ullman-bytecoin/
5. https://np.reddit.com/r/Monero/comments/26we1g/why_monero_and_not_bytecoin/
6. https://coinmarketcap.com/currencies/bytecoin-bcn/
7. https://coinmarketcap.com/currencies/monero/

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