Digital Gold
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CHAPTER 29
309In a statement, Mark explained: While material from the Mt. Gox web-site has been deleted, the full statement is still available at http://pando .com/2014/02/10/blame-game-embattled-mt-gox-points-to-flaws-in-bitcoin-protocol-bitcoin-community-calls-bs/.
310He was wearing a short-sleeved shirt: The confrontation was recorded and is viewable at https://www.youtube.com/watch?v=ob9Ak1t09Ao.
315“This tragic violation of the trust of users”: The statement is available at http://blog.coinbase.com/post/77766809700/joint-statement-regarding-mtgox.
316lawyers in Chicago and Denver filed a lawsuit: Jonathan Stempel and Emily Flitter, “Mt. Gox Sued in United States over Bitcoin Losses,” Reuters, February 28, 2014, http://www.reuters.com/article/2014/02/28/bitcoin-mtgox-lawsuit-idUSL1N0LX1QK20140228.
317An academic study in 2013: Tyler Moore and Nicolas Christin. “Beware the Middleman: Empirical Analysis of Bitcoin-Exchange Risk.” In Ahmad-Reza Sadeghi, editor, Financial Cryptography, volume 7859 of Lecture Notes in Computer Science (New York: Springer, 2013).
317“The only way to stabilise the system is”: Izabella Kaminska, “Magic: The Undercapitalized Gathering Online,” FT Alphaville, March 3, 2014, http://ftalphaville.ft.com/2014/03/03/1787992/magic-the-under capitalised-gathering-online/.
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319The Newsweek reporter, Leah McGrath Goodman, had: Leah McGrath Goodman, “The Face Behind Bitcoin,” Newsweek, March 6, 2014, http://www.newsweek.com/2014/03/14/face-behind-bitcoin-247957.html.
321“Why did you create Bitcoin, sir?”: The video of Dorian Nakamoto leaving his house is viewable at http://www.theguardian.com/technology/2014/mar/07/satoshi-nakamoto-denies-inventing-bitcoin.
323“simply be an old man saying ANYTHING”: Gavin’s letter to McGrath Goodman is available at http://www.reddit.com/r/bitcoin/comments/1zqjq6/open_letter_to_leah_mcgrath/.
323In an Amazon review of Danish butter cookies: The review is available at http://www.amazon.com/review/R3U92F9YRUSF37.
323The AP’s story and video from its interview: The interview is viewable at https://www.youtube.com/watch?x-yt-ts=1422579428&x-yt-cl= 85114404&v=GrrtA6IoR_E.
324An Argentinian security expert, Sergio Lerner, had done: Sergio Demian Lerner, “The Well Deserved Fortune of Satoshi Nakamoto, BitcoinCreator, Visionary and Genius,” Bitslog, April 17, 2013, https://bitslog.wordpress.com/2013/04/17/the-well-deserved-fortune-of-satoshi-nakamoto/. 333 “Friends, citizens, Bitcoiners, there is nothing”: Charlie’s speech is viewable at https://www.youtube.com/watch?v=xH7mCO5EnDU.
334“I think it’s very obvious to all of us”: Gregory Ferenstein, “Google’s Jared Cohen: It’s ‘Obvious’ Bitcoin-Like Currencies Are ‘Inevitable,’” TechCrunch, March 8, 2014, http://techcrunch.com/2014/03/08/googles-jared-cohen-its-obvious-bitcoin-like-currencies-are-inevitable/.
335“You don’t get the new technology from”: Andreessen’s comments are from his speech at Coinsummit 2014, which is viewable at https://www .youtube.com/watch?v=iir5J6Z3Z1Q.
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339Nick’s writing: Nick’s writings are available at http://unenumerated .blogspot.com/.
339-40Most bizarrely, Nick altered the dates: the dates that Nick later put on the posts are at the top of each post. But the URL addresses of the posts still show the original posting date. For instance, his post on “Bit Gold Markets” says that it was written on December 27, 2008, but the URL is http://unenumerated.blogspot.com/2008/04/bit-gold-markets .html#links.
339“repeated use of ‘of course’ without isolating commas”: Skye Grey, “Satoshi Nakamoto Is (Probably) Nick Szabo,” LikeinaMirror, December 1, 2013, https://likeinamirror.wordpress.com/2013/12/01/satoshi-nakamoto-is-probably-nick-szabo/.
348a hacker demanding ransom was targeting Hal: Robert McMillan, “An Extortionist Has Been Making Life Hell for Bitcoin’s Earliest Adopters,” Wired, December 29, 2014, http://www.wired.com/2014/12/finney-swat/.
353The United States Marshals Service had auctioned off the 29,655: Tim Draper’s announcement is available at https://medium.com/mirror-blog/tim-draper-wins-govt-auction-partners-with-vaurum-to-provide-bit coin-liquidity-in-emerging-markets-88f04a1d8598.
353Wences officially announced the $20 million: The Xapo announcement is available at https://blog.xapo.com/xapo-raises-20-million-investment-led-by-greylock-partne/.
354Gates had initially bet against the open Internet and built a closed network: Kathy Rebello, “Inside Microsoft: The Untold Story of How the Internet Forced Bill Gates to Reverse Course,” BusinessWeek, July 15, 1996.
INDEX
“The pagination of this electronic edition does not match the edition from which it was created. To locate a specific passage, please use your e-book reader’s search tools.”
Abedier, Osama, 101
Alcor Life Extension Foundation, 7
Alibaba (Chinese Internet company), 261
Alice (hypothetical user), 9, 11, 21–23, 358–359
Alipay (Chinese payment processor), 260–261
Allen & Co., 181, 292, 349, 353
altoid (screen name), 69, 248. See also Ulbricht, Ross
Andreessen Horowitz, 186, 192, 329
Andreessen, Marc, 181, 186–187, 293–295, 303, 335
Andresen, Gavin
beginnings with Bitcoin, 44–47, 49–50, 323
as Bitcoin central figure, 59–62
Bitcoin mining, 53, 192–197, 329
Bitcoin promotion, 75–76, 101–106
creation of Bitcoin Foundation, 138, 141–142
dealing with scandals, 99
relationship with Satoshi, 55–56, 80–86
responding to Mt. Gox collapse, 309
2014 Bitcoin Pacifica (Lake Tahoe), 346–348
Anoncoin (digital currency), 270–271
Anti-state.org (website), 29
Argentina, 153–161, 182, 240–242, 259, 277–280, 286, 349–353
ASIC (computer chip), 189–190, 259, 329–330
Assange, Julian, 56–57
Athey, Susan, 345
Atlantis, 245
Australia, 44–45, 117, 168, 171
Automated Clearing House (ACH), 133
Avalon (ASIC), 190, 206
Back, Adam, 17–22, 339, 348
Baidu (Chinese search engine), 261–262
bank bailout of 2008, 32, 111
Bank of America, 272
Bates, Richard, 75–77, 115–116
bee-te-bee (Chinese Bitcoin), 255–256
Beijing Summer Olympics (2008), 145
Benchmark Capital, 282, 293, 305
Bernanke, Ben, 266
Bezos, Jeff, 353
Bharara, Preet, 299–300
Bill and Melinda Gates Foundation, 353–355
Bitcoin
arrival of Gavin Andresen, 44–47
arrival of Martti Malmi, 29–30
building trust, 24–25, 33, 48, 61–62, 69, 99–100, 279, 315, 339
buying/selling with, 43–44, 82, 119–120, 129–130
changing business model, 236–239
characterization as “cryptocurrency,” 36
comparison to gold, 157–158, 165, 182
comparison to paper money, 219, 286–287
creation and operation of original code, 4–6, 20–24
disappearance of Satoshi Nakamoto, x–xiii
hacking and scandals, 91–99
increasing price/value, 38, 66–69, 79, 81–85, 89–91, 131, 175, 180, 184, 193–196, 204–206, 210–211, 250–253, 262–264, 267, 271–275, 284–285
legality/government regulation, 196–198, 251
limitations based upon computers, 347
Mt. Gox collapse busts bubble, 308–317
origin and ideology, vii–xv, 5, 113–114
as Ponzi scheme, 220
proof-of-work, 18–19
Bitcoin Foundation
candidacy of Bobby Lee, 345
dealing with Bitcoin collapse, 314–315
Ga
vin Andresen as member, 192
involvement in Senate hearing, 265–267, 270, 300–302
Patrick Murck as member, 176
planning and creation of, 138–142
regulatory problems, 217–219, 233–236
resignation of Charlie Shrem, 302
Bitcoinica, 237
Bitcoin Investment Trust, 314
Bitcoin Meetups. See conferences (Bitcoin and others)
Bitcoin mining
about process vulnerability, 41–42
creating blocks and recording transactions, 359–361
creation of ASIC chip, 189–192, 259, 329–330
creation of Avalon chip, 190, 206
formation of mining companies, 294–295, 328–329
formation of mining pools, 192–194
GPU technology, 42, 56, 189–191
growth in China, 259–261, 329
Litecoin mining, 283
more users increased difficulty, 53
role in securing system, 100
Satoshi Nakamoto patterns, 324
specialized computers/computing power, 105, 170, 190, 233, 324, 330, 347
The Bitcoin Show (TV program), 102, 128
Bitcoin software
about operation, 23, 357–362
beta testing, 25–26, 58
changes to code, 22–24, 35–39, 43–46, 55–58, 61–62, 141, 309, 346–347
creating/maintaining protocol, x, 5–6, 32, 99, 215–216
creation and launch, xiv, 30–31, 319, 346
downloads, 49–51, 80, 237, 261
Google interest, 100–102
hard fork, 193, 195
“1 RETURN” bug, 56
role of public-key
cryptography, 9–10, 17–18
running on Macintosh, 41
transaction malleability problem, 309–314
updates and old versions, 37, 59, 193–195
version 0.2, 37
version 0.3, 47–48
version 0.319, 59
version 0.7, 194–195
version 0.8, 194–195
The Bitcoin Trader (blog), 195
Bitcoin White Paper, 21, 45, 339
Bitfury, 330
bit gold, 18, 338–339
BitInstant. See also Shrem, Charlie
attracting investors, 130–135
creation and function, 128–130
dealing with problems and competitors, 201–207
hacker penetration, 150
investment by David Azar, 134, 150–151
investment by Roger Ver, 128
investment by Winklevoss twins, ix, 173–176, 211–215
involvement of Erik Voorhees, 135–137
management problems, 220–222
regulatory problems, 222–224
trading volume, 201, 205–207
BitLicense, 302, 317
Bitomat (Polish exchange), 97–98
BitPagos (Argentinian payment service), 278–279
BitPay, 134, 211, 219, 272
Bitstamp (Slovenian exchange)
about founding, 203
attendance at 2014 Bitcoin Pacifica, 252–253, 337
regulation of virtual currencies, 271
response to Mt. Gox collapse, 309–310, 315
surpassing Mt. Gox volume, 236
trading volume, 262–263, 267
working with banks, 327
blind digital signatures, 12
blockchain
banking interest in the technology, 324–328
Bitcoin transfers, 97–98, 133, 148, 182, 203–204, 235–237
creation and function, 21–26, 43, 55, 61, 340
dealing with hard fork, 193–194
generating new coins, 361–362
increasing file size, 100–101
sidechains, 348
use by mining pools, 191–194
use by money transfer projects, 188–189, 336
winning acceptance and approval, 269–274, 289–290, 345
winning blocks, 361
Blockchain.info, 237–241, 252, 270, 315, 330–331
Blodget, Henry, 182–184
Bloomberg, Michael, 144, 325
b-money, 339
Branson, Richard, 297
Briger, Pete, 163–165, 201, 236, 252–253, 281–283, 287–288, 302, 342–343. See also Fortress Investment Group
Brito, Jerry, 79–80
Bruno, Joe Bel, 322
BTC China, 255–264, 267–269, 275, 284–285, 300, 315, 343–345. See also China
BTC Guild, 195
BTC King (screen name). See Faiella, Robert
Buffett, Warren, 353
Burges, Kolin, 310–312
Business Insider, 184
BusinessWeek, 197
Byrne, Patrick, 289
Canada, launch of Mint Chip, 133
Carper, Thomas (senator), 235, 267–268
Cary, Nic, 239, 252, 296–298, 333
Casares, Belle, 154, 162, 243, 352
Casares, Wences. See also Lemon Digital Wallet and Xapo
background and arrival at Bitcoin, 153–165
Bitcoin as commodity, 274
Bitcoin holdings, 287–288
Bitcoin promotion, 179–180, 185–187, 197, 209–210
Bitcoin promotion in Argentina, 240–242
conference attendance, 181–185, 214–216, 349, 351–355
development of Lemon Digital Wallet, 201–205
sale of Lemon Digital Wallet, 252, 280–283
seeking business investors, 291–296
startup business financing, 305–306
2013 Argentina, Bitcoin meeting, 277
Xapo founding and operations, 349–351
Casascius coins, 126–127
chronicpain (screen name). See Green, Curtis
cimon (screen name). See Variety Jones [vj]
cirrus (screen name), 246–248
Chaum, David, 10, 12, 23, 71. See also DigiCash
China, xiii, 128, 183, 190–191, 273–275, 280, 329. See also BTC China
CIA. See U.S. Central Intelligence Agency
Coinapult, 174, 338
Coinbase (Bitcoin service). See also Ehrsam, Fred
about the founding and operation, 203–204, 211–213
investment by Andreessen Horowitz, 293–295
maintaining private keys, 281
regulation of virtual currencies, 271
regulatory compliance, 236–237
response to Mt. Gox collapse, 315
transaction fees, 290
working with banks, 305–306
CoinLab, 138, 144, 200, 213
COIN (Nasdaq ticker symbol), 353
Collins, John, 265–266
conferences (Bitcoin and others)
2011 CIA interest in Bitcoin, 81
2011 NYC Bitcoin World Expo, 102–106, 135
2011 Thailand, Bitcoin, 104
2012 Amsterdam, Bitcoin, 104, 297–298
2012 Federal Reserve on money transfer, 132–133
2012 NYC, Bitcoin, 104
2013 Allen & Co., 181, 349
2013 Argentina, Bitcoin, 277–283
2013 San Jose, Bitcoin, 214–216
2014 Allen & Co., 262, 349, 353–355
2014 Austin, Bitcoin, 331–336
2014 Bitcoin Pacifica (Lake Tahoe), 337–345
2014 SXSW, 334–336
2014 Utrecht technology, 298
The Construction and Operation of Clandestine Drug Laboratories (Jack B. Nimble), 69
Costollo, Dick, 181
Cowen, Tyler, 286
CRASH (CRypto caSH), 12
credit cards
Bitcoin as replacement, 23, 158–160, 235, 292
digital wallets and, 101, 154, 209
disputes and chargebacks, 64, 134, 343
lack of privacy, 11
Target Corporation, data breach, 288–289
transaction fees, xii, 102, 240–241, 272, 277–278, 290, 343
WikiLeaks blockad
e, 57
Crisis Strategy Draft, 313–315
cryogenics, 7
cryptocurrency, 36
Cryptonomicon (Stephenson), 19, 252
currency debasement, 30–31
Cypherpunk Manifesto, 8–12
Cypherpunks
awareness of privacy and data vulnerability, 8–9
conceptualizing future of money, 11–13, 16
facing digital money obstacles, 19–20
philosophical influences, 70
termination of mailing list, 20
Dai, Wei, 19–20
Darkcoin (digital currency), 270–271
Debt: The First 5,000 Years (Graeber), 157, 179
decentralized systems/technology. See also Blockchain
about Bitcoin ideology, 236
Bitcoin comparison to gold, x
building Bitcoin system, 55–56, 141, 292–294
development of payment systems, 129, 133
disadvantages of centralization, 113–114
Internet as, 182
Occupy Wall Street movement and, 111
open source software and, 45–47
P2P Foundation and, 30
regulatory compliance, 269–270
resolving problems, 195
Silk Road and, 118
trend toward centralization, 99–100, 347
Der-Yeghiayan, Jered, 246–248
DigiCash, 12, 19, 21, 23, 26, 158. See also Chaum, David
digital currency
Anoncoin, 270–271
Chinese potential, 260–261
creation of early systems, 12–13
Darkcoin, 271
Finney experimentation, 5
Greenspan prediction, 17
Liberty Reserve, 218
Mint Chip, 133
Q coin, 257, 260–261, 268
DigitalInk (screen name). See George, Jacob
Dimon, Jamie, 303–306
Dixon, Chris, 181–182, 186, 294
Dodd, Nigel, 16
Donahoe, John, 262
Donald, James, 24
Draper, Tim, 353
Dread Pirate Roberts [DPR] (screen name), 118, 121, 168–169, 171, 213, 225, 227, 248. See also Ulbricht, Ross
drugs/drug trafficking. See Silk Road
eDonkey (file sharing website), 50–51
Ehrsam, Fred, 334–336. See also Coinbase (Bitcoin service)
Electronic Frontier Foundation, 80, 270
Eleuthria (screen name), 195
encryption technology, 8–12. See also Public-key cryptography
exchange-traded funds (ETF), 222, 250
Extropians, 11
Facebook, 145
Faiella, Robert (aka BTC King), 130, 138, 299
The Far Wilds (online game), 50–51