Russia

The Mysterious Satoshi Nakamoto Allegedly Leveraged a Russian Proxy for Communications

05/06/2020 by Idelto Editor

4,171 days ago in 2009, Satoshi Nakamoto invoked the Bitcoin network after sharing the white paper with people since Halloween 2008. Just recently, it has been discovered that Nakamoto leveraged a Russian proxy to obfuscate his whereabouts and the inventor used the proxy back in January 2009. For quite some time now, armchair sleuths have been finding interesting clues within Bitcoin’s earliest codebases.

Satoshi Nakamoto and Ties to a Russian Proxy

The Satoshi Nakamoto mystery is like a holy grail of sorts, for a large number of cryptocurrency advocates. People have tried to hunt him down for well over 11 years now, and to this day no one knows his true identity. Just recently online detectives have discovered in the first version of Bitcoin (v0.1.0), Satoshi Nakamoto allegedly used a Russian proxy to hide his location and identity. The clues can be found in the file “irc.cpp” and line 212 is leveraged in a way where the proxy is hidden by a cipher.

After the discovery, people have been discussing a variety of theories as to why Satoshi may have used a Russian proxy. A proxy server is a tool that can be utilized to access web pages and networks without giving certain communications to the server. A proxy can also be leveraged to create a false IP address location. For instance, a person from China might leverage a EU-based proxy, in order to bypass the Great Firewall in the country. It is quite possible that Satoshi used the Russian proxy because he was located inside Russia’s borders. But it is more likely he was outside of Russia’s borders and he used the proxy to hide from Western intelligence services or the Five Eyes (FVEY).

Satoshi’s Alleged West Coast IP Address

A number of findings have been discovered as far as Satoshi’s original code is concerned. There is one theory that indicates Bitcoin’s inventor may have been in California. One clue we have is how back in January and February 2009, Hal Finney and Satoshi communicated together while working on the Bitcoin alpha codebase using an IRC.

At the time, Hal discovered an error in the code and he posted the vulnerability in the mailing list with a debug log. In the earliest versions of Bitcoin, the software included IP addresses within the debug log. The log on January 10, 2009, shows that there are three IP addresses available and one stemmed from Hal Finney.

Finney’s IP shows that his location was in California where he resided for years, while Satoshi’s IP and the unknown IP address indicates that the inventor’s location at the time was possibly Van Nuys, California. What is interesting is that the discovery from Van Nuys was not a Tor exit node, and it indicates that Satoshi was likely in Van Nuys on the 10th of January 2009.

Even though Satoshi Nakamoto wrote his words with double spaces and wrote like he was from the UK, for the first few months during Bitcoin’s launch many people have assumed he was on the West Coast in the United States. Unfortunately for Hal Finney and his family, as well as Dorian Nakamoto and his family, the California clues have made it so their private lives have been invaded on various occasions.

Timechain, Virtual Poker, Coin, and Sergey’s Hotel Reviews

Bitcoin v0.1.0 and the earliest versions of Satoshi’s codebase, also has a number of other interesting factoids. Many people have discussed the fact that Satoshi had given copies of the original codebase to others, prior to the January 2009 launch. On November 17, 2008, Satoshi’s writings indicated that he had given the software to a pseudonym named “James A. Donald.” The source code was also reportedly distributed to Bitcointalk.org member “Cryddit”

Early versions of Bitcoin show that Satoshi used the words “coin,” “cent,” “timechain,” and “miners.” Satoshi named Bitcoin’s smaller units a “coin” (1,000,000) and “cent” (10,000) rather than “satoshis,” the term most people use today. Early code also shows Satoshi wanted bitcoin to have a virtual poker game and marketplace built within the codebase.

The Russian proxy evidence indicates that the user may have been named “Sergey,” and the individual also used the Russian proxy for hotel surveys. Despite the recent discovery, not everyone believes Satoshi used a Russian proxy and the theories that suggest he did. Just like a great number of the Satoshi Nakamoto theories, the Russian proxy story was quickly dismissed by well known individuals within the cryptocurrency ecosystem.

What do you think about reports that are saying Satoshi Nakamoto leveraged a Russian proxy? Let us know what you think in the comments below.

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Despite Russia’s Confusing Crypto Laws, P2P Bitcoin Trade Volumes Soar

03/06/2020 by Idelto Editor

Peer-to-peer cryptocurrency trading data shows digital assets like bitcoin are growing extremely popular in Russia, despite the State Duma’s opinions and regulations aimed at crypto assets. On Monday, the Russian government published a draft version of litigation mandates called “On Digital Financial Assets,” and lawmakers are looking for public opinion. Despite the strict proposal drafted by the Russian bureaucracy, trade volumes on certain exchanges have seen significant demand from the country’s citizens.

Russia’s Cryptocurrency Laws Remain in the Gray Zone

Just recently Russia’s State Duma released a draft of proposed litigation toward cryptocurrencies and companies that deal with the technology. The draft called “On Digital Financial Assets,” is an updated version on how lawmakers might regulate the crypto industry in the near future. The documents do not delve much into personal holdings, trading, and cross-border remittances, unless it is applied to startups and veteran companies that leverage cryptocurrencies. People can own bitcoin or other digital assets, but the new proposal does prohibit the widespread circulation and even evangelism when it comes to digital currencies versus the Russian ruble.

“Сryptocurrencies go completely into the gray zone in Russia,” explains Waves Enterprise representative Artem Kalikhov. “People who own one or two bitcoins are not at risk. But all cryptocurrency exchanges and wallets hosted on Russian sites with a .ru at the end are now at risk.”

Despite Russia's Confusing Crypto Laws, P2P Bitcoin Trade Volumes Soar — Russia’s State Duma recently published this draft called “On Digital Financial Assets.”

Demand for Cryptos Like Bitcoin and Bitcoin Cash Has Been Thriving in Russia

Despite the newly updated proposal, Russian trade volume for bitcoin (BTC) on the peer-to-peer trading platform Localbitcoins (LBC) has been surging. For two months straight Russia has outpaced a number of other countries who have also been seeing significant trade volumes stem from the Russian people. Coin Dance statistics indicate that Russia has accounted for 20% of May’s LBC trade volume. Even though regulatory clarity has kept Russians in the dark, LBC’s data shows that citizens from the region are demanding more bitcoin than they have in years.

Data from Bitcoin.com’s local bitcoin cash (BCH) marketplace, Local.Bitcoin.com, indicates that Russians are trading a lot of BCH as well. In popular regions like Venezuela and Colombia, there are people who have traded 50 to over 100 times using Local.Bitcoin.com. In Russia, however, traders have settled over a thousand buys and sells in the local region. People accept credit cards, Advcash, Qiwi, and bank transfers. One trader from Russia shows that he/she has settled over 15,000 trades in the country purchasing bitcoin cash.

Russia was recently featured in an Onfo research report, which had shown the country saw a faster network effect than the likes of the U.S. and Germany. The trend of adoption continues despite Russian lawmakers proposing a law that will allegedly criminalize buying bitcoin with cash.

News.Bitcoin.com’s Jeff Gogo reported on how offenders from Russia could face seven years in jail if the law is enacted. While the Russian government seems like it will crack down on bitcoin, there have been rumors of the country banning digital assets for over seven years now. Even though, Russian residents are still in the “gray zone,” like Artem Kalikhov stressed, the demand for cryptocurrencies continues to thrive.

What do you think about the peer-to-peer exchange volumes stemming from Russia? Let us know in the comments below.

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Cryptocurrencies Spread 4X Faster in Undeveloped Countries: Blockchain Analysis Report

28/05/2020 by Idelto Editor

Cryptocurrency Network Effect Grows 4X Faster in Undeveloped Countries: Blockchain Analysis Report

During the month of April, the blockchain project Onfo initiated an experiment to see how fast crypto assets can gain popularity in four different countries. The team’s findings discovered that cryptocurrencies spread four times faster in developing nations as opposed to developed countries.

Crypto Asset Network Effect Grows Stronger in Undeveloped Countries

Last month, the blockchain team from the project Onfo, decided to run a social mining experiment in a number of different countries to see how crypto assets gain recognition and popularity. The researchers chose four different countries which include the U.S., Germany, Indonesia, and Russia. The U.S. and Germany represented the developed countries, while Russia and Indonesia are developing nations. Free crypto assets were sent to 100 individuals from each country and every person got ten coins each.

Cryptocurrencies Spread 4X Faster in Undeveloped Countries: Blockchain Analysis Report — Onfo conducted the experiment in Russia, Indonesia, Germany, and the U.S.

The individuals would also get more coins if they attracted other users to try the crypto asset and results had shown the spread was far larger in developing countries. According to the results, the network effect spread was four times faster in Russia and Indonesia than it was in the U.S. and Germany. Onfo detailed that in the United States, 100 people attracted 1,112 people. In Germany the 100 individuals told 763 new people and the 100 Russian participants attracted 2,304 new users. Indonesia’s spread rates were monumental, as the 100 Indoneisan users attracted a whopping 4,350 people.

“The spread index turned out to be almost 4 times higher than in the US, given that the two countries have similar population sizes,” explains Onfo’s report.

The founder of Onfo, J.R. Forsyth, believes the spread was faster in developing countries because small amounts of money are valued more in these regions. Forsyth noted that Indonesia shows an opportunity for “massive growth” and there are various factors that bolster the spread. “The absence of a national credit lending system, coupled with increasing smartphone penetration and the consequences of the coronavirus pandemic, are also making Indonesia a ripe market for cryptocurrency disruption,” the report highlights.

“Indonesia possesses the unique conditions that make it well-poised for Bitcoin adoption. As the world’s fourth most populous country, it’s home to a largely cash-based community, and huge swaths of the population — up to 80% — remain unbanked,” Forsyth stressed in the report.

Southeast Asia and South Africa Are Ripe for Blockchain Growth and a Crypto Renaissance

The U.S. and Indonesia have close to the same population, and Onfo’s findings show 14% of the American population are cryptocurrency users. In Indonesia, with around 270 million residents, the number of crypto users is around 11%.

“In-depth analysis of the statistical data shows that Indonesians started getting involved in the crypto market 1-2 years ago, while Americans delved into the industry in 2008-2010. The results of the experiment conducted by Onfo demonstrate a rapidly expanding adoption level in Indonesia, meaning that the country can soon face its crypto renaissance,” the report details.

The report’s authors also note that Southeast Asia is ripe for crypto asset adoption, and there are also other developing nations that are seeing the beginnings of a “crypto renaissance.” For instance, the Onfo report shows that South Africa is currently experiencing the renaissance period and reports from Luno and Arcane Research highlight these findings.

“South Africa has the highest percent of cryptocurrency ownership or use among internet users in Africa, standing at 13%, followed by Nigeria with 11%,” Onfo’s report concludes. “The increase in volumes of cryptocurrencies across the continent has also seen P2P volumes from Sub-Saharan Africa overtake Latin America for the first time.”

What do you think about crypto asset popularity growing four times faster in undeveloped nations? Let us know in the comments below.

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Russia Proposes Law That Criminalizes Buying Bitcoin With Cash, Offenders Face 7 Years in Jail

24/05/2020 by Idelto Editor

Russian lawmakers have proposed new laws that seek to ban the use of bitcoin (BTC) and other cryptocurrencies in the country, local media reported.

According to draft bills submitted by a group of deputies to the Russian parliament recently, individuals may face up to seven years in prison and fines of up to $7,000 for using BTC in financial transactions.

People will also be penalized for buying crypto with cash or transferring to accounts opened with Russian banks.

If signed into law, the bills will punish companies that issue or operate virtual currencies without approval from the Russian central bank, with fines of up to two million rubles or about $28,000.

Furthermore, “for violation of the rules for transactions with cryptocurrencies, if they are used as payment for goods or services,” companies would have to pay the equivalent of one million rubles ($13,900) and individuals at least 200,000 rubles ($2,800).

The draft bills were lodged with Russia’s Ministry of Economic Development earlier this week, says a report published by local news company RBC on May 21. One of the proposed laws plans to completely stop digital assets from being used as a means of payment by citizens or corporations.

People that already hold digital assets will be forced to register them with Russia’s tax agency and explain how they acquired them. Another bill proposes to add new sections to the country’s criminal law for illegal operations with cryptocurrencies.

Companies that issue or circulate digital financial assets “using sites registered in Russia or technical equipment located in Russia” are especially liable under this second draft proposal.

Penalties may be compounded for both individuals and firms “if major or especially large damage was caused to citizens, organizations or the state, or if these actions led to enrichment on a large or especially large scale.”

Local lawyers fear that if these laws are enforced, they will paralyze the Russian cryptocurrency industry. Dmitry Kirillov, a senior tax lawyer at Bryan Cave Leighton Paisner and a teacher at Moscow Digital School, told RBC:

People who currently own cryptocurrencies will be forced to get rid of them before the law comes into force or risk ‘going underground.’ Goals that will be achieved this way are the direct opposite of what’s being declared. In general, the idea of dropping a crypto ‘Iron Curtain,’ in my opinion, does not contribute to the development of businesses or Russia’s interaction with the world economy on a digital level.

What do you think about Russia’s draft bills on cryptocurrencies? Let us know in the comments section below.

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Hyperbitcoinization: Visions of Bitcoin Fueling the Post Covid-19 Shadow Economy

07/04/2020 by Idelto Editor

With the recent coronavirus spread and its overall effect on the global economy, some people believe the powers that be are preparing a financial reset. During these times, a number of bitcoiners think a bitcoin-induced form of fiat currency demonetization will take place, otherwise known as ‘hyperbitcoinization.’ However, a few speculators believe digital assets in the crypto economy are actually meant to further the underground shadow economy. In a world filled with overbearing politicians and malicious data-collecting corporations, the surveillance state could easily make cryptocurrencies far more valuable by fueling the world’s shadow markets.

Also read: Evidence Shows Politicians and Wall Street CEOs Expected the Market Crash Well Before Covid-19

A Different Kind of Hyperbitcoinization

A number of bitcoiners think that someday, bitcoin could grow so popular that it becomes the most used money in the world. These speculators believe that the protocol will be uncontrollable and eventually be adopted by everyone leading to hyperbitcoinization. But what if bitcoin covers only a fraction of the global economy, and more specifically the black and gray markets that operate beneath the legal system. Adoption of a crypto that fuels the shadow economy would still be a threat to the manipulated fiat system and it could remain uncontrollable. In fact, estimates show that the shadow economy is the second-largest economy in the world. When bitcoin was born in 2009, the Organisation for Economic Co-operation and Development (OECD) predicted that by this year in 2020: “more than two-thirds of the world’s workers will work in the shadow economy.”

The shadow economy or ‘System D’ isn’t just black market trades like drugs, weapons, and items the government has banned. System D participants include any paid workers who don’t report their financial transactions to the government and the funds remain untaxed. Traditionally, the general public has always assumed that the shadow economy exists in regions with fewer laws and in underdeveloped parts of the world. But that’s not the case at all, as underground financial systems exist in countries with a lot of wealth, high taxes, and significant amounts of regulation. The top countries in the world with the biggest shadow economies include places like the United States, Brazil, Italy, Russia, Germany, France, Japan, the United Kingdom, and Spain.

With the coronavirus plaguing the world and industry shutdowns squeezing the economy, some individuals think that governments and central bankers are planning a financial reset. Speculators assume that it’s the perfect time to usher in a “New Deal” similar to the way Wall Street and Franklin D. Roosevelt (FDR) restructured the American monetary system. Governments and central bankers are already pushing a few versions of digital cash and a cashless society, but the systems are centralized and meant to monitor people’s everyday transactions. Under the veil of crisis, nation states could easily reset the financial system right now by creating a cashless system that’s maintained by central bankers and bureaucrats.

Bitcoin and decentralized cryptocurrencies could still experience a smaller form of hyperbitcoinization by people who want to escape the “Green New Deal.” Cryptocurrencies could grow immensely valuable, even though they would only be used within the underground financial system. Digital money like bitcoin could easily be valued for far more than six-figures if entire the shadow economy adopted the decentralized asset.

Cypherpunks Write Code – E-Money & Daemon

The cypherpunks in the ‘90s discussed the rise of a private digital cash system that bolsters market anarchy and a new monetary system. In the 1994 Wired article “E-Money – That’s What I Want,” the editorial describes how the cypherpunks envisioned a brave new world that leverages a digital cash system. “The killer application for electronic networks isn’t video-on-demand,” explained Wired columnist Steven Levy. “It’s going to hit you where it really matters – in your wallet. It’s not only going to revolutionize the net, but it will also change the global economy,” Levy stressed. Back then, no one had heard of Satoshi Nakamoto and people’s concepts of digital cash stemmed from individuals like the renowned cryptographer David Chaum, the founder of Digicash. Other cypherpunks like Tim May and Wei Dai, however, envisioned a world with untraceable digital cash and the concepts of crypto anarchy.

These visionaries, who came well before Nakamoto, predicted systems that not only increased economic efficiency, but also the ability to transact across any border without censorship. Of course, individuals like Tim May forecasted that an underground electronic cash system could make big problems for the nation states. With an untraceable digital asset, it could destroy the benchmark rates of legal tender, increase tax evasion and money laundering, and disrupt the world’s money supply. If digital cash is just as convenient as today’s credit cards but also facilitates private financial transactions, it will likely continue to grow stronger. But unfortunately, it also will be attacked a lot more as well, as a true untraceable electronic cash system that’s not controlled by a single entity would be the nation states’ archnemesis.

The techno-thriller “Daemon” written by novelist Daniel Suarez describes a system that is similar to decentralized cryptocurrencies like bitcoin. In the novel, an individual publishes a new type of software that creates a cyber-space fueled shadow economy. Essentially, system users are rewarded for developing “decentralized hubs” and peer-to-peer networks by leveraging the Daemon. The very same thing could happen to bitcoin and the crypto economy to where the poor, middle class and even the rich can participate in hiding money from big brother’s watchful eyes. In the novel Daemon, Suarez tells the readers about online web markets that are hidden from the general public and operatives leveraging the financial system to exchange important data. 12 years before Daemon was published, the cypherpunk Eric Hughes also envisioned “anonymous systems.”

“We the Cypherpunks are dedicated to building anonymous systems,” Hughes wrote in 1993. “We are defending our privacy with cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money,” he added. Hughe’s continued:

Cypherpunks write code. We know that someone has to write software to defend privacy, and since we can’t get privacy unless we all do, we’re going to write it. We publish our code so that our fellow Cypherpunks may practice and play with it. Our code is free for all to use, worldwide. We don’t much care if you don’t approve of the software we write. We know that software can’t be destroyed and that a widely dispersed system can’t be shut down.

Shadow Market Money Could Be the ‘Ultimate Expression of Intentionality’

Of course, a number of people begging governments to approve cryptocurrencies like bitcoin and who hope the status quo adopts a strong digital currency, really don’t want the shadow market associated with the technology. Despite what they think, crypto transactions are still being used to skip taxes today and pay for things on the darknet. For instance, a report published in 2018 finds that illegal activity stemming from BTC transactions accounted for 44% of all transactions. It’s quite possible that bitcoin and cryptocurrencies won’t serve the white markets and traditional bankers and a slew of bitcoiners will be fine with that type of result. In 2015, the founder of Defense Distributed (DD), Cody Wilson told me in an interview how he would probably celebrate bitcoin being driven underground.

“Without a big expression of intentionality to what is considered not the polite things to do with bitcoin — specifically money laundering, specifically private access to your coin, holding your own keys,” Cody stressed during our interview. “Without projects that express these principles, you have nothing of what you want with a revolution. This leaves me to proclaim that most people involved with bitcoin were not serious about that in the first place.”

What do you think about a shadow economy hyperbitcoinization event? Let us know in the comments section below.

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