The name Satoshi Nakamoto was long thought to be a pseudonym. Nakamoto was the name of the author of a 2009 paper titled, “Bitcoin: A Peer-to-Peer Electronic Cash System,” which is the document that launched the famous alternative currency known as bitcoin. In the ensuing years, reporters have searched to discover the true identity of the man behind the revolutionary currency. According to a story in the newest issue of Newsweek magazine, the name was not a pseudonym at all; the creator of Bitcoin is, in fact, a man named Satoshi Nakamoto.
As the Newsweek story broke, reporters flocked to the Los Angeles area home of Dorian Satoshi Nakamoto on Thursday, according to the Los Angeles Times. The 64-year-old Japanese American then led reporters all over the city while he, apparently, ran errands and grabbed some lunch.
Fox News reports that Nakamoto acknowledged to reporters that the Newsweek story got many facts about his life correct, including that he once worked as a defense contractor for the U.S. government. He denied, however, that he was the creator of Bitcoin.
According Leah McGrath Goodman, the author of the Newsweek story, Nakamoto did admit to early involvement in the currency’s creation. Fox News quoted Goodman’s story:
"I am no longer involved in that and I cannot discuss it," he said, according to Goodman. "It's been turned over to other people. They are in charge of it now. I no longer have any connection.”
Goodman claims Nakamoto then called police to have her removed from his doorstep as she was researching the story.
The slow motion car chase that occurred Thursday was reminiscent, to some Los Angeles observers, of the infamous O.J. Simpson White Bronco chase from the '90s, according to The Daily Dot. This time, though, the lead vehicle was Nakamoto’s Toyota Prius, and reporters didn’t gain much information for their efforts.
As Nakamoto brushed by the reporters in his front yard on the way to his car he told them, “No questions right now. I’m not involved in Bitcoin.”
He then invited an Associated Press reporter to travel with him saying, “I want a free lunch, so I’m going with you.”
That lunch interview only yielded more denials, according to the subsequent AP story.
At the end of the lunch, Nakamoto simply asked, ”How long is this media hoopla going to last?”
28-year-old Autumn Radtke was found dead in her apartment on Feb. 28. Radtke was the CEO of First Meta, a Bitcoin currency exchange firm.
Radtke’s body was found in her Singapore apartment. Local media outlets are calling the death a suicide, but the cause of death will not be official until a toxicology report is released.
Radtke’s last Facebook post lends some credibility to the suicide theory, though. On Feb. 10, Radtke posted an article on her Facebook titled “The Psychological Price of Entrepreneurship.” Above the article, she wrote “everything has its price.”
First Meta posted a message on its website regarding Radtke's death.
"The First Meta team is shocked and saddened by the tragic loss of our friend and CEO Autumn Radtke," the message reads. "Our deepest condolences go out to her family, friends and loved ones. Autumn was an inspiration to all of us and she will be sorely missed."
Radtke was a successful entrepreneur who worked in the past with Apple and other Silicon Valley firms on digital payment technologies. Radtke described First Meta as a company that takes “virtual currencies and pays out real $ via paypal.”
Her death marks the eighth apparent suicide of a prominent financial sector figure this year.
The Bitcoin community is used to drastic fluctuation. That’s the nature of the deregulated digital currency. Still, Bitcoin owners were shocked when Mt. Gox, one of the world’s most popular bitcoin exchanges, was robbed.
The company initially reported that it had lost a total of 850,000 Bitcoins, 750,000 of which belonged to users and investors. The Star estimates that number translates to around $480 million.
Although the incident immediately rattled concerned Bitcoin users, Mt. Gox CEO Mark Karpeles has remained relatively silent on the issue. The Tokyo-based French CEO was recently forced to make public statements when he appeared in court, filing for civil rehabilitation, or the Japanese equivalent of Chapter 11 bankruptcy in the U.S. Although Mt. Gox has promised that it was working to fix the issue, most members of the Bitcoin community speculate that the stolen coins are gone forever.
In his court statement, Karpeles indicated that he stands by Bitcoin despite his company’s recent incident.
“First of all, I’m very sorry. The Bitcoin industry is healthy and it is growing. It will continue, and reducing the impact is the most important point,” Karpeles said.
Karpeles’s apology serves as an admission of guilt for his role in what many believe to threaten the future of the digital currency. It’s likely, however, that Bitcoin will continue to operate despite the loss of its once dominant exchange.
In response to the incident, Mt. Gox has opened a call center in order to answer any customer’s questions regarding the significant loss of money, Mashable reports.
Bitcoin exchange Mt. Gox filed for bankruptcy protection in Tokyo on Friday reports USA Today. The filing came after the exchange shutdown earlier in the week fearing a breach of security that resulted in the loss of 750,000 bitcoins.
Mt. Gox was once the worlds largest exchange for the controversial, virtual currency. At its height it claimed to handle nearly 80 percent of all bitcoin transactions, according to a NBC News story.
Appearing in court on Friday, Mt. Gox CEO Mark Karpeles confirmed that a hacking attack resulted in the loss of 750,000 users’ bitcoins as well as 100,000 of the company’s. At current prices that would amount to about $425 million. Such a loss puts Mt. Gox’s debt at $65 million, a figure which surpasses its assets said Teikoku Databank, a firm that monitors bankruptcies, in an AP story carried by ABC News.
Bitcoins were developed in 2009 as a virtual currency that allowed users to make transactions across international borders without using third parties such as banks or credit cards. The use of the currency had been catching on recently as sites like Overstock.com began accepting it. Such acceptance had spurred speculation and values of bitcoins had begun to fluctuate wildly.
The failure does not come as a surprise to many officials. "No one recognizes them as a real currency," said Japanese Finance Minister Taro Aso. "I expected such a thing to collapse.”
Last year China banned the currency and Vietnam recently followed suit amid the troubles at Mt. Gox.
Proponents of the currency, though, are hopeful that Bitcoin can survive the recent troubles and emerge stronger.
Yang Weizhou, analyst at Mizuho Securities Co. in Tokyo said the bankruptcy filing highlights the need for government regulations to stabilize virtual currencies. Weizhou predicted there would be lawsuits from users who suffered losses in the recent hack and further predicted that such virtual currencies are here to stay.
“It is undeniable," she said. "One must separate the Mt. Gox problem from the overall concept."
In an era of economic hardship yet rapid technological advance, digital currency is often viewed as a beacon of hope for the future. Bitcoin, the internet’s most popular digital currency, has its skeptics due to the currency’s unpredictable fluctuation in value as a result of its deregulation. Still, many use the currency on a daily basis, and several investors are hoping to cash in on the currency if it ever truly takes off.
A new investigation by the Congressional Research Service may dash the hopes of those opportunistic early adopters. After extensively researching Bitcoin, the organization claims that the existence of the digital currency may violate a relatively ancient law: the Stamp Payments Act of 1862.
The Stamp Payments Act was originally designed to discourage institutions from issuing money with a sum of less than $1. The law reads: “Whoever makes, issues, circulates, or pays out any note, check, memorandum, token, or other obligation for a less sum than $1, intended to circulate as money or to be received or issued in lieu of lawful money of the United States, shall be fined under this title or imprisoned not more than six months, or both.”
The way Bitcoin works is by breaking a single digital “coin” into extremely tiny values, which could potentially dip below $1. According to the provisions outlined by Stamp Act, this could technically make the online institutions that issue Bitcoin illegal.
According to some finance scholars, whether or not Bitcoin will be allowed to continue in the United States mostly depends on whether the government will want to take action against it, not necessarily the violation of The Stamp Act in particular.
“A lot depends on whether the government becomes anxious to move against Bitcoin. Whether this is the most appropriate statute under which to control Bitcoin, I’m not so confident,” said Darrell Duffie, finance professor at Stanford University, via Wired.
According to this Quora response as well as information found on several Bitcoin-specific sites, early adopters of the currency have long viewed the Stamps Payment Act of 1862 as a potential threat to Bitcoin's future.
A man from South Carolina became the first ever person to have Bitcoins seized by the U.S. government.
Eric Daniel Hughes, 31, was using the online currency to buy drugs at Silk Road, a site that only accepts Bitcoins.
DEA documentation indicates they took 11.02 Bitcoins from him, worth $814. While the forfeiture said nothing about Silk Road, there are reports that speculate this was the reason he was targeted.
Blog Let's Talk Bitcoin! connected his Bitcoin account number with a transaction made in April on Silk Road of exactly 11.02 coins.
"This is the first time something like this has happened with Bitcoin," Adam Levine, editor of Let's Talk Bitcoin!, said. "And the interesting subtext is: we don't have any idea just how involved the DEA is with Bitcoins."
Silk Road users are also unaware how involved the government is with transactions happening on the site. Often referred to as the "eBay of drugs," the site sells all types of prescription drugs.
While authorities admit they seized Hughes' Bitcoins, they will not reveal how they did so.
Hughes has not been charged yet, but local authorities are looking to arrest him. Charleston, S.C. police raided his apartment in June and found 10 bags of narcotic Suboxone while searching.
Levine believes police were able to confiscate his digital currency by using the same computer Hughes did to make the transaction or they did an online sting operation.
A porn community known as r/gonewild, an offshoot of Reddit, has become a place where “normal” people can upload explicit photos in the hopes of receiving favorable comments. Defined as a “place for open-minded Adult Redditors to exchange their nude bodies for karma; showing it off in a comfortable environment without pressure,” GoneWild has more than 400,000 subscribers.
Some of the ladies who upload their pictures are tipped out in Bitcoin, an untraceable digital currency. Others are given Reddit Gold, a $30 subscription package for increased privileges on the social news site. The site is free to use, and the number of women who upload photos far outnumber the men, the Daily Mail reported.
Not all of the ladies who put themselves on display do it for compensation. Some just do it as a way of getting positive feedback about their bodies.
“I wasn't quite sure what to expect, really,” wrote anonymous exhibitionist Natural_Red. “I had an OK view of myself, but wasn't quite sure how others viewed me. It was more or less an experiment in self-esteem.”
Natural_Red, 24, who works in advertising and design, arrived at the site during a rough patch three years ago.
“I was kind of in a boring slump in my life, going to school and work, then coming home, eating dinner, and going to bed,” she wrote. “This was something new and exciting, so I thought, Why not?”
There are certainly some negative things about GoneWild. Many people write mean, nasty or creepy comments, and there is always the possibility that a provocative poster will be recognized.
Still, its enthusiasts view it as a good thing.
“I think GoneWild is a great place for people who are looking for a bump in self-esteem, exhibitionists, and people who are just looking for a little something thrilling in their day-to-day lives,” Natural_Red wrote. “It's a win-win. You get a rise out of posting, and other people get boobs.”
Venture capitalists Tyler and Cameron Winklevoss, famous for suing Mark Zuckerberg over Facebook, announced that they own about 1 percent of all bitcoins, approximately $11 million worth.
Created by programmers in 2009, bitcoin is a virtual form of currency that can be transferred through computers and smartphones. It is decentralized, making the trading platform for the currency rather volatile. People use real money to purchase bitcoins, and the untraceable currency can be used to buy anything from pizza to a hotel room.
Since last summer the Winkevoss brothers, sometimes referred to collectively as the Winklevii, accrued what is known to be the single largest portfolio of bitcoins in less than a year. They told the New York Times they’re excited be on bitcoin’s ground floor.
"People really don’t want to take it seriously. At some point that narrative will shift to ‘virtual currencies are here to stay,’" Cameron Winklevoss told DealBook. "We’re in the early days."
“To say highly speculative would be the understatement of the century,” said Steve Hank of Johns Hopkins University, a professor specializing in alternative currencies.
When the twins starting stockpiling the currency last summer, the value of one bitcoin was still in the single digits. April 9th the value was up to $190/BTC. However the value took a pulunge this week, now at $77/BTC.
“We have elected to put our money and faith in a mathematical framework that is free of politics and human error,” Tyler Winklevoss said.
The number of real-world items that can be bought with bitcoins is limited, but hopeful users want to see it conquer the world. The Winklevosses say they paid a Ukrainian programmer in bitcoins to work on their website.
Because bitcoin accounts are anonymous, it’s difficult to say how the Winklevosses portfolio stacks up to others.
“It has been four years and it has yet to be discredited as a viable alternative to fiat currency,” Tyler Winklevoss said. “We could be totally wrong, but we are curious to see this play out a lot more.”
The alternate digital currency bitcoin has received a lot of media attention in the past two days after the value of one bitcoin rose to over $200. By Wednesday, the value of each coin dropped to $105, and only six hours later, the value was back up to $160.
The media attention has a lot of people talking about bitcoin, and, understandably, there is a lot of confusion over what exactly it is.
So, what is it?
Bitcoin is an experimental digital currency. It was created by a person or group of people who go by the pseudonym Satoshi Nakamoto. The creators wrote an algorithm that releases new bitcoins at a fixed rate. Currently, that rate is 25 new bitcoins every 10 minutes. The rate will be halved to 12.5 bitcoins per 10 minutes by the year 2017, and will be continued to be halved every four years until a final amount of 21 million bitcoins are in circulation by the year 2140. Unlocking bitcoins requires “mining”. Users mine coins by solving digital algorithms created by Nakamoto’s software. If you solve an algorithm, you get a bitcoin. The monetary value of all bitcoins in circulation is currently over $1 billion USD.
Over 1,000 online vendors reportedly accept bitcoins as a form of payment. Unlike credit cards, there are no transaction fees when using them. Proponents of the currency point to benefits like this in an effort to encourage more vendors to accept the coins. Several exchange sites such as Mt. Gox and BitInstant exist for holders of bitcoins to exchange them for government issued money at any time. The coins have a fluid exchange rate similar to any other currency.
Bitcoins are far from the first digital currency. Cybercash and e-gold are two examples of prior attempts to establish an alternate online currency. While many think bitcoin will fail to establish itself as a viable form of money, others are investing large sums of money into the system.
The Winklevoss twins, made famous by their feud with Mark Zuckerberg over Facebook, are investing millions into bitcoin. The twins reportedly hold over $11 million USD worth of bitcoins at this time. They are far from the only investors betting on this currency, though. The start-up firm Draper Fisher Jurvetson has invested millions into Coinlab, a collection of bitcoin-related projects. Tribeca Venture Partners recently announced that it is investing in Coinsetter, a new trade platform for bitcoins.
Some big banking names are interested in the currency, too. Morgan Stanley and Goldman Sachs reportedly visit bitcoin exchanges up to 30 times per-day. The British-based financial company IG Group announced they will soon offer bitcoin pricing options.
The Winklevoss brothers offered some thoughts on the currency recently. They see bitcoins as a potential next big thing in the financial world. Understandably, they don’t want to miss out on Bitcoins as they did with Facebook.
“People say it’s a Ponzi Scheme, it’s a bubble,” said Cameron Winklevoss. “People really don’t want to take it seriously. At some point that narrative will shift to ‘virtual currencies are here to stay.’ We’re in the early days.”
“We have elected to put our money and faith in a mathematical framework that is free of politics and human error,” Tyler Winklevoss added. The brothers believe the recent trading fluctuations are “growing pains” similar to those that other young technologies experience.
“It has been four years and it has yet to be discredited as a viable alternative to fiat currency,” Tyler Winklevoss said. “We could be totally wrong, but we are curious to see this play out a lot more.”
Well-known financial investor Chris Dixon is on board as well. Dixon believes bitcoin represents the next phase of currency. “Three eras of currency,” he said. “Commodity based, e.g., gold; politically based, e.g., dollar; and math based, e.g., bitcoin.”
Not everyone is sold, however. Steve Hanke is an alternative currencies professor at Johns Hopkins University.
“It’s not something I’d want to be involved in or have any investors’ money involved with,” Hanke said. “To say highly speculative would be the understatement of the century.”
Others point to the problem of a fixed currency in a growing global economy. In order to maintain stable prices, currency circulation must grow at the same rate as markets. Bitcoins' fixed rate of growth could prove problematic if the currency is ever implemented at a large-scale level. The lack of human oversight of the currency could cause problems if viruses or hackers got a hold of peoples virtual wallets, too. Government entities like the IRS would not be likely to help victims of bitcoin-related financial fraud or theft given that the currency is used in opposition to government money.
Much like today’s trading values, the future of bitcoin is uncertain. Investors hope they are ahead of the curve and staking their claim on the next global phenomenon, while critics believe the currency is too flawed to ever catch on in any significant way.
Technology has a way of surprising us sometimes, though. Facebook, YouTube, and smart phones were almost unthinkable 20 years ago as well, and now they’re a daily part of our lives. Only time will tell if one day we'll look back at bitcoin in the same way.
What the heck is a "bitcoin"?
While many people couldn't tell you if they had multiple guesses what exactly a bitcoin is, the value of this virtual currency has actually surpassed the value of 20 national currencies.
The bitcoin, also known as BTC, is a “decentralized digital currency based on open-source, peer to peer internet protocol.” It was introduced in 2009 and created by Satoshi Nakamoto- How many bitcoins do you think that guy is worth now?
Though not intended as its original purpose, the bitcoin is in high demand thanks to various world events that have made people leery of government-issued currencies.
“Because of what's going on in Cyprus and Europe, people are trying to pull their money out of banks there,” Tony Gallippi, the CEO “BitPay.com told FoxNews.com.
Currently the monetary base of the bitcon is valued at over $800 million US dollars. Through a system of timestamps which are widely published for public consumption, transactions are recorded, and bitcoins trade virtual hands like any other form of currency.
Interestingly, the European Central Bank has accused bitcoins of being a type of Ponzi scheme. But considering the current financial situation in Europe and the fact that a majority of bitcoin investors are from Europe, it isn’t hard to see why the ECB and bitcoins would be natural enemies.
If your grandma had a hard time understanding how wi-fi works, the bitcoin may just melt her brain.