A Time investigation into the development of Venezuela’s state-backed cryptocurrency, petro, revealed strong anecdotal and circumstantial evidence connecting Russia to its launch. At least two Russians with ties to Vladimir Putin were present at petro’s unveiling, complete with the Venezuelan president’s thanks. Analysts are claiming the South American country is Mr. Putin’s crypto guinea pig as the two nations try to find innovative ways around US sanctions.
Report Claims Putin and Maduro Teamed to Launch Petro
Time online is referring to Tuesday’s official sale of petro as “a half-hidden joint venture between Venezuelan and Russian officials and businessmen, whose aim was to erode the power of U.S. sanctions,” finding “Moscow’s fingerprints all over the creation of the petro.”
Such revelations come at an interesting time for all three countries. In the US, the present administration has been accused of being too close to re-elected Russian President Putin. Mr. Putin is under international pressure for alleged acts of assassination on foreign shores along with meddling in elections abroad. Venezuela has long been a client state of Russia, and has equally been the object of scorn for several US administrations. The three were tied together, somewhat unknowingly (on the US side at least) by President Trump’s recent Executive Order forbidding formal participation in the petro.
And truth be told it is Russia who would rather tread lightly at this point. Indeed, as Mr. Putin’s economic advisor, Igor Shuvalov, explained, “For Russia, it’s too dangerous. If we say that the only reason we do it is to avoid U.S. sanctions, then the United States is definitely going to be displeased about it. Venezuela has nothing to lose. For them it’s the only chance.” The Venezuelan economy is the daily subject of press accounts, documenting economic horrors.
So it might have seemed somewhat brazen to have no fewer than two Russian nationals connected front and center at petro’s media scrum launch last month. Denis Druzhkov and Fyodor Bogorodsky were thanked publicly by Mr. Maduro, and Mr. Bogorodsky stands at the one hour and eight minute mark to give a congratulatory speech in Russian (see video inset).
Covering Tracks on a Gamble
The two men were initially identified as representatives of a shadowy company, Aerotrading, which claims blockchain specialty. Within days of the presser, presumably to establish the company’s legitimacy, a sudden website and Twitter account were set up. Of the two men, Mr. Bogorodsky was the only to comment publicly.
Mr. Druzhkov is well connected to a Russian billionaire, while Mr. Bogorodsky is a former banking executive living in South America. The report describes him as having “close business ties with Russia and other former Soviet states.” It appears he’s been involved with petro since its inception late last year. Mr. Bogorodsky stresses, “Russia has been moving in this direction for a while now, trying to draft laws to regulate cryptocurrencies.” Venezuela’s pace has evidently been much quicker. Dismissing potential US concerns, he laughs, “Any citizen of the world can do what he wants. We offer freedom of choice. So I think there will be lots of investors, big and small, from all over the world.”
According to an anonymous “executive at a Russian state bank who deals with cryptocurrencies, senior advisers to the Kremlin have overseen the effort in Venezuela, and President Vladimir Putin signed off on it last year. ‘People close to Putin, they told him this is how to avoid the sanctions,’ says the executive. ‘This is how the whole thing started,’” the report explained. Russia is insisting it had nothing to do with the petro’s creation.
State apparatchiks, on the other hand, have made plenty of statements about US financial sanctions. The head of Russia’s second largest bank, VTB, Andrei Kostin spoke openly recently about how “The reign of the dollar must end. This whip that the Americans use in the form of the dollar would then, to a great extent, not have such a serious impact on the global financial system.”
US regulators are quoted as not being too worried about petro nor the possibility of a crypto-ruble. It is hard to say if state-backed cryptocurrencies could ultimately work. Such ideas have always suffered from violating key tenants of crypto: censorship resistance and decentralization. By definition, state-backed currencies violate both.
Do you think state-backed crypto can work? Let us know in the comments!
Images via Pixabay, Wikipedia.
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VANCOUVER, British Columbia, March 21, 2018 (GLOBE NEWSWIRE) — Subject to receipt of all requisite regulatory approvals, Victory Square Technologies Inc. (“Victory Square” or the (“Company”) (CSE:VST) (FWB: 6F6) will acquire 49% percent of all issued and outstanding shares of Flo Digital Inc. (“Flo”), for $1,000,000 CAD in total consideration (the “Purchase Price”). In addition to the equity investment, Victory Square will be providing a $300,000 CAD convertible note. The note will convert upon a minimum financing of $1,000,000 CAD at a 20% discount to the issue price.
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It will take more than a government ban on ICOs to keep issuers away in China. Both investors and issuers in the country have found a way to circumvent the laws that were implemented last year by Chinese regulators, according to a report in local publication Caixin Global. Despite the fact that ICO demand largely stems … Continued
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Anyone swiping through the tech news on their tablet this week may have been startled by an unsavory story. Child pornography (CP) is permanently encoded in the bitcoin blockchain accoriding to mainstream media reports, making anyone who downloads the blockchain guilty of accessing CP. Not only is this old news, but it’s fake news. Understanding why calls for taking a quick dip into bitcoin’s code.
Bitcoin’s Boogeyman Returns
No one can really recall what bitcoin was branded as first: a tool of terrorists, drug dealers, or child pornographers. All that can be said for certain is all three canards have been trotted out regularly over the years. Only last week in the U.S. Senate, Representative Brad Sherman expressed hope that a cryptocurrency panel would reconvene immediately after there had been a terrorist attack funded by crypto. But that was last week; this week it’s all about pornography of the worst kind. CP is the topic du jour thanks to a new research paper. Its abstract explains:
Blockchains…irrevocably record arbitrary data, ranging from short messages to pictures. This does not come without risk for users as each participant has to locally replicate the complete blockchain, particularly including potentially harmful content…Our analysis shows that certain content, e.g., illegal pornography, can render the mere possession of a blockchain illegal…our analysis reveals more than 1600 files on the blockchain, over 99% of which are texts or images. Among these files there is clearly objectionable content such as links to child pornography, which is distributed to all Bitcoin participants.
This all sounds pretty damning, and given some of the alarmist headlines the paper has generated, you would have thought the FBI van was speeding its way to every address known to operate a full bitcoin node. But that’s not quite how the real story goes.
Old News Is Old
The CP on the blockchain story isn’t news and it isn’t new either. In fact, it was first dragged up in 2013, and has been revived, six years on, purely because a new paper has given the claims an air of legitimacy. News outlets were quick to jump on the story again, which was then widely shared by attention trolls such as Brianna Wu. The false hypothesis comes from the fact that it’s possible to encode information in the blockchain. That was how Satoshi famously hid his message in the genesis block: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”. Anyone inspecting the blockchain won’t find those words however. Instead they’ll find the following hash: 000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26. That is the block’s coinbase parameter (nothing to do with Coinbase the company), written in hex.
A research paper published in July 2017 titled Data Insertion in Bitcoin’s Blockchain explores this topic in more detail and explains how the coinbase data “is arbitrary and can be up to 100 bytes in size”. Only miners have the ability to insert data in this manner, and it’s typically used to signal mining support for proposed protocol changes. There are five other ways in which data can be encoded on the bitcoin blockchain, and it is the OP_RETURN option that is at the center of the child pornography story. The 2017 research paper explains that “this method is appropriate for inserting small amounts of data (or transaction metadata), but it is not suitable for large quantities of data.”
80 bytes is all that OP_RETURN can store, and what’s more that information is subject to deletion. That’s because bitcoin nodes are capable of pruning “provably unspendable” UTXOs for efficiency, which include OP_RETURN data. Anyone wishing to use the bitcoin blockchain to seek out child pornography would need to perform the following convoluted process:
- Download the entire bitcoin blockchain and sift through 251 million transactions to find the 1.4% that contain some kind of arbitrary data encoded in them.
- Ensure that the version of the blockchain you were using had been subject to no pruning that might have removed OP_RETURN data.
- Extract any web links that might be concealed in the data using some sort of steganography.
- Type the links into your browser until you eventually found a website that was still accessible.
To assert that the bitcoin blockchain contains child pornography is disingenuous, and is no more meaningful than saying that the internet contains CP. You could live to 100 and never encounter CP on the web, because that’s not how the web works. And that’s not how the blockchain works either.
Don’t Believe the Headlines
Asserting that there is child pornography on the blockchain would be like strolling through the U.S. Capitol Building, dropping a scrap of paper containing a deep web address, and then claiming that the American government is storing obscene content. As respected bitcoin commenter Nic Carter wrote: “Any journalist writing about arbitrary content injection into the Bitcoin blockchain should be extremely careful to detail to what extent that content exists, is extractable, viewable, etc. A text string which is a URL link to a [website displaying a thing] is not [the thing itself]. That is an extremely bad interpretation. Do not conflate the two. If you are willing to claim that “the blockchain contains X” you should be able to prove that you can extract X.”
Steganography and blockchain data insertion are fascinating topics that deserve scrutiny and further study. But to assert that the blockchain contains child pornography is misleading to the point of falsehood. It’s possible to encode a hidden link inside any database, including Facebook, Twitter, and Wikipedia. The act of doing so proves nothing other than the fascination some people have for concealing messages in messages – and that’s been happening since 1499.
Do you think mainstream media are guilty of misreporting this story, or are they right to air their concerns? Let us know in the comments section below.
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The post No, There Isn’t Child Porn on the Bitcoin Blockchain appeared first on Bitcoin News.
Xkeyscore. MAC addresses. OAKSTAR. MONKEYROCKET. Edward Snowden is at it again. This time the world’s most notorious whistleblower has handed over National Security Agency (NSA) documentation to online investigative news outlet The Intercept revealing an invasive covert program to track bitcoin users using spy tools he uncovered during his infamous first go-round. The implications include the future of privacy along with warrantless data collection being used to prosecute bitcoiners such as Ross Ulbricht of Silk Road.
Snowden Reveals How NSA Tracked Bitcoin Users
Ever get the feeling you’re being watched? Department of Homeland Security (DHS) Acting Assistant Secretary for Legislative Affairs Brian de Vallance, in a November 2013 letter to Congress, worried that “with the advent of virtual currencies and the ease with which financial transactions can be exploited by criminal organizations, DHS has recognized the need for an aggressive posture toward this evolving trend.” Infamous whistleblower Edward Snowden seems to have found a trove of heavily redacted, classified NSA documents attesting to that “aggressive posture.”
It’s fitting Mr. Snowden should share them with The Intercept, an online investigative news organization founded by his benefactor, attorney turned journalist Glenn Greenwald. Mr. Greenwald was then writing for The Guardian, and the two unleashed the largest batch of government security documents ever revealed about US and UK global surveillance.
Interestingly, the documents tracking bitcoin users stem from roughly the same period, 2013. They detail bitcoiners all over the world were targeted as powers granted the NSA under the rubric of fighting terrorism expanded, and might have even begun to play a role in early crypto prosecutions such as Ross Ulbricht and Silk Road.
American Civil Liberties Union’s Patrick Toomey, of its National Security Project, explained, “If the government’s criminal investigations secretly relied on NSA spying, that would be a serious concern. Individuals facing criminal prosecution have a right to know how the government came by its evidence, so that they can challenge whether the government’s methods were lawful. That is a basic principle of due process. The government should not be hiding the true sources for its evidence in court by inventing a different trail.”
Raw, Global Internet Traffic
Readers in recent years have been thrown a pivot. It’s not the currency aspect of bitcoin that is to be admired, but rather blockchain technology or some other such related innovation. Yet all along, since its inception, bitcoin was meant to be digital cash, a direct way to undermine governments and their cartelized banking system. In popular press accounts this aspect has been downplayed and almost forgotten. Until now.
It appears NSA has been focused on what’s important or novel about bitcoin, and it ain’t blockchain. And since the initial Mr. Snowden revelations of the Agency’s widespread data gathering streams and programs, enthusiasts have long suspected something of the sort was happening in crypto. Document sentences filled with snippets such as “help track down senders and receivers of Bitcoins” will only fuel more speculation.
“The data source appears to have leveraged NSA’s ability to harvest and analyze raw, global internet traffic while also exploiting an unnamed software program that purported to offer anonymity to users, according to other documents,” Sam Biddle of The Intercept wrote, noting “Bitcoin is #1 priority” over other cryptocurrencies, according to documents.
Information gathered wasn’t just about transactions. In fact, “the tracking may also have involved gathering intimate details of these users’ computers. The NSA collected some Bitcoin users’ password information, internet activity, and a type of unique device identification number known as a MAC address,” Mr. Biddle explains. A MAC address is also known as a media access control address, a unique hardware identifier. A crisper analogy would be to liken a MAC to an American social security number which remains with a person (device) for their entire lives.
Deeper still, the NSA documents confirm the ease at which the Agency could identify users in particular, “hinting that NSA may have been using its Xkeyscore searching system, where the Bitcoin information and wide range of other NSA data was cataloged, to enhance its information on Bitcoin users. An NSA reference document indicated that the data source provided ‘user data such as billing information and Internet Protocol addresses.’ With this sort of information in hand, putting a name to a given Bitcoin user would be easy,” the report detailed. Xkeyscore (XKS) came into popular consciousness through Mr. Snowden’s first revelations. XKS was used by the NSA globally, collecting internet data daily, and shared with most English-speaking, industrialized nations. Its source code was publically analyzed in Germany during Summer of 2014.
The report relies heavily on tracking derived from OAKSTAR, also first uncovered by Mr. Snowden during his initial affair, which uses “a collection of covert corporate partnerships enabling the agency to monitor communications, including by harvesting internet data as it traveled along fiber optic cables that undergird the internet.” A sister program, MONKEYROCKET, was employed to snatch data from Asia, Europe, the Middle East, and South America, according to documents. It’s “full take”, which can mean “the entirety of data passing through a network was examined and at least some entire data sessions were stored for later analysis,” The Intercept claims.
As part of a broader anti-terrorism program, MONKEYROCKET was also used to develop software promising relative anonymity to unsuspecting bitcoiners in places like China and Iran. The program wasn’t disclosed, but its import is plain enough: “it functioned as a privacy bait and switch, tricking Bitcoin users into using a tool they thought would provide anonymity online but was actually funneling data directly to the NSA.” This seems to indicate a virtual private network (VPN) of some kind was compromised. The forever rub with VPNs is that users have to trust the issuer.
While the latest news might further push enthusiasts toward privacy coins, equally disturbing, if not more, is the assumption the NSA played a role in the prosecution of Ross Ulbricht, now serving double life without the possibility of parole and awaiting a possible Supreme Court reprieve. Mr. Ulbricht argued the Federal Bureau of Investigation’s recounting of their case left serious holes. And if it could be proved an outside entity, like the NSA, used unethical, illegal means to obtain evidence, then the entire prosecution against him was compromised. Mr. Snowden’s current batch doesn’t speak to the issue directly; however, the timeframe and government sense of urgency seems to make it at least plausible, if not probable.
Do you think Snowden’s latest documents will push more enthusiasts to privacy coins? Will the information provided help Ross Ulbricht? Let us know in the comments!
Images via Pixabay, The Intercept.
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The rise in global demand for cobalt, an essential component of the lithium-ion batteries found in electronics and electric vehicles, should bring prosperity to the people of resource-rich Democratic Republic of Congo. Instead, as has been the status quo for generations, growing demand for limited resources has meant little benefit for the historically troubled country’s … Continued
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Japan’s Financial Services Agency (FSA), the country’s financial regulator, has revealed details of a closed-doors roundtable between regulators and central banks from a number of countries as a part of a wider multilateral joint research project on blockchain technology. Central banks and financial regulators from a number of nations alongside a handful of foreign and … Continued
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