JPMorgan CEO warns he will fire any employee trading Bitcoin for being “stupid.”


 
Tough stand: Dimon has warned that he will fire JPMorgan traders who traded in bitcoin ‘in a second. For two reasons: It’s against our rules, and they’re stupid. And both are dangerous.’ — AFP

NEW YORK: JPMorgan Chase & Co chief executive officer Jamie Dimon said he will fire any employee trading bitcoin for being “stupid.”

The cryptocurrency “won’t end well,” he told an investor conference in New York on Tuesday, predicting it will eventually blow up. “It’s a fraud” and “worse than tulip bulbs.”

If a JPMorgan trader began trading in bitcoin, he said: “I’d fire them in a second. For two reasons: It’s against our rules, and they’re stupid. And both are dangerous.”

Bitcoin has soared in recent months, spurred by greater acceptance of the blockchain technology that underpins the exchange method and optimism that faster transaction times will encourage broader use of the cryptocurrency.

Prices have climbed more than four-fold this year – a run that has drawn debate over whether that’s a bubble.

Bitcoin initially slipped after Dimon’s remarks. It was down as much as 2.7% before recovering.

Last week, it slumped after reports that China plans to ban trading of virtual currencies on domestic exchanges, dealing another blow to the US$150bil cryptocurrency market.

Tulips are a reference to the mania that swept Holland in the 17th century, with speculators driving up prices of virtually worthless tulip bulbs to exorbitant levels.

That didn’t end well.

In bitcoin’s case, Dimon said he’s sceptical authorities will allow a currency to exist without state oversight, especially if something goes wrong.

“Someone’s going to get killed and then the government’s going to come down,” he said.

“You just saw in China, governments like to control their money supply.”

Dimon differentiated between the bitcoin currency and the underlying blockchain technology, which he said can be useful.

Still, he said banks’ application of blockchain “won’t be overnight.”

The bank chief said he wouldn’t short bitcoin because there’s no telling how high it will go before it collapses.

The best argument he’s heard, he said, is that it can be useful to people in places with no other options – so long as the supply of coins doesn’t surge.

“If you were in Venezuela or Ecuador or North Korea or a bunch of parts like that, or if you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin than US dollars,” he said.

“So there may be a market for that, but it’d be a limited market.”— Bloomberg

 

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Who created Bitcoin? How? Why? The long search may not be over


 

SAN FRANCISCO  — Who is Satoshi Nakamoto? For many in the tech world, the identity of bitcoin’s elusive creator has been a long-running parlor game. And the speculation might not be over.

Australian entrepreneur Craig Steven Wright, who announced Monday that he founded the digital currency , convinced at least one longtime bitcoin contributor that he’s the real deal. He managed that feat via a technical demonstration involving Nakamoto’s secret bitcoin keys. But Wright’s public documentation, which he posted online Monday , underwhelmed others and left the question of Nakamoto’s true identity far from settled.

“There’s no way you can conclusively prove that you are the creator of bitcoin,” said Jerry Brito, executive director of Coin Center, a Washington, D.C.-based crypto-currency think tank, who is skeptical of Wright’s claims.

Tracking a pseudonymous cryptographic genius would be challenging under the best circumstances. And here we’re talking someone who invented a way for people to send money around the world anonymously, without banks or national currencies. Someone who apparently disappeared five years ago for unknown reasons.

None of that has stopped people from trying. Journalists, researchers and amateur detectives have scoured Nakamoto’s emails and online posts, plus the original bitcoin code, for unusual phrases, cultural references and other potential clues to their author.

One of the most celebrated candidates — to his own dismay — was an unassuming Japanese-American engineer who found himself in the cross-hairs of Newsweek magazine in 2014.

A Newsweek cover story fingered Dorian Satoshi Nakamoto, a retired resident of suburban Los Angeles County, after citing circumstantial clues and a vague comment that Nakamoto made when confronted briefly on his front doorstep. The article sparked a media frenzy and a car chase with reporters that ended at the Los Angeles offices of The Associated Press — where Dorian Nakamoto emphatically denied any involvement with bitcoin.

An earlier contender named in a 2011 New Yorker magazine piece was Michael Clear, then a graduate student in cryptography at Trinity College in Dublin. The New Yorker cited some of Nakamoto’s writings, which used British slang such as “maths” for mathematics and “flat” for an apartment. It also noted that Clear had worked on currency-trading software for an Irish bank and co-authored a paper on “peer-to-peer” technology similar to that used in bitcoin.

At first, according to the New Yorker, Clear was evasive when asked at a cryptography conference if he had created bitcoin. But he later denied it repeatedly. He also suggested another candidate to the New Yorker reporter, naming Finnish researcher Vili Lehdonvirta, who studied virtual currencies and created video games.

“I would love to say that I’m Satoshi, because bitcoin is very clever,” Lehdonvirta told the New Yorker, after laughing for several seconds. “But it’s not me.”

Speculation has also focused on a Hungarian-American computer scientist named Nick Szabo, who was called a likely candidate by linguistic experts who conducted their own “reverse textual analysis” — essentially, looking for distinctive phrases or word patterns — on an early white paper by the bitcoin creator.

The only problem? Szabo, who has worked on other digital currencies, has repeatedly denied creating bitcoin.

Other scientists’ names have surfaced over the years; some theories pose the notion of two or three working together. But denials have usually followed each new mention.

At one point, two Israeli mathematicians floated, and later retracted, the notion that bitcoin was created by the founder of Silk Road, an online bazaar known for trade in various illicit goods.

Conspiracy theorists have even speculated it could have been the work of some shadowy government agency — no one’s saying which government — to undermine established currencies or somehow monitor online transactions. (That theory depends on the unproved notion that the creator retained the ability to decode bitcoin’s encryption.)

Vice magazine once suggested Nakamoto might be Gavin Andresen, an American software expert and early bitcoin enthusiast who has helped push bitcoin forward in Nakamoto’s absence. Andresen has denied it — and on Monday declared that he believes Wright is Nakamoto.

But other cryptocurrency enthusiasts aren’t convinced it’s Wright. The truth, they say, is still out there. – AP

Image for the news result

AP EXPLAINS: What Is Bitcoin? A Look at the Digital Currency How it work, security, vulnerability and why? 

Comments:

Indeed, the way Wright has stage-managed the latest revelations about himself seem inconsistent with what we know about Nakamoto. Wright chose to give his scoop to the BBC, the Economist, and GQ. These are all excellent publications, but none of them are known for their in-depth coverage of computer security. The real Satoshi Nakamoto should have anticipated that no one would give much weight to a GQ scoop about his identity.

Bitcoin was Nakamoto’s attempt to create a financial system that didn’t require trusting the fallible human beings that run the banking system. Yet when Wright decided to reveal his identity as Nakamoto, he chose to do it via face-to-face meetings with a handful of journalists and Bitcoin insiders instead of providing mathematically rigorous proof that anyone could verify. It’s hard to believe that’s what Nakamoto would have done.

http://www.vox.com/cards/bitcoin

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Bitcoin: cryptocurrency rising, money talks, mining boom sputters


Bitcoin_cryptocurrency

The Internet has spawned a new form of currency that’s purely digital called Bitcoin. 

Picture this — a high speed car chase with a slew of journalists trying to keep up with a celebrity as they hound him around Los Angeles, California.

The only problem is that inside the lead car isn’t Brad Pitt or even Christian Bale, but a rather unassuming 64-year-old man of Japanese descent named Dorian Nakamoto.

 The car chase started when Newsweek claimed in an article that he was the mysterious ­creator of Bitcoin who goes under the ­pseudonym Satoshi Nakamoto, after which a slew of journalists flocked to his home for comment.

Whether he is indeed the fabled founder is still unclear but the media storm revolving around Bitcoin’s creator is a sign of how much interest it’s generating in technology circles.

In this article we take a look at the concept of Bitcoin and how this so-called cryptocurrency works.

Real world, virtual ­currency 

Today, currency or money is produced by the national banks of each country and is accepted as legal tender to be exchanged for goods or services. While we take it for granted, currency is a pretty abstract concept made real by a few pieces of paper and metal which we can exchange for products that have value to us.

It used to be that countries like the United States backed up its ­currency with gold reserves but since 1971 this is no longer the case and now its value is determined by governmental regulation or law. This form of money is also known as fiat currency.

CRYPTOCURRENCY:  A strange revolution on the Net has started a form of currency known as Bitcoin.

Then we have credit cards and online payment gateways like Paypal which make it possible to conduct a transaction without ­actually exchanging hard cash.

However, when you drill down to it, the system is always based on currency produced by the national banks.

Over the past few years, though, a strange revolution on the Net has started a form of currency known as Bitcoin, ­created by private ­individuals ­without national bank or ­government involvement.

In fact, the actual creator of Bitcoin itself has been shrouded in mystery — although credited to Satoshi Nakamoto, the name is believed to be a pseudonym and while a few individuals have been identified, none have been definitively proven to be the elusive ­creator.

V for volatility 

Being digital, Bitcoin itself has no built-in intrinsic value, except what its users assign to it. As such, the price of Bitcoin can vary quite a bit.

As a sign perhaps that the ­currency is gaining more ­acceptance, the value of Bitcoin has gone up in the last few years — today, the price of a single Bitcoin hovers at around RM1,300, although it has gone up as high as RM5,000.

VALUABLE: Today, the price of a single Bitcoin hovers at around RM1,300, although it has gone up as high as RM5,000. — AFP

When it first started, a single Bitcoin was worth very little, and slowly rose to US$1 (about RM3.10) and finally to its current value.

However, if you’re thinking of buying Bitcoin as a form of investment, do be aware that the sheer volatility of Bitcoin does mean that your virtual currency could be worth nothing in the future, or it could be worth a lot.

Is it legal?

This is perhaps the crux of the matter — is Bitcoin legal or illegal?

So far, Bitcoin itself is not illegal and in most countries, there are no restrictions to its use amongst ­parties who accept it as currency.

However, some countries have moved to limit the use of Bitcoin. China, for example, does not allow financial institutions to deal with Bitcoin.

LEGAL TENDER?: A shop in Hong Kong. Some countries have moved to limit the use of Bitcoin. China, for example, does not allow financial institutions to deal with Bitcoin. — AFP

The situation is similar here and Bank Negara has released a short official statement on Bitcoin in January, stating that “… Bitcoin is not recognised as legal tender in Malaysia. The Central Bank does not regulate the operations of Bitcoin. The public is therefore advised to be cautious of the risks associated with the usage of such digital currency.”

Last month, The Star ran a story on the dangers of Bitcoin (Be wary of virtual money, M’sians told) but the currency is still widely used in ­technology circles. According to Nook Malaysia chief executive Daniel Yap, the fact that it is not “legal tender” does not make its use a crime. It simply means that Bitcoin is not regulated by Bank Negara and thus will not be recognised by any bank or financial institution in this country as legal tender.

However, it is not illegal for ­private businesses and users to deal in Bitcoin and Nook Malaysia is one of the local companies that accepts Bitcoin.

According to Yap, even if the government moved to ban Bitcoin use, it would be difficult to stop private individuals from dealing in it.

What is Bitcoin?

Bitcoin as a concept is simple — it’s essentially digital currency. Dig deeper into the concept, however, and it gets fairly complicated.

Bitcoin (or BTC which is also the symbol used for the currency) is defined as a form of ­cryptocurrency that utilises peer-to-peer ­transactions, a decentralised system where users across the Internet handle the payment network ­without a central authority or any kind of middlemen.

Users can make transactions and get paid in Bitcoin almost immediately, much like how it works with more conventional systems like PayPal.

However, where it differs is that because Bitcoin transactions are managed by a peer-to-peer system without various companies (such as your credit card company or PayPal) taking a “cut” of the money, the transaction charge for dealing in Bitcoin is either nil or a lot lower.

As the transactions are processed by machines on the peer-to-peer network, the “peers” within the network actually receive the ­transaction fee if there is one. This means that transaction fees are received by the community itself instead of a third party.

As for security, users on peer-to-peer network who run the full Bitcoin client have a copy of a virtual ledger called the “block chain” — this contains a list of every Bitcoin transaction ever processed.

The authenticity of each ­transaction in this ledger is ­authenticated by digital signatures and as every person running the full Bitcoin client has a copy of it, the transactions are also checked against others in the network.

As you may well imagine, the block chain is quite large and ­getting larger every day — last we checked, it was about 14GB in size.

Get started

Using Bitcoin to pay for goods and services is actually easier than trying to explain it. To get started, all a user needs is to install the ­wallet application, which is ­available for Windows, Mac OS X, Linux and even Android.

At its most basic, the wallet app allows users to send and receive Bitcoin currency. While you can run a dedicated application on your PC to send and receive Bitcoins, some sites like Blockchain.info also allow you to perform transactions using a simple web browser.

[VIRTUAL MONEY: A digital wallet used to store Bitcoins is displayed at a Bitcoin conference on at the Javits Center in New York City. — AFP

To be clear, sites like Blockchain.info are not “online banks” and do not actually keep your Bitcoin ­currency — they simply make ­transactions more convenient.

Android smartphone users can download the Blockchain app for sending and receiving Bitcoin ­currency, but due to Apple’s ­restrictions, there is no such app on iOS.

To receive money, every person gets a public address, which is a long string of letters and numbers. For convenience, this string of ­letters and numbers can also be represented by a QR code, which can be scanned by smartphones with a Bitcoin app.

This public address allows other users to deposit money into your account but not take money out from it.

The current value of a ­single Bitcoin is hovering at about RM1,300, which is probably too large to pay for most goods or ­services. However, it is possible to send a fraction of a Bitcoin — ­currently, a single Bitcoin can be split up into a fraction of up to a million, so you can send it in much smaller denominations.

A Numoni Bitcoin Automatic Vending Machine

Once you install the wallet application, you can actually get bitcoins either by receiving it from other users, or buying it from an “exchange” or simply mining for it.

An exchange is an online ­company that will sell you Bitcoins for real money. A relatively new development in this country is the so-called Bictoin AVM (automatic vending machines), where you trade real cash for Bitcoin.

When we first started writing this story, there were two Bitcoin AVMs — one in Bangsar Shopping Complex in Kuala Lumpur and another in Gurney Plaza, Penang. There is also a local website at ­cryptomarket.my which sells Bitcoin Scratch Cards of various denominations similar to mobile phone credit top ups.

Private address

Every Bitcoin wallet app has what is called a private address which is similar to your public address in that it’s also represented by a long string of letters and numbers. This private address is essentially the key to unlocking your wallet and allows you to send out Bitcoin currency to others.

Most Bitcoin wallet apps hide your private address from you since it’s not necessary to know it to send or receive Bitcoin.

However, most wallet apps allow you to “backup” this private address by printing it out or writing it down to be stored in a safe place.

It’s important to never reveal your private address, as this ­represents your actual wallet. Anybody who knows your private address can effectively take control of your ­wallet and transfer all your Bitcoin out of it into their own ­wallet.

Mining for more

Mining is the term used to refer to machines that run special software to “mine” for bitcoins. Although the term mining is used, what a machine that runs the ­mining ­software ­actually does is process ­transactions and secure the network, as well as keep everyone in the Bitcoin ­network ­synchronised.

Processing of transactions and securing the network involves a ­highly secure and complicated encryption system and as such requires pretty hefty computing power.

In the early days of Bitcoin, ­individual users could easily use a PC to mine for Bitcoins. But as more Bitcoins have surfaced, the system, by design, has become more ­complicated and requires specialised machines running powerful ASIC (Application Specific Integrated Circuit) chips.

As such, a number of companies have sprung up around the world that run specialised machines ­dedicated to mining for Bitcoins.

As an incentive for contributing to the system, Bitcoin miners get a twofold reward — first, in the form of transaction fees, and second, the system itself can reward miners by producing new Bitcoins.

NOT EASY TO MINE: Bitcoin mining hardware — each specialised ASIC-based mining machine is equivalent to 180 PCs! — AFP

Don’t expect to be able to easily mine for Bitcoins using a regular PC — each specialised ASIC-based ­mining machine is equivalent to 180 PCs with powerful graphic chips installed and as such, using a regular PC for mining could take years to yield any Bitcoins.

Regular users who still want to try mining for Bitcoins can band together to share computing power over a network by joining what’s called a “mining pool”. If you’re interested in mining for Bitcoins check out www.bitcoinmining.com.

Future of Bitcoin

In many ways, Bitcoin is still in its infancy with many countries ­taking a wait-and-see approach as to whether to accept as legal tender.

This lack of regulation also means that there is effectively no enforcement when there is theft — while there are ways to trace the perpetrators, there is no way to force Bitcoin thieves to return what they’ve stolen.

Money Talks

There are hundreds of ­vendors across the world that accept Bitcoin as a valid form of ­currency in exchange for goods and services.

While Bitcoin acceptance has grown in many neighbouring countries, including Singapore and Thailand, according to coinmap.org, which keeps a list of worldwide businesses that accept Bitcoin, only three businesses in Malaysia currently accept Bitcoin as a form of payment. The three are The Nook Bangsar (nook.my), Ked.ai (ked.ai) and Footsteps (www.footsteps.com.my).

Daniel Yap started accepting Bitcoins as a

Daniel Yap started accepting Bitcoins as a “social experiment” since November, to help encourage its use in this country.

The chief executive officer of Nook Malaysia, Daniel Yap, says he started accepting Bitcoins as a “social experiment” since November. Yap, who operates a co-working space in Bangsar, started to accept Bitcoin to help encourage its use in this country.

“If you don’t encourage people to use it, then it will never be adopted,” he said

“Bitcoin may not be the ­ultimate form of ­cryptocurrency or decentralised currency, but it’s certainly the most well known. But the whole ­movement is beyond Bitcoin, as it’s about going towards unregulated ­currency,” he said.

Right now, though, the ­percentage of customers who pay via Bitcoin for Nook’s co-working space is very small, according to Yap, and it’s mostly foreigners.

Muaaz Mohamad Nor, owner of Footsteps who operates kayak tours and sells outdoor gear, says that the number of customers who pay via Bitcoin are similarly small, although in his case, they’re mostly Malaysians.

“My opinion is that there are three factors that affect Bitcoin adoption — education, Internet access and desperation,” said Muaaz.

Muaaz Mohamad Nor says that accepting Bitcoin is better for a 'mom-and-pop' style shop like his.
Muaaz Mohamad Nor says that accepting Bitcoin is better for a ‘mom-and-pop’ style shop like his.

Muaaz explains that in countries where the first two criteria are met, weak currency will usually push people to start adopting Bitcoin as a form of currency.

“The practical reason for me to start accepting Bitcoin is that it’s relatively low-cost for mom and pop shops like mine, and in the wider view, I like the idea of an alternative to fiat currency,” he said.

Unlike fiat currency, which derives its value from goverment regulation or law, Bitcoin’s value is determined by its users and the value they place on the ­currency.

“If you look at the value of Bitcoin, it suffered three major crashes over the years but its value has quickly risen again. You can’t say that about most other currency crashes,” he said.

According to Muaaz, he used to own some 5,000 Bitcoins which he bought for just five euros in 2007 when he was studying and living in Germany.

“Back then it was hip to pay for stuff using Bitcoin,” he said. When asked about how much of those 5,000 Bitcoins he still holds, Muaaz laughs and said, “None of it!” At current exchange rates, if he had held on it would be worth some RM6.35mil.

However, both Muaaz and Yap have opted to hold on to the Bitcoins they’ve obtained from their businesses rather than ­convert it to cash.

Bitcoin business: Arsyan Ismail says that he likes Bitcoin because of the decentralised, open and instantaneous nature of the cryptocurrency.

Arsyan Ismail says that he likes Bitcoin because of the decentralised, open and instantaneous nature of the cryptocurrency.

Arsyan Ismail, chief excutive officer of 1337 Tech Sdn Bhd and creator of. Ked.ai, an online ­marketplace that also accepts Bitcoin, says that he likes it because of the decentralised, open and instantaneous nature of the cryptocurrency.

Currently, Arsyan enables merchants who sell products on Ked.ai to accept Bitcoin and will convert it to cash for them automatically. However, like the other local online retailers, ­payments made with Bitcoin on Ked.ai still amounts to a very small ­percentage.

Arsyan says the biggest hurdle to Bitcoin acceptance is that most people find it very hard to understand the concept, and there are no local exchanges for buying and selling Bitcoin.

“What I’ve seen in Malaysia is that there are two sides — a community of miners who have Bitcoins but don’t know where to sell it, and on the other side, a group who wants to buy Bitcoin but don’t know where to get it,” he said.

The function of Bitcoin exchanges is to bring these two groups together but without an official one the flow of Bitcoins from miners to buyers is a little more complicated, he said.

Contributed by Tan Kit Hoong The Star/Asia News Network

Bitcoin Mining Boom Sputters as Prospectors Face Losses 
Bitcoin_Boom sputters

Portland: The bitcoin mining rush is sputtering.

Speculators, known as miners, use powerful computers to solve complex software problems and verify transactions to unlock new bitcoins. They’re finding that the enterprise isn’t as profitable as it once was.

Drawn by the virtual currency’s jump in value last year, digital prospectors have turned the mining industry into an arms race as they buy expensive computing equipment and gobble up electricity. While that worked well as long as bitcoin’s value kept rising, smaller players are now being crowded out by bigger competition, high utility bills and declining prices.

“If you mine at the moment, you have to be very lucky to get anything,” said Mehmet Vatansever, who bought $16,000 worth of mining computers in February to chase after new bitcoins. “It’s a very difficult business.”

Mining, a nod to the excavation of minerals and metal ore, is entirely digital and part of bitcoin’s design, so that the money self-regulates supply and prevents out-of-control inflation. The mining process gets increasingly complicated as more bitcoins are created, driving demand for computing power.

Bitcoins, which jumped to more than $1,200 last year from $12, were trading at about $420 apiece yesterday, according to the CoinDesk Bitcoin Price Index, an average of prices across major global exchanges. China’s tighter controls on alternative currencies, the implosion of the Mt.Gox exchange and a U.S. Internal Revenue Service ruling that bitcoins should be taxed as a property have all weighed on the virtual currency.

Used Equipment

While he has been able to create new bitcoins, Vatansever soon discovered that his equipment was on track to earn less than his monthly utility bill of $480. After selling his computers on EBay Inc. in April, Vatansever estimates that he lost a total of about $6,000 on his mining adventure.

In the past week, miners made $14.9 million in revenue, compared with a weekly average of $25.2 million in December, according to Blockchain.info, a bitcoin-data aggregator. The figures represent the number of bitcoins mined plus transaction fees, multiplied by the dollar-based market price.

EBay now features more than 1,600 listings for mining computers, many of them used.

“The mining market has evolved from being mostly isolated ventures to more organized entrepreneurial ventures that are still racing to get an edge with increasingly fast equipment and lower electricity costs,” Gil Luria, an analyst at Wedbush Securities Inc., said in an interview. “At this point, the opportunity for individual miners is very small.”

Big Miners

While individuals give up prospecting, at least two other larger mining companies, KnCMiner and Cloud Hashing, are still generating profits. By scaling up operations, they’ve been able to save costs on cooling and power, making their computers more efficient and cost-effective. KnCMiner also sells mining computers to other miners.

KnCMiner, based in Stockholm, operates about 7,000 machines. While the mining company’s electric bill in March came to $450,000, the computers mined 21,000 bitcoins, according to co-founder Sam Cole.

Cloud Hashing, which lets people buy computing capacity in its data center and share in profits, mines about $230,000 to $260,000 worth of bitcoins a day, according to Chief Executive Officer Emmanuel Abiodun.

“We are profitable whether we sell contracts or not — through mining,” Abiodun said in an interview. “Our business model can handle volatility in pricing.”

Sales Shift

Mining-equipment suppliers are feeling the cool-down firsthand. CoinTerra Inc., a manufacturer of the powerful computers used to crunch numbers for new bitcoins, has seen new sales shrink by 30 percent in the past three weeks from the preceding period, according to CEO Ravi Iyengar.

Mining-equipment suppliers are also detecting early signs of a shift to new virtual currencies. Approximately 250 KnCMiner customers switched their orders from $10,000 computers to similarly priced alternative-currency mining machines in the past three weeks, according to Cole.

Because they are newer, designed differently and currently mined by fewer people, currencies such as Litecoin can be more profitable, according to CoinWarz, which tracks mining activity.

“The new rush right now is Litecoin,” Colin Lusk, a network engineer in Portland, Oregon, said in an interview.

While he once mined only bitcoins, Lusk now uses five of his eight machines to produce Litecoins and other virtual currencies. Created in 2011, Litecoin is similar in design to bitcoin yet requires less computing power.

A $3,500 computer can produce $25 worth of Litecoins a day for $3 in electricity, while producing $20 worth of bitcoins would cost $17, Lusk said.

Math Problem

Andrew Korb, another miner, said buying bitcoins outright is easier than participating in the mining arms race. While Korb and fellow investors have spent 900 bitcoins on mining equipment since last year, they have only generated 77 units of the virtual currency, he said.
“People do the math,” said CoinTerra’s Iyengar. “If the price goes down significantly, people realize they may be better off buying bitcoins directly from an exchange rather than buying machines.” 

Contributed by  Olga Kharif Bloomberg

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Be wary of virtual money! First Bitcoin launched in Malaysia


Bitcoin_Gold_giant bubbleBitcoin: the new gold or a giant bubble?

 

PETALINGJAYA: Malaysians have been warned against investing in virtual or Internet money as their savings could be wiped out if the exchange is hacked or runs into financial troubles.Over the last month, two major Bitcoin exchanges in Japan and Canada have gone offline, filed for bankruptcy or closed down after claiming more than US$500mil (RM1.6bil) in losses due to hacking.

In light of the controversy, Bank Negara has advised the public to be cautious of the risks involved in using digital currency, stressing that Bitcoin is not recognised as legal tender in Malaysia.

“The Central Bank does not regulate the operations of Bitcoin. The value is subject to fluctuations, (hence) the value of the investments may not be preserved,” an official told Sunday Star.

China, Thailand, Vietnam, Indonesia, Germany, France and Russia, have also issued similar warnings or banned the use of virtual currency. In Singapore, there are plans to regulate virtual currency exchanges and vending machines to address concerns that they could be used for money laundering or to fund terrorism activities.

A check by Sunday Star shows that in Malaysia, there are at least 12 local Bitcoin-related groups on Facebook, including Malaybtc Bitcoin, Bitcoin Malaysia #1 Group, Bitcoin Malaysia Open Group, Bitcoin Malaysia (Trader), Cryptocurrency Malaysia (Bitcoin, Litecoin, Dogecoin, etc) and Malaysia Bitcom Info.

Last week, Bitcoin rolled out its first auto vending machines (AVM) at the Bangsar Shopping Complex in Kuala Lumpur and Gurney Plaza in Penang. Singapore-based Numoni Pte Ltd, which developed and launched the AVMs here, estimated that there were some 2,000 Bitcoin users in Malaysia and was targeting to install 100 Bitcoins AVMs within three years.

Its CEO Norma Sit said that Bitcoins were still in demand despite different countries deliberating its acceptance.

“The AVM lets the public buy small amounts of Bitcoin, which in many countries, is seen as an international voucher that can be used to barter for goods online,” she said.

Bitcoin Malaysia founder Colbert Low said Bitcoin had many unreported successes but was unfairly put in a bad light because of the recent controversy outside of Malaysia.

On March 10, Mt Gox, the world’s biggest Bitcoin exchange filed for bankruptcy protection in the United States, two weeks after its Tokyo-based exchange reportedly took its entire operation offline and filed for bankruptcy in Japan after claiming to have lost around US$500mil (RM1.6bil) to hacking.

Admitting that there were failures in companies and individuals that provided Bitcoin services, Low stressed that the Mt Gox case was “not Bitcoin” but specific to the exchange.

He described Bitcoin as a “building block for the future” and an innovative decentralised payment system software.

“Currency pricing is just one feature.

“Using it as a speculative tool for investment is up to the individual. Due diligence is needed and you cannot blame Bitcoin for losses suffered,” he said, cautioning that like any new technology, there are risks involved and bugs to fix.

Contributed by Christina Chin The Star/Asian News Netowork

Bitcoin_AVM-malaysiaFirst Bitcoin AVM launched in M’sia

KUALA LUMPUR: Singapore-based payment transaction provider Numoni Pte Ltd has introduced the first Bitcoin auto vending machines (AVM) in Malaysia.

One month after it launched its Bitcoin AVM in Mobile World Congress 2014 in Barcelona, Spain in February 2014, Numoni has installed its Bitcoin AVMs in Bangsar Shopping Centre in Kuala Lumpur and at Gurney Plaza in Penang.

Earlier this year, Bank Negara Malaysia issued a statement announcing that the Bitcoin is not recognised as legal tender in Malaysia.

“The Central Bank does not regulate the operations of Bitcoin. The public is therefore advised to be cautious of the risks associated with the usage of such digital currency,” it had said.

Called the Numoni Nugen B2-Spirit machine, Numoni had also earlier launched its machines at four prominent locations in Singapore where people can transact.

Numoni CEO Norma Sit said while different countries are deliberating over the acceptance of Bitcoin, Bitcoin remains in demand.

“The Numoni Bitcoin Vending Machines enables the public to participate in buying small amounts of this crypto-currency that is seen in many countries as an international voucher that can be used to barter for goods online. The machines, which are assembled in Malaysia in our Senai factory, was fully developed by Numoni in Singapore since 2012,” Sit said in a statement.

Numoni targets to install 10 Bitcoin AVMs nationwide within one year and 100 AVMs within three years.

Bitcoin, a digital crypto currency, had taken centrestage on financial news recently with much focus on issues surrounding Mt Gox, a Bitcoin Exchange based in Tokyo, that was reportedly hacked. Nonetheless, investors and industry players continue to strongly support the virtual currency that is today one of the largest in the world.

Numoni has appointed BTC Future Sdn Bhd for the distribution of Bitcoin AVMs in Peninsula Malaysia.

The Numoni machines can be deployed to sell prepaid airtime and other voucher products on connection with telco gateways. Numoni will work with other industry partners in Malaysia to enable the sale of prepaid airtime on the Nugen machines with an intended roll-out in 2014.

The Numoni Bitcoin AVM reads the user’s Bitcoin QR Code, and completes the request to purchase with the insertion of fiat money. The Numoni Bitcoin AVMs can be linked to multiple Bitcoin Exchanges enabling the machines to present the best available price at the time of the requested transaction to Bitcoin customers.

Customers can buy and sell Bitcoins at Numoni Bitcoin AVMs. The machine enables users to sell their Bitcoins through a simple cash-out process working with retail merchants’ cash-out-points. Numoni has selected not to implement the cash-out mechanism in Singapore or Malaysia.

“From inception, Numoni understood that virtual currencies and mobile wallets will have tremendous impact on daily lives, in light of the incredible global penetration of mobile phones that today reaches all communities,” said Sit.

Sit added that it was a matter of time before virtual currencies are adopted to make life easier for billions who remain underserved by banks and financial institutions.

– Sunbiz@thesundaily.com

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Bitcoin creator mystery, who is the Face Behind the Bitcoin?

 

Bitcoin creator mystery, who is the Face Behind the Bitcoin?


BitcoinThis story has been appended to include a statement from Dorian Nakamoto received on March 19th when Newsweek was first contacted directly by Mr. Nakamoto’s attorney, denying his role in Bitcoin. 

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

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

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

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

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

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

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

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

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

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

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

Video: Leah McGrath Goodman discusses her article

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

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

Not even his family knew.

Satoshi Nakamoto in Lancaster, Calif. Credit: Photo via Photobucket.com via Satoshi Nakamoto (Wagumabher) Satoshi Nakamoto in Lancaster, Calif. Credit: Photo via Photobucket.com via Satoshi Nakamoto (Wagumabher) 
 

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

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

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

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

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

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

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

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

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

But he also had a warning.

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

And with that, Nakamoto’s brother hung up.

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

I plainly needed to talk to Satoshi Nakamoto face to face.

Bitcoin is a currency that lives in the world of computer code and can be sent anywhere in the world without racking up bank or exchange fees, and is then stored on a cellphone or hard drive until used again. Because the currency resides in code, it can also be lost when a hard drive crashes, or stolen if someone else accesses the keys to the code.

“The whole reason geeks get excited about Bitcoin is that it is the most efficient way to do financial transactions,” says Bitcoin’s chief scientist, Gavin Andresen, 47. He acknowledges that Bitcoin’s ease of use can also lead to easy theft and that it is safest when stored in a safe-deposit box or on a hard drive that’s not connected to the Internet. “For anyone who’s tried to wire money overseas, you can see how much easier an international Bitcoin transaction is. It’s just as easy as sending an email.”

Even so, Bitcoin is vulnerable to massive theft, fraud and scandal, which has seen the price of Bitcoins whipsaw from more than $1,200 each last year to as little as $130 in late February.

The currency has attracted the attention of the U.S. Senate, the Department of Homeland Security, the Federal Reserve, the Internal Revenue Service, the Treasury Department’s Financial Crimes Enforcement Network, the Securities and Exchange Commission and the Federal Bureau of Investigation, which in October shuttered the online black market Silk Road and seized its $3.5 million cache of Bitcoin. “The FBI is now one of the largest holders of Bitcoin in the world,” Andresen says.

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

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

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

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

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

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

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

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

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

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

Andresen says he didn’t give much thought to working for an anonymous inventor. “I am a geek,” he says simply. “I don’t care if the idea came from a good person or an evil person. Ideas stand on their own.”

Other developers were driven by “enlightened self-interest,” profit or personal politics, he says. But nearly all were intrigued by the promise of a digital currency accessible to anyone in the world that could bypass central banks at a time when the global financial system was on life support. In this respect, the launch of Bitcoin could not have been better timed.

In 2008, just before Bitcoin’s official kickoff, a somewhat stiffly written, nine-page proposal found its way onto the Internet bearing the name and email address of Satoshi Nakamoto.

The paper proposed “electronic cash” that “would allow online payments to be sent directly from one party to another without going through a financial institution,” with transactions time-stamped and viewable to all.

The masterstroke was replacing the role of banks as the trusted middlemen with Bitcoin users, who would act as sentinels for the integrity of the system, verifying transactions using their computing power in exchange for Bitcoin.

Bitcoin production is designed to move at a carefully calibrated pace to boost value and scarcity and remain inflation proof, halving its quantity every four years, and is designed to stop proliferating when Bitcoins reach a total of 21 million in 2140. (Bitcoins can be divided by up to eight decimal places, with the smallest units called “satoshis.”)

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

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

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

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

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

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

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

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

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

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

Nakamoto's house Nakamoto’s house

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“I could see my dad doing something brilliant and not accepting the greater effect of it,” says Ilene Mitchell, who works for Partnerships for Student Achievement in Beaverton, Ore. “But I honestly don’t see him being straight about it. Any normal person would be all over it. But he’s not totally a normal person.”

Nakamoto’s middle brother, Tokuo Nakamoto, who lives near his brother and mother, in Duarte, Calif., agrees. “He is very meticulous in what he does, but he is very afraid to take himself out into the media, so you will have to excuse him,” he says.

Characteristics of Satoshi Nakamoto, the Bitcoin founder, that dovetail with Dorian S. Nakamoto, the computer engineer, are numerous. Those working most closely with Bitcoin’s founder noticed several things: he seemed to be older than the other Bitcoin developers. And he worked alone.

“He didn’t seem like a young person and he seemed to be influenced by a lot of people in Silicon Valley,” says Nakamoto’s Finnish protégé, Martti Malmi. Andresen concurs: “Satoshi’s style of writing code was old-school. He used things like reverse Polish notation.”

In addition, the code was not always terribly neat, another sign that Nakamoto was not working with a team that would have cleaned up the code and streamlined it.

“Everyone who looked at his code has pretty much concluded it was a single person,” says Andresen. “We have rewritten roughly 70 percent of the code since inception. It wasn’t written with nice interfaces. It was like one big hairball. It was incredibly tight and well-written at the lower level but where functions came together it could be pretty messy.”

Satoshi Nakamoto’s 2008 online proposal also hints at his age, with the odd reference to “disk space” – something that hasn’t been an issue since the last millennium – and older research citations of contemporaries’ work going back to 1957.

The Bitcoin code is based on a network protocol that’s been established for decades. Its brilliance is not so much in the code itself, says Andresen, but in the design, which unites functions to reach multiple ends. The punctuation in the proposal is also consistent with how Dorian S. Nakamoto writes, with double spaces after periods and other format quirks.

In the debate between those who claim Nakamoto writes curiously “flawless English” for a Japanese man and those who contend otherwise, writing under both names can swerve wildly between uppercase and lowercase, full spellings and abbreviations, proper English and slang.

In his correspondences and writings, it has widely been noted that Satoshi Nakamoto alternates between British and American spellings – and, depending on his audience, veers between highly abbreviated verbiage and a more formal, polished style. Grace Mitchell says her husband does the same.

Dorian S. Nakamoto’s use of English, she says, was likely influenced by his lifelong interest in collecting model trains, many of which he imported from England as a teenager while he was still learning English.

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

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

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

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

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

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

Of course, none of this puts to rest the biggest question of all – the one that only Satoshi Nakamoto himself can answer: What has kept him from spending his hundreds of millions of dollars of Bitcoin, which he reaped when he launched the currency years ago? According to his family both he – and they – could really use the money.

Andresen says if Nakamoto is as concerned about maintaining his anonymity as he remembers the answer might be simple: He does not want to participate in the Bitcoin madness. “If you come out as the leader of Bitcoin, now you have to make appearances and presentations and comments to the press and that didn’t really fit with Satoshi’s personality,” he says. “He didn’t really want to lead it anymore. He was pretty intolerant to incompetence. And he also realized the project would go on without him.”

On the other hand, it is possible Nakamoto simply lost the private security keys to unlock his Bitcoin and cash in on his riches. Andresen, however, says he doubts it. “He was too disciplined,” he says.

If Nakamoto ever sells his Bitcoin fortune, he would likely have to do so at a legitimate Bitcoin bank or exchange, which would not only give away his identity but alert everyone from the IRS to the FBI of his movements. While Bitcoin lets its users conduct transactions anonymously, all transactions can be viewed transparently online – and everyone is watching Nakamoto’s Bitcoin to see if he spends it, says Andresen.

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

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

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

Forensic analysts Sharon Sergeant and Barbara Mathews contributed to research for this piece.

Contributed by  Leah McGrath Goodman Newsweek Mar 6, 2014

Newsweek issued a statement about this article on March 7, 2014

*** Dorian Nakamoto’s Statement Recieved on March 19, 2014:Bitcoin_Nakamoto

My name is Dorian Satoshi Nakamoto. I am the subject of the Newsweekstory on Bitcoin. I am writing this statement to clear my name.

I did not create, invent or otherwise work on Bitcoin. I unconditionally deny the Newsweek report.

Dorian Satoshi Nakamoto

Images for Bitcoin Nakamoto’s images AP

The first time I heard the term “bitcoin” was from my son in mid-February 2014. After being contacted by a reporter, my son called me and used the word,which I had never before heard. Shortly thereafter, the reporter confronted me at my home. I called the police. I never consented to speak with the reporter. In an ensuing discussion with a reporter from the Associated Press, I called the technology “bitcom.” 

I was still unfamiliar with the term.My background is in engineering. I also have the ability to program. My most recent job was as an electrical engineer troubleshooting air traffic controlequipment for the FAA. I have no knowledge of nor have I ever worked on cryptography, peer to peer systems, or alternative currencies.

I have not been able to find steady work as an engineer or programmer for ten years. I have worked as a laborer, polltaker, and substitute teacher. I discontinued my internet service in 2013 due to severe financial distress. I am trying to recover from prostate surgery in October 2012 and a stroke I suffered in October of 2013. My prospects for gainful employment has been harmed because of Newsweek’s article.

Newsweek’s false report has been the source of a great deal of confusion and stress for myself, my 93-year old mother, my siblings, and their families. I offer my sincerest thanks to those people in the United States and around the world who have offered me their support. I have retained legal counsel. This will be our last public statement on this matter. I ask that you now respect our privacy.

Dorian Satoshi Nakamoto
Temple City, California
March 17, 2014

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