Monday, August 3, 2015
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Police Confiscate 11,000 Bitcoin Wallets; Shut Down Dark Web Site
Sunday, August 2, 2015
Bitcoin Will Succeed via Innovation, Not Laws (Op-Ed)
Saturday, August 1, 2015
Ashley Barr Reveals New Details about Mt.Gox Operations after Karpeles’ Arrest
As Mark Karpeles was being arrested on August 1, 2015, his former employee Ashley Barr, who operated under the name “Adam Turner,” took to Reddit to answer questions about his time at Mt.Gox.
In his introduction, Barr wrote, “I was hired by Mark [Karpeles] in June 2011 to help him handle the crazy inbox at Mt.Gox during bitcoin’s initial rally. In January 2012 I was asked to become Mt.Gox’s CEO, a process which led to my dismissal in May 2012. My statement along with other ex-employees have led the Tokyo Metro Police’s arrest on embezzlement and ‘illegal manipulation of accounting.’
“We plan to eat pizza in front of Mark while he is in prison…”
Barr talked openly about the work culture at Mt.Gox while he was there and about Karpeles in particular.
Barr wrote, “All in all, I felt Mt.Gox was [a role-playing game] to Mark, as he didn’t quite grasp the reality that the money being in deposited into his bank account meant more to other people than just numbers on his screen.”
In the post, Barr took the opportunity to clarify what his role was during his time at Mt.Gox. He also wrote at length about what he knew of the company’s state of affairs. He explained that Karpeles had wanted Barr to take over as CEO, a position Barr declined when he realized that he couldn’t get access to the information necessary to paint a clear picture of the company’s financial situation.
“Basically, after Mark asked me to be CEO, I tried my best at due-diligence. I asked Mark to show me the financials of the company. He wouldn’t, or feigned that he would do it later, all while pressuring me to take the role.”
Barr asserted that his “due diligence” unearthed discrepancies in the company’s financials.
“I confronted Mark about it, told him I couldn’t take the role if he couldn’t explain this gross incompetence in spending (he was also asking employees other than myself to find investors…something impossible without knowing the financial status of the company).”
Around the same time, we learned that Mark only had one bank account, shared with Mt.Gox’s customer deposits. That was the nail in the coffin.”
Barr went on to describe Karpeles’s response to being confronted with allegations of financial wrongdoing:
“…his answer was simply: ‘My grandmother lives in a castle in Switzerland.’ That was it. That was all, we couldn’t get him to explain it. He just ignored the rest of our inquiries. It. was. insane.”
Barr went on to make the stunning assertion that Mt.Gox’s only bank account, the one that held customer deposits, was actually Karpeles’s own personal account.
Barr also revealed his strong belief that Mt.Gox had no cold storage for any funds stored on the exchange.
“[Karpeles] said there were many cold-wallets, what I witnessed was one hot wallet…
All I know is that BTC was sitting there when Mark logged in. How he would have moved it from cold storage into a single wallet on a remote-desktop, I have no idea… it’s possible, but I don’t know how to prove it.”
Furthermore, Barr said that Karpeles was the only one with the keys to any of the wallets.
“Mark said that if he died there would be hints that one of his best friends could follow to find and unlock the cold-wallets. When I asked said friend, he said he had no idea what Mark was talking about.”
Regarding the missing 200,000 BTC that were lost and then mysteriously recovered by Karpeles, Barr said, “When I read the news, I was surprised to hear that 200,000 coins were recovered. My first thought was… of course… [expletive]. How is that even [expletive] possible… I guess, to be more specific. I mean, even in usual terms, not knowing if my bank account has $8000 vs $2000 dollars is pretty [expletive] significant…Sorry, I dunno what to conclude but it feels like a lie, or gross ineptitude… either way it’s really, very, upsetting.”
However, as for whether or not he thinks that Karpeles actually committed robbery, Barr was non-committal.
“I think gross incompetence happened, and Mark tried to cover it up. I don’t believe he is outright malicious, but certainly ignorantly-malicious. If it’s an A) or B) question, I believe he lost them [the missing bitcoins], but considering other s*** I’ve seen… I really can’t be certain.”
On a personal level, Barr’s opinion of his former employer was conflicted.
“[Karpeles] had (has) the ego of someone wanting to prove themselves, some anti-social behaviors, some social behaviors, and everything in between. He’s still a mystery to me, and absolutely unpredictable.
When asked if he wanted authorities to “throw the book” at Karpeles, Barr’s response was similarly measured.
“My honestly feeling is I liked Mark, as just… a geek. I’m a geek, I get other geeks. We’re all wired differently but similarly and I enjoyed that about him. I think most others had the same experience, and I think it reflects in his media personality (harmless, but awkward and untrustworthy)…. He’s not evil, just he justifies the things he thinks [he needs] to do to preserve whatever image he has for himself.”
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Friday, July 31, 2015
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HackCoin: Bitcoin Hackathon in India Sponsored by Microsoft, IBM and Citruspay
Zone Startups India, BitStreet and Block Chain University are hosting India’s first bitcoin hackathon at the Bombay Stock Exchange in India named “HackCoin Mumbai.” The hackathon will be joined by over a hundred developers looking to build blockchain-based applications for payments, big data and digital experience.
“There are three problem statements – one for each theme,” explained Ajay Ramasubramanian, project head of Zone Startups India. “There are possibilities for the winning outputs to be rolled out into full-scale projects.”
The hackathon is sponsored by Microsoft, IBM and Citruspay, and the executives of these companies will participate in the event as mentors and panelists.
“What we are really excited about is not only that we are the first fintech hackathon in terms of blockchain usage, but also that we are getting a lot of bitcoin experts,” said Raunaq Vaisoha, partner of HackCoin, the facilitator of the event.
Vaisoha added that such an event is important to developers, especially now that large global banks are showing strong interest in blockchain technology and blockchain/bitcoin-based startups.
“This event is very important for the blockchain ecosystem,” Vaisoha said. “If you look at 2014, there was $400 million VC funding in the blockchain. Citibank, Barclays and IBM are looking at it.”
Bitcoin to Ripple Gateway to Shut Down for US Users
Ripple Inc., payment gateway for hundreds of assets and digital currencies has announced the closure of btc2ripple gateway for all US residents starting September 1, 2015.
Btc2ripple gateway is one of the hundreds of gateways on the Ripple Trade platform which is used to purchase or trade BTC to XRP (Ripple’s IOU). On September 1, Ripple will shut down the btc2ripple gateway for all U.S. residents, which will disallow any Americans from purchasing or depositing BTC using Ripple Trade accounts.
In a statement, the btc2ripple team announced, “We are discontinuing the btc2ripple service for U.S. residents. All non-U.S. customers will have full access to our service as usual. Starting Sept 1, 2015, you will not be able to make BTC deposits to your Ripple Trade account or make BTC withdrawals from your Ripple Trade account.”
If any U.S.-based accounts hold BTC on or after September 1, all bitcoin will be forfeited.
The majority of Ripple Trade users are based in the United States, and so the closure of btc2ripple may lead to a large decline in bitcoin/xrp trading volume on its platform.
Accenture Executives Propose Replacing Bitcoin with a Closed Blockchain
Writing on CIO Journal, a Wall Street Journal blog for corporate technology executives, Owen Jelf and Sigrid Seibold , respectively global managing director of Accenture’s capital markets practice and managing director of Accenture’s digital capital markets efforts, weigh in on the fashionable debate about the blockchain as a system vs. bitcoin as a currency.
Not surprisingly, the two Accenture writers propose to do without bitcoin as a currency, but they are bullish about the potential of the blockchain in financial markets.
“Blockchains present an enormous opportunity for the world’s banks and financial institutions, which have moved quickly to make investments in it,” they say.
Accenture, a Fortune Global 500 company, is the world’s largest consulting firm as measured by revenues and has scores of high profile clients in the banking, financial and regulatory sectors.
“The bitcoin protocol supports a highly decentralized currency validated through anonymous consensus on a public ledger held by entities around the world,” note the Accenture representatives. “But that objective introduced trade-offs, including a costly proof-of-work algorithm, public transaction data and a validation scheme that adds latency to the transaction process, by design.”
Bitcoin enthusiasts would disagree, and argue that the distributed anonymous consensus model used in the Bitcoin blockchain is not a bug, but a feature – and a breakthrough innovation. In fact, the Bitcoin blockchain represents the first solid, working implementation of distributed consensus – for the first time, everyone can agree on what transactions took place, and who owns what, because everything is recorded on a tamper-proof public ledger that doesn’t need a central server and can’t be controlled by any central authority.
Of course, that is precisely the reason why the authorities and the banks don’t like Bitcoin. Today, governments and financial institutions recognize that the blockchain technology behind Bitcoin can offer huge cost savings, efficiency, and operational benefits to financial systems – distributed ledger technology could save banks $15 billion-$20 billion per annum by 2022 according to a recent Santander Innoventures report – but it’s in the nature of power to oppose what it can’t control.
The two Accenture representatives offer their solution: “To be used by financial institutions, including capital markets firms and insurers, blockchains must supplant the costly methods introduced by bitcoin with a mechanism that guarantees security, privacy and speed without paying for anonymous consensus.”
In other words, Bitcoin should disappear and be replaced by a closed blockchain. The new blockchain proposed by the Accenture writers is not “permissionless” like the Bitcoin blockchain, where everyone can download the software and participate without asking anyone’s permission, but a “permissioned” blockchain restricted to vetted participants.
New York Times technology and finance reporter Nathaniel Popper, author of “Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money,” noted that a permissioned blockchain could be jointly run by the computers of the largest banks and serve as the backbone for a new, instant payment system without a single point of failure. The new blockchain, decentralized but closed, would offer the benefits of the current Bitcoin network without relying on end-users for its operations.
Of course, the governments and the banks tend to enthusiastically support the idea of a permissioned blockchain without the troublesome bitcoin. But the Bitcoin system works, and the features that the Accenture writers propose to eliminate could be the very features that make it work. Other solutions to the issues mentioned by the Accenture writers, for example Lightning Networks, could be more effective.
Photo Michael Gray / Flickr
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